item 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen co independent public accountants financial statements required part ii item 8 included pages 18 43 annual report see index page 7 2 financial statement schedules halliburton company page report supplemental schedules arthur andersen co independent public accountants 52 schedules included v property plant equipment three years ended december 31 1993 53 vi accumulated depreciation property plant equipment three years ended december 31 1993 54 ix shortterm borrowings three years ended december 31 1993 55 x supplementary income statement information three years ended december 31 1993 56 note schedules filed herein provision made rules regulation sx omitted applicable required information required therein included notes financial statements 3 exhibits exhibit number exhibits 3 bylaws company amended september 30 1992 incorporated reference exhibit 43 second amendment companys registration statement form s3 dated march 29 1993 4a credit agreement dated february 25 1993 avalon financial services ltd nationsbank texas na incorporated reference exhibit 4a companys annual report form 10k year ended december 31 1992 4b form debt security zero coupon convertible subordinated debentures due march 13 2006 registrant incorporated reference exhibit 4a companys form 8k dated march 13 1991 4c resolutions board directors registrant adopted meeting held february 11 1991 special pricing committee board directors registrant adopted meeting held march 6 1991 incorporated reference exhibit 4c companys form 8k dated march 13 1991 4d subordinated indenture dated january 2 1991 company texas commerce bank national association trustee incorporated reference exhibit 4b companys form 8k dated march 13 1991 4e form debt security 875 debentures due february 15 2021 incorporated reference exhibit 4a companys form 8k dated february 20 1991 4f senior indenture dated january 2 1991 company texas commerce bank national association trustee incorporated reference exhibit 4b companys form 8k dated february 20 1991 4g resolutions companys board directors adopted meeting held february 11 1991 special pricing committee board directors registrant adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c companys form 8k dated february 20 1991 4h composite certificate incorporation filed may 26 1987 secretary state delaware certain certificate designation rights preferences related authorization companys junior participating preferred stock series incorporated reference exhibit 4d companys registration statement form s3 dated december 21 1990 4i amended restated rights agreement dated february 15 1990 company ncnb texas national bank rights agent includes form right certificate exhibit incorporated reference exhibit 1 companys form 8 dated february 23 1990 4j copies instruments define rights holders miscellaneous longterm notes registrant subsidiaries totaling 40 million aggregate december 31 1993 filed commission registrant agrees herewith furnish copies instruments upon request 10a halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a companys annual report form 10k year ended december 31 1992 10b halliburton company senior executives deferred compensation plan amended restated effective october 1 1990 incorporated reference exhibit 10b companys annual report form 10k year ended december 31 1992 10c retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c companys annual report form 10k year ended december 31 1992 10d halliburton company directors deferred compensation plan amended restated effective may 15 1990 incorporated reference exhibit 10d companys annual report form 10k year ended december 31 1992 10e halliburton company annual incentive compensation plan amended restated december 4 1990 incorporated reference exhibit 10e companys annual report form 10k year ended december 31 1992 10f form criteria determination brown root recommendations incentive awards brown root management dated march 2 1992 incorporated reference exhibit 10f companys annual report form 10k year ended december 31 1992 10g summary plan description executive splitdollar life insurance plan incorporated reference exhibit 10g companys annual report form 10k year ended december 31 1992 10h halliburton company 1993 stock longterm incentive plan incorporated reference appendix companys proxy statement dated march 23 1993 10i asset acquisition agreement smith company dated january 14 1993 incorporated reference second amendment companys registration statement form s3 dated march 29 1993 10j halliburton company restricted stock plan nonemployee directors incorporated reference appendix b companys proxy statement dated march 23 1993 11 computation earnings per share 21 subsidiaries registrant 24a powers attorney signed march 1992 incorporated reference exhibit 25 companys annual report form 10k year ended december 31 1991 24b form power attorney c j silas filed annual report b reports form 8k report filed form 8k dated october 18 1993 reporting item 5 events regarding press release announcing plans sell geophysical business increase certain insurance reserves settlement dispute united states internal revenue service report filed form 8k dated january 14 1994 reporting item 5 events regarding press release announcing sale geophysical business report independent public accountants supplemental schedules halliburton company audited accordance generally accepted auditing standards consolidated financial statements included halliburton companys 1993 annual report form 10k issued report thereon dated february 4 1994 report consolidated financial statements includes explanatory paragraph respect change methods accounting investments income taxes reinsurance accounting postretirement benefits discussed notes 2 7 11 16 consolidated financial statements respectively audits made purpose forming opinion statements taken whole supplemental schedules v vi ix x responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedules subjected auditing procedures applied audits basic financial statements opinion fairly state material respects financial data required set forth therein relation basic financial statements taken whole arthur andersen co arthur andersen co dallas texas february 4 1994 halliburton company halliburton company halliburton company halliburton company signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized 7th day march 1994 halliburton company thomas h cruikshank thomas h cruikshank chairman board chief executive officer pursuant requirements securities exchange act 1934 report signed following persons capacities indicated 7th day march 1994 signature title thomas h cruikshank chairman board thomas h cruikshank chief executive officer director jerry h blurton vice presidentfinance jerry h blurton principal financial officer scott r willis controller principal scott r willis accounting officer signature title anne l armstrong director anne l armstrong robert w campbell director robert w campbell lord clitheroe director lord clitheroe edwin l cox director edwin l cox robert l crandall director robert l crandall william r howell director william r howell dale p jones president director dale p jones c j silas director c j silas roger staubach director roger staubach e l williamson director e l williamson susan keith susan keith attorneyinfact index exhibits 11 computation earnings per share 21 subsidiaries registrant 24b form power attorney c j silasitem 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 16 45 annual report see index page 7 2 financial statement schedules financial statements european marine contractors limited emc investment accounted equity method follow five year financial record emc financial statements prepared accordance accounting principles generally accepted united kingdom certain parent company adjustments included selected financial data presented note 6 companys financial statements order conform generally accepted accounting principles united states note schedules filed herein provision made rules regulation sx omitted applicable required information required therein included notes financial statements 3 exhibits exhibit number exhibits 3 bylaws company amended september 301992 incorporated reference exhibit 43 second amendment companys registration statement form s3 dated march 29 1993 4a credit agreement dated february 25 1993 avalon financial services ltd nationsbank texas na incorporated reference exhibit 4a companys annual report form 10k year ended december 31 1992 4b form debt security zero coupon convertible subordinated debentures due march 13 2006 registrant incorporated reference exhibit 4a companys form 8k dated march 13 1991 4c resolutions board directors registrant adopted meeting held february 11 1991 special pricing committee board directors registrant adopted meeting held march 6 1991 incorporated reference exhibit 4c companys form 8k dated march 13 1991 4d subordinated indenture dated january 2 1991 company texas commerce bank national association trustee incorporated reference exhibit 4b companys form 8k dated march 13 1991 4e form debt security 875 debentures due february 15 2021 incorporated reference exhibit 4a companys form 8k dated february 20 1991 4f senior indenture dated january 2 1991 company texas commerce bank national association trustee incorporated reference exhibit 4b companys form 8k dated february 20 1991 4g resolutions companys board directors adopted meeting held february 11 1991 special pricing committee board directors registrant adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c companys form 8k dated february 20 1991 4h composite certificate incorporation filed may 26 1987 secretary state delaware certain certificate designation rights preferences related authorization companys junior participating preferred stock series incorporated reference exhibit 4d companys registration statement form s3 dated december 21 1990 4i amended restated rights agreement dated february 15 1990 company ncnb texas national bank rights agent includes form right certificate exhibit incorporated reference exhibit 1 companys form 8 dated february 23 1990 4j copies instruments define rights holders miscellaneous longterm notes registrant subsidiaries totaling 04 million aggregate december 31 1994 filed commission registrant agrees herewith furnish copies instruments upon request 4k copies instruments define rights holder 40 notes payable totaling 250 million december 31 1994 filed commission registrant agrees herewith furnish copies instruments upon request 10a halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a companys annual report form 10k year ended december 31 1992 10b halliburton company senior executives deferred compensation plan amended restated effective october 1 1990 incorporated reference exhibit 10b companys annual report form 10k year ended december 31 1992 10c retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c companys annual report form 10k year ended december 31 1992 10d halliburton company directors deferred compensation plan amended restated effective may 15 1990 incorporated reference exhibit 10d companys annual report form 10k year ended december 31 1992 10e halliburton company annual incentive compensation plan amended restated december 9 1994 10f form criteria determination brown root recommendations incentive awards brown root management dated march 2 1992 incorporated reference exhibit 10f companys annual report form 10k year ended december 31 1992 10g summary plan description executive splitdollar life insurance plan incorporated reference exhibit 10g companys annual report form 10k year ended december 31 1992 10h halliburton company 1993 stock longterm incentive plan incorporated reference appendix companys proxy statement dated march 23 1993 10i asset acquisition agreement smith company dated january 14 1993 incorporated reference second amendment companys registration statement form s3 dated march 29 1993 10j halliburton company restricted stock plan nonemployee directors incorporated reference appendix b companys proxy statement dated march 23 1993 10k halliburton elective deferral plan effective january 1 1995 11 computation earnings per share 21 subsidiaries registrant 23 consent ernst young 24 form power attorney signed may 1994 following directors anne l armstrong robert w campbell lord clitheroe robert l crandall thomas h cruikshank w r howell dale p jones c j silas roger staubach richard j stegemeier e l williamson 27 financial data schedules registrant filed electronically filed annual report b reports form 8k current report filed form 8k dated october 19 1994 reporting item 5 events regarding press release dated october 18 1994 announcing companys definitive agreement sale natural gas compression business unit current report filed form 8k dated october 26 1994 reporting item 5 events regarding press release dated october 25 1994 regarding discussion 5050 scottish joint venture operate fabrication yards current report filed form 8k dated october 28 1994 reporting item 5 events regarding press release dated october 27 1994 announcing companys earnings quarter nine months ended september 30 1994 current report filed form 8k dated november 14 1994 reporting item 5 events regarding press release dated november 8 1994 regarding fourth quarter dividend declaration 25 cents per share current report filed form 8k dated november 22 1994 reporting item 5 events regarding press release dated november 21 1994 announcing companys definitive agreement sale industrial service business unit current report filed form 8k dated november 30 1994 reporting item 5 events regarding press release dated november 30 1994 announcing companys completion sale natural gas compression business unit current report filed form 8k dated january 9 1995 reporting item 5 events regarding press release dated january 9 1995 announcing company entered contracts three firms outsource substantially information technology requirements current report filed form 8k dated january 12 1995 reporting item 5 events regarding press release dated january 11 1995 announcing companys completion sale assets industrial services business unit current report filed form 8k dated february 2 1995 reporting item 5 events regarding press release dated january 30 1995 announcing business unit brown root inc recently multimillion dollar contract construct polypropylene plant current report filed form 8k dated february 2 1995 reporting item 5 events regarding press release dated february 1 1995 announcing companys earnings quarter year ended december 31 1994 current report filed form 8k dated february 16 1995 reporting item 5 events regarding press release dated february 15 1995 announcing formation scottish joint venture current report filed form 8k dated february 17 1995 reporting item 5 events regarding press release dated february 16 1995 announcing declaration first quarter dividend current report filed form 8k dated february 27 1995 reporting item 5 events regarding press release dated february 24 1995 announcing joint venture agreement signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized 23rd day march 1995 halliburton company thomas h cruikshank thomas h cruikshank chairman board chief executive officer pursuant requirements securities exchange act 1934 report signed following persons capacities indicated 23rd day march 1995 signature title thomas h cruikshank chairman board chief executive officer thomas h cruikshank director jerry h blurton vice presidentfinance principal financial officer jerry h blurton scott r willis controller principal accounting officer scott r willis signature title anne l armstrong director anne l armstrong robert w campbell director robert w campbell lord clitheroe director lord clitheroe robert l crandall director robert l crandall w r howell director w r howell dale p jones president director dale p jones c j silas director c j silas roger staubach director roger staubach richard j stegemeier director richard j stegemeier e l williamson director e l williamson susan keith susan keith attorneyinfactitem 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 12 32 annual report see index page 6 2 financial statement schedules note schedules filed herein provision made rules regulation sx omitted applicable required information required therein included notes financial statements 3 exhibits exhibit number exhibits 2 agreement plan reorganization dated december 11 1996 among halliburton company known halliburton energy services inc predecessor halliburton hold co known halliburton company halliburton merge co incorporated reference exhibit 11 companys registration statement form 8b dated december 12 1996 file 103492 3a certificate incorporation company amended incorporated reference exhibit 31 companys registration statement form 8b dated december 12 1996 file 103492 3b bylaws company amended incorporated reference exhibit 32 companys registration statement form 8b dated december 12 1996 file 103492 4a subordinated indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4c predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 43 companys registration statement form 8b dated december 12 1996 file 103492 4b form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 4c senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 41 companys registration statement form 8b dated december 12 1996 file 103492 4d resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 3 exhibits exhibit number exhibits 4e form debt security 634 notes due february 1 2027 incorporated reference exhibit 41 companys form 8k dated february 11 1997 4f second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee incorporated reference exhibit 44 predecessors registration statement form s3 file 3365772 originally filed securities exchange commission july 9 1993 post effectively amended december 5 1996 supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 42 companys registration statement form 8b dated december 12 1996 file 103492 4g resolutions companys board directors adopted unanimous consent dated december 5 1996 4h certificate designation rights preferences related authorization companys junior participating preferred stock series filed december 11 1996 secretary state delaware 4i rights agreement dated december 1 1996 company chasemellon shareholder services llc incorporated reference exhibit 44 companys registration statement form 8b dated december 12 1996 file 103492 4j copies instruments define rights holders miscellaneous longterm notes registrant subsidiaries totaling 01 million aggregate december 31 1996 filed commission registrant agrees herewith furnish copies instruments upon request 10a halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors annual report form 10k year ended december 31 1992 10b retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c predecessors annual report form 10k year ended december 31 1992 10c halliburton company directors deferred compensation plan amended restated effective may 1 1994 10d summary plan description executive splitdollar life insurance plan incorporated reference exhibit 10g predecessors annual report form 10k year ended december 31 1992 10e halliburton company 1993 stock longterm incentive plan amended restated may 21 1996 3 exhibits exhibit number exhibits 10f agreement plan merger predecessor halliburton acq company landmark graphics corporation dated june 30 1996 incorporated reference appendix predecessors registration statement form s4 filed august 30 1996 10g halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 10h halliburton elective deferral plan amended restated effective january 1 1997 10i employment agreement incorporated reference exhibit 10 predecessors form 10q quarterly period ended september 30 1995 10j halliburton company senior executives deferred compensation plan amended restated effective january 1 1996 10k halliburton company annual performance plan amended restated effective january 1 1997 10l employment agreement incorporated reference exhibit 10 n predecessors form 10k year ended december 31 1995 10m early retirement agreement 10n financial statements european marine contractors incorporated reference item 14 companys annual report form 10k year ended december 31 1995 11 computation earnings per share 21 subsidiaries registrant 23a consent arthur andersen llp 23b consent ernst young chartered accountants 24 powers attorney signed february 1997 following directors anne l armstrong richard b cheney lord clitheroe robert l crandall w r howell dale p jones delano e lewis c j silas roger staubach richard j stegemeier e l williamson 27 financial data schedules registrant filed electronically filed annual report b reports form 8k current report filed form 8k dated october 8 1996 reporting item 5 events regarding press release dated october 4 1996 announcing completion acquisition landmark graphics corporation current report filed form 8k dated october 24 1996 reporting item 5 events regarding press release dated october 22 1996 announcing third quarter results current report filed form 8k dated november 18 1996 reporting item 5 events regarding press release dated november 15 1997 announcing fourth quarter dividend current report filed form 8k dated december 11 1996 reporting item 5 events regarding press release dated december 9 1997 announcing companys intent reorganize legal structure current report filed form 8k dated december 12 1996 reporting item 5 events regarding press release dated december 12 1996 announcing completion reorganization companys legal structure current report filed form 8k dated december 20 1996 reporting item 5 events regarding press release dated december 19 1996 announcing award terra nova contract grand banks alliance current report filed form 8k dated december 24 1996 reporting item 5 events regarding press release dated december 24 1996 reporting supplemental selected financial data restated acquisition landmark graphics corporation current report filed form 8k dated december 27 1996 reporting item 5 events regarding press release dated december 23 1996 announcing potential acquisition ogc international plc first quarter 1997 date hereof current report filed form 8k dated january 14 1997 reporting item 5 events regarding press releases dated january 11 1997 announcing sangu agreement plan approval current report filed form 8k dated january 23 1997 reporting item 5 events regarding press release dated january 22 1997 announcing fourth quarter earnings current report filed form 8k dated january 31 1997 reporting item 5 events regarding press release dated january 29 1997 announcing offer acquire ogc international plc current report filed form 8k dated february 10 1997 reporting item 5 events regarding press release dated february 6 1997 announcing 125 million notes offering current report filed form 8k dated february 12 1997 reporting item 5 events regarding press release dated february 11 1997 announcing purchase davenport royal dockyard current report filed form 8k dated february 14 1997 reporting item 7 financial statements exhibits regarding filing distribution agreement terms agreement form note current report filed form 8k dated february 21 1997 reporting item 5 events regarding press release dated february 20 1997 announcing annual meeting quarterly dividend current report filed form 8k dated march 4 1997 reporting item 5 events regarding press release dated march 3 1997 announcing unconditional tender offer purchase outstanding shares ogc international plc signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized 11th day march 1997 halliburton company richard b cheney richard b cheney chairman board president chief executive officer pursuant requirements securities exchange act 1934 report signed following persons capacities indicated 11th day march 1997 signature title richard b cheney chairman board president richard b cheney chief executive officer director david j lesar executive vice president david j lesar chief financial officer r charles muchmore vice president controller r charles muchmore principal accounting officer signature title anne l armstrong director anne l armstrong lord clitheroe director lord clitheroe robert l crandall director robert l crandall w r howell director w r howell dale p jones vice chairman director dale p jones c j silas director c j silas roger staubach director roger staubach richard j stegemeier director richard j stegemeier e l williamson director e l williamson susan keith susan keith attorneyinfactitem 14 exhibits financial statement schedules reports form 8k 1financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 14 38 annual report see index page 6 2financial statement schedules page report supplemental schedule arthur andersen llp49 schedule ii valuation qualifying accounts three years ended december 31 199750 note schedules filed herein provision made rules regulation sx omitted applicable required information required therein included notes financial statements 3 exhibits exhibit number exhibits 2 agreement plan reorganization dated december 11 1996 among halliburton company known halliburton energy services inc predecessor halliburton hold co known halliburton company halliburton merge co incorporated reference exhibit 11 companys registration statement form 8b dated december 12 1996 file 103492 3a restated certificate incorporation company incorporated reference companys registration statement form s3 file 33332731 filed securities exchange commission august 1 1997 3b bylaws company amended incorporated reference companys registration statement form s3 file 33332731 filed securities exchange commission august 1 1997 4a subordinated indenture dated january 2 1991 halliburton company known halliburton energy services inc predecessor texas commerce bank national association trustee incorporated reference exhibit 4c predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 43 companys registration statement form 8b dated december 12 1996 file 103492 4b form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 4c senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 41 companys registration statement form 8b dated december 12 1996 file 103492 3 exhibits continued exhibit number exhibits 4d resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 4e form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 companys form 8k dated february 11 1997 4f second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 42 companys registration statement form 8b dated december 12 1996 file 103492 4g resolutions companys board directors adopted unanimous consent dated december 5 1996 4h restated rights agreement dated december 1 1996 company chasemellon shareholder services llc incorporated reference exhibit 44 companys registration statement form 8b dated december 12 1996 file 103492 4i copies instruments define rights holders miscellaneous longterm notes registrant subsidiaries totaling 460 million aggregate december 31 1997 filed commission registrant agrees herewith furnish copies instruments upon request 4j form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 companys form 10q quarterly period ended march 31 1997 4k form debt security 627 notes due july 8 1999 incorporated reference exhibit 41 companys form 8k dated july 8 1997 4l form debt security 630 notes due august 5 2002 incorporated reference exhibit 41 companys form 8k dated august 5 1997 10a halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors annual report form 10k year ended december 31 1992 10b retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c predecessors annual report form 10k year ended december 31 1992 10c halliburton company directors deferred compensation plan amended restated effective may 1 1994 incorporated reference exhibit 10c companys annual report form 10k year ended december 31 1996 3 exhibits continued exhibit number exhibits 10d summary plan description executive splitdollar life insurance plan incorporated reference exhibit 10g predecessors annual report form 10k year ended december 31 1992 10e halliburton company 1993 stock longterm incentive plan amended restated july 22 1997 10f agreement plan merger predecessor halliburton acq company landmark graphics corporation dated june 30 1996 incorporated reference appendix predecessors registration statement form s4 filed august 30 1996 10g halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 10h halliburton elective deferral plan amended restated effective january 1 1997 incorporated reference exhibit 10h companys annual report form 10k year ended december 31 1996 10i employment agreement incorporated reference exhibit 10 predecessors form 10q quarterly period ended september 30 1995 10j halliburton company senior executives deferred compensation plan amended restated effective january 1 1996 incorporated reference exhibit 10j companys annual report form 10k year ended december 31 1996 10k halliburton company annual performance plan amended restated effective january 1 1997 incorporated reference exhibit 10k companys annual report form 10k year ended december 31 1996 10l employment agreement incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 10m early retirement agreement incorporated reference exhibit 10m companys annual report form 10k year ended december 31 1996 10n halliburton company 1993 stock longterm incentive plan amended restated february 19 1998 11 computation earnings per share 21 subsidiaries registrant 23 consent arthur andersen llp 3 exhibits continued exhibit number exhibits 24a powers attorney following directors signed february 1997 incorporated reference companys annual report form 10k year ended december 31 1996 anne l armstrong richard b cheney lord clitheroe robert l crandall w r howell dale p jones delano e lewis c j silas roger staubach richard j stegemeier 24b power attorney signed december 1997 charles j dibona 27 financial data schedules registrant filed electronically filed annual report b reports form 8k fourth quarter 1997 current report form 8k dated october 20 1997 filed reporting item 5 events regarding press release dated october 20 1997 announcing agreement sell environmental services business current report form 8k dated october 22 1997 filed reporting item 5 events regarding press release dated october 22 1997 announcing third quarter earnings current report form 8k dated october 30 1997 filed reporting item 5 events regarding press release dated october 30 1997 announcing fourth quarter dividend current report form 8k dated october 30 1997 filed reporting item 5 events regarding press release dated october 30 1997 announcing award pipeline construction contract joint venture companys brown root energy services unit current report form 8k dated november 19 1997 filed reporting item 5 events regarding press release dated november 19 1997 announcing officer appointment halliburton energy services business unit current report form 8k dated december 8 1997 filed reporting item 5 events regarding press release dated december 8 1997 announcing election member board directors current report form 8k dated december 31 1997 filed reporting item 5 events regarding press release dated december 31 1997 announcing completion sale environmental services unit first quarter 1998 date hereof current report form 8k dated january 22 1998 filed reporting item 5 events regarding press release dated january 22 1998 announcing fourth quarter earnings current report form 8k dated february 17 1998 filed reporting item 5 events regarding two press releases dated february 17 1998 announcing provide wide range services part terra nova alliance petrocanada terra nova development alliance agreement elk hills two business units occidental current report form 8k dated february 19 1998 filed reporting item 5 events regarding press release dated february 19 1998 announcing first quarter 1998 dividend declaration shareholders annual meeting report independent public accountants supplemental schedule halliburton company audited accordance generally accepted auditing standards consolidated financial statements included form 10k issued report thereon dated january 22 1998 audits made purpose forming opinion basic consolidated financial statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly states material respects financial data required set forth therein relation basic financial statements taken whole arthur andersen llp dallas texas january 22 1998 signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized 23rd day february 1998 halliburton company richard b cheney richard b cheney chairman board chief executive officer pursuant requirements securities exchange act 1934 report signed following persons capacities indicated 23rd day february 1998 signature title richard b cheney chairman board chief executive officer director richard b cheney gary v morris executive vice president chief financial officer gary v morris r charles muchmore jr vice president controller principal accounting officer r charles muchmore jr signature title anne l armstrong director anne l armstrong lord clitheroe director lord clitheroe robert l crandall director robert l crandall charles j dibona director charles j dibona w r howell director w r howell dale p jones vice chairman director dale p jones delano e lewis director delano e lewis c j silas director c j silas roger staubach director roger staubach richard j stegemeier director richard j stegemeier susan keith susan keith attorneyinfact index exhibits filed annual report exhibit number exhibits 10e halliburton company 1993 stock longterm incentive plan amended restated july 22 1997 10n halliburton company 1993 stock longterm incentive plan amended restated february 19 1998 11 computation earnings per share 21 subsidiaries registrant 23 consent arthur andersen llp 24b power attorney signed december 1997 charles j dibona 27 financial data scheduleitem 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 19 51 annual report see index page 8 2 financial statement schedules page report supplemental schedule arthur andersen llp 65 schedule ii valuation qualifying accounts three years ended december 31 1998 66 note schedules filed herein provision made rules regulation sx omitted applicable required information required therein included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation company filed secretary state delaware july 23 1998 incorporated reference exhibit 3a companys quarterly report form 10q quarterly period ended june 30 1998 32 bylaws company amended restated effective september 29 1998 incorporated reference exhibit 3 companys quarterly report form 10q quarterly period ended september 30 1998 41 subordinated indenture dated january 2 1991 halliburton company known halliburton energy services inc predecessor texas commerce bank national association trustee incorporated reference exhibit 4c predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 43 companys registration statement form 8b dated december 12 1996 file 103492 42 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 43 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 41 companys registration statement form 8b dated december 12 1996 file 103492 44 resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 45 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 companys form 8k dated february 11 1997 46 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 42 companys registration statement form 8b dated december 12 1996 file 103492 47 third supplemental indenture dated august 1 1997 company texas commerce bank national association trustee second senior indenture dated december 1 1996 48 fourth supplemental indenture dated september 29 1998 company chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 49 resolutions companys board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g companys annual report form 10k year ended december 31 1996 410 resolutions companys board directors adopted special meeting held september 28 1998 411 restated rights agreement dated december 1 1996 company chasemellon shareholder services llc incorporated reference exhibit 44 companys registration statement form 8b dated december 12 1996 file 103492 412 copies instruments define rights holders miscellaneous longterm notes company subsidiaries totaling 396 million aggregate december 31 1998 filed commission company agrees herewith furnish copies instruments upon request 413 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 companys form 10q quarterly period ended march 31 1997 414 form debt security 627 notes due july 8 1999 incorporated reference exhibit 41 companys form 8k dated july 8 1997 415 form debt security 630 notes due august 5 2002 incorporated reference exhibit 41 companys form 8k dated august 5 1997 416 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 companys form 8k dated november 24 1998 417 form indenture dresser industries inc dresser nationsbank texas na trustee unsecured debentures notes evidences indebtedness incorporated reference exhibit 41 dressers registration statement form s3 registration 3359562 418 form indenture baroid corporation texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 401 registration statement form s3 registration 3360174 supplemented amended form supplemental indenture dresser baroid corporation texas commerce bank na trustee 8 guaranteed senior notes due 2003 incorporated reference exhibit 43 registration statement form s4 filed baroid corporation registration 3353077 419 second supplemental indenture dated october 30 1997 dresser texas commerce bank national association trustee 8 senior notes due 2003 420 third supplemental indenture dated september 29 1998 dresser company guarantor chase bank texas national association trustee 8 senior notes due 2003 421 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dressers form 8k filed august 9 1996 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors annual report form 10k year ended december 31 1992 102 retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c predecessors annual report form 10k year ended december 31 1992 103 halliburton company directors deferred compensation plan amended restated effective may 1 1994 incorporated reference exhibit 10c companys annual report form 10k year ended december 31 1996 104 halliburton company 1993 stock longterm incentive plan amended restated february 19 1998 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 106 halliburton elective deferral plan amended restated effective january 1 1998 incorporated reference exhibit 10a companys quarterly report form 10q quarterly period ended june 30 1998 107 employment agreement incorporated reference exhibit 10 predecessors form 10q quarterly period ended september 30 1995 108 halliburton company senior executives deferred compensation plan amended restated effective january 1 1999 109 halliburton company annual performance pay plan amended restated effective january 1 1997 incorporated reference exhibit 10k companys annual report form 10k year ended december 31 1996 1010 employment agreement incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 1011 halliburton company 1993 stock longterm incentive plan amended restated february 19 1998 incorporated reference exhibit 10n companys annual report form 10k year ended december 31 1997 1012 agreement plan merger dated february 25 1998 among company halliburton nc inc dresser incorporated reference exhibit c companys schedule 13d filed march 9 1998 1013 stock option agreement dated february 25 1998 company dresser incorporated reference exhibit b companys schedule 13d filed march 9 1998 1014 employment agreement amendment thereto incorporated reference exhibit 10a companys quarterly report form 10q quarterly period ended september 30 1998 1015 employment agreement amendment thereto incorporated reference exhibit 10b companys quarterly report form 10q quarterly period ended september 30 1998 1016 employment agreement 1017 employment agreement 1018 employment agreement 1019 employment agreement 1020 early retirement agreement 1021 early retirement agreement 1022 dresser industries inc deferred compensation plan incorporated reference exhibit dressers proxy statement dated february 11 1966 filed pursuant regulation 14a file 14003 1023 dresser industries inc 1982 stock option plan incorporated reference exhibit dressers proxy statement dated february 12 1982 filed pursuant regulation 14a file 14003 1024 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dressers form 10k year ended october 31 1995 1025 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dressers form 10k year ended october 31 1995 1026 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dressers form 10k period ended october 31 1997 1027 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dressers registration statement form s8 registration 33340829 1028 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dressers registration statement form s8 registration 33340829 1029 dresser industries inc 1989 restricted incentive stock plan incorporated reference exhibit dressers proxy statement dated february 10 1989 filed pursuant regulation 14a file 14003 1030 longterm performance plan selected employees w kellogg company incorporated reference exhibit 10r dressers form 10k year ended october 31 1991 1031 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 7 1992 filed pursuant regulation 14a file 14003 1032 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1033 dresser industries inc 1995 executive incentive compensation plan incorporated reference exhibit b dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1034 special 1997 restricted incentive stock grant incorporated reference exhibit 1026 dressers form 10k year ended october 31 1996 1035 form executive life insurance agreement individual beneficiary incorporated reference exhibit 1022 dressers form 10k period ended october 31 1997 1036 form executive life insurance agreement trust beneficiary incorporated reference exhibit 1023 dressers form 10k period ended october 31 1997 1037 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dressers form 10k period ended october 31 1997 1038 dresser industries inc 1998 executive incentive compensation plan incorporated reference exhibit b dressers proxy statement dated february 10 1998 filed pursuant regulation 14a file 14003 1039 form waiver rights dresser industries inc longterm incentive retention plan incorporated reference exhibit 105 dressers form 10q period ended january 31 1998 1040 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dressers form 10q period ended april 30 1998 21 subsidiaries registrant 231 consent arthur andersen llp 232 consent pricewaterhousecoopers llp 241 powers attorney following directors signed february 1997 incorporated reference exhibit 24 companys annual report form 10k year ended december 31 1996 anne l armstrong richard b cheney lord clitheroe robert l crandall w r howell delano e lewis c j silas richard j stegemeier 242 power attorney signed december 1997 charles j dibona incorporated reference exhibit 24b companys annual report form 10k year ended december 31 1997 243 powers attorney following directors signed october 1998 william e bradford lawrence eagleburger ray l hunt j landis martin jay precourt 27 financial data schedule registrant filed electronically 991 report independent accountants pricewaterhousecoopers llp filed form 10k b reports form 8k fourth quarter 1998 current report form 8k dated september 29 1998 filed reporting item 5 events regarding press release dated september 29 1998 announcing completion merger company dresser industries inc current report form 8k dated september 29 1998 filed reporting item 2 acquisition disposition assets regarding acquisition dresser industries inc pursuant plan merger dated february 25 1998 current report form 8ka dated september 29 1998 filed reporting item 2 acquisition disposition assets regarding acquisition dresser industries inc included supplemental financial statements halliburton company three years ended december 31 1997 six months ended june 30 1998 current report form 8k dated october 29 1998 filed reporting item 5 events regarding press release dated october 29 1998 announcing third quarter earnings current report form 8k dated october 30 1998 filed reporting item 5 events regarding press release dated october 30 1998 announcing fourth quarter dividend current report form 8k dated november 19 1998 filed reporting item 5 events regarding press release dated november 19 1998 announcing halliburton company 150 million notes offering current report form 8k dated november 24 1998 filed reporting item 5 events regarding 150 million notes offering filing final copy terms agreement form note current report form 8k dated november 30 1998 filed reporting item 5 events regarding press release dated november 30 1998 announcing dresser industries inc change control offer purchase outstanding guaranteed senior notes baroid corporation b reports form 8k continued current report form 8k dated december 28 1998 filed reporting item 5 events regarding press release dated december 28 1998 announcing 35 million pretax special charge 1998 fourth quarter provide reduction personnel first quarter 1999 date current report form 8k dated january 22 1999 filed reporting item 5 events regarding press release dated january 22 1999 announcing company entered agreement wh energy services inc sale companys loggingwhiledrilling lwd related measurementwhiledrilling mwd business current report form 8k dated january 25 1999 filed reporting item 5 events regarding press release dated january 25 1999 announcing fourth quarter earnings current report form 8k dated february 18 1999 filed reporting item 5 events regarding press release dated february 18 1999 announcing declaration first quarter dividend report independent public accountants supplemental schedule halliburton company audited accordance generally accepted auditing standards consolidated financial statements included form 10k issued report thereon dated january 25 1999 audits made purpose forming opinion statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly states material respects financial data required set forth therein relation basic financial statements taken whole arthur andersen llp arthur andersen llp dallas texas january 25 1999 halliburton company schedule ii valuation qualifying accounts millions dollars signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized 22nd day march 1999 halliburton company richard b cheney richard b cheney chief executive officer director pursuant requirements securities exchange act 1934 report signed following persons capacities indicated 22nd day march 1999 signature title richard b cheney chief executive officer director richard b cheney gary v morris executive vice president chief financial officer gary v morris r charles muchmore jr vice president controller principal accounting officer r charles muchmore jr signature title anne l armstrong director anne l armstrong william e bradford chairman board director william e bradford lord clitheroe director lord clitheroe robert l crandall director robert l crandall charles j dibona director charles j dibona lawrence eagleburger director lawrence eagleburger w r howell director w r howell ray l hunt director ray l hunt delano e lewis director delano e lewis j landis martin director j landis martin jay precourt director jay precourt c j silas director c j silas richard j stegemeier director richard j stegemeier susan keith susan keith attorneyinfactitem 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 21 60 pages 64 65 annual report see index page 11 2 financial statement schedules page report supplemental schedule arthur andersen llp 75 schedule ii valuation qualifying accounts three years ended december 31 2000 76 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware july 23 1998 incorporated reference exhibit 3a halliburtons form 10q quarter ended june 30 1998 32 bylaws halliburton revised effective may 16 2000 incorporated reference exhibit 3 halliburtons form 10q quarter ended june 30 2000 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburtons registration statement form 8b dated december 12 1996 file 103492 43 resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 44 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburtons form 8k dated february 11 1997 45 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburtons registration statement form 8b dated december 12 1996 file 103492 46 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburtons form 10k year ended december 31 1998 47 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburtons form 10k year ended december 31 1998 48 resolutions halliburtons board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburtons form 10k year ended december 31 1996 49 resolutions halliburtons board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburtons form 10k year ended december 31 1998 410 restated rights agreement dated december 1 1996 halliburton mellon investor services llc formerly chasemellon shareholder services llc incorporated reference exhibit 44 companys registration statement form 8b dated december 12 1996 file 103492 411 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 18 million aggregate december 31 2000 filed commission halliburton agrees furnish copies instruments upon request 412 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburtons form 10q quarter ended march 31 1997 413 form debt security 630 notes due august 5 2002 incorporated reference exhibit 41 halliburtons form 8k dated august 5 1997 414 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburtons form 8k dated november 24 1998 415 form indenture baroid corporation texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 401 registration statement form s3 filed baroid corporation registration 3360174 supplemented amended form supplemental indenture dresser baroid corporation texas commerce bank na trustee 8 guaranteed senior notes due 2003 incorporated reference exhibit 43 registration statement form s4 filed baroid corporation registration 3353077 416 second supplemental indenture dated october 30 1997 dresser texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 419 halliburtons form 10k year ended december 31 1998 417 third supplemental indenture dated september 29 1998 dresser halliburton guarantor chase bank texas national association trustee 8 senior notes due 2003 incorporated reference exhibit 420 halliburtons form 10k year ended december 31 1998 418 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dressers form 8k filed august 9 1996 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors form 10k year ended december 31 1992 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2000 103 halliburton company directors deferred compensation plan amended restated effective february 1 2001 104 halliburton company 1993 stock longterm incentive plan amended restated effective may 16 2000 incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2000 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 106 halliburton elective deferral plan amended restated effective january 1 2000 incorporated reference exhibit 101 halliburtons form 10q quarter ended march 31 2000 107 first amendment elective deferral plan incorporated reference exhibit 104 halliburtons form 10q quarter ended september 30 2000 108 employment agreement incorporated reference exhibit 10 predecessors form 10q quarter ended september 30 1995 109 halliburton company senior executives deferred compensation plan amended restated effective january 1 1999 incorporated reference exhibit 108 halliburtons form 10k year ended december 31 1998 1010 halliburton company annual performance pay plan amended restated effective january 1 1997 incorporated reference exhibit 10k halliburtons form 10k year ended december 31 1996 1011 employment agreement incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 1012 employment agreement amendment thereto incorporated reference exhibit 10b halliburtons form 10q quarter ended september 30 1998 1013 employment agreement incorporated reference exhibit 1016 halliburtons form 10k year ended december 31 1998 1014 employment agreement incorporated reference exhibit 1017 halliburtons form 10k year ended december 31 1998 1015 employment agreement incorporated reference exhibit 1019 halliburtons form 10k year ended december 31 1998 1016 dresser industries inc deferred compensation plan amended restated effective january 1 2000 1017 dresser industries inc 1982 stock option plan incorporated reference exhibit dressers proxy statement dated february 12 1982 filed pursuant regulation 14a file 14003 1018 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dressers form 10k year ended october 31 1995 1019 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dressers form 10k year ended october 31 1995 1020 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dressers form 10k year ended october 31 1997 1021 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dressers registration statement form s8 registration 33340829 1022 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dressers registration statement form s8 registration 33340829 1023 longterm performance plan selected employees w kellogg company amended restated effective september 1 1999 1024 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 7 1992 filed pursuant regulation 14a file 14003 1025 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1026 dresser industries inc 1995 executive incentive compensation plan incorporated reference exhibit b dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1027 special 1997 restricted incentive stock grant incorporated reference exhibit 1026 dressers form 10k year ended october 31 1996 1028 form executive life insurance agreement individual beneficiary incorporated reference exhibit 1022 dressers form 10k year ended october 31 1997 1029 form executive life insurance agreement trust beneficiary incorporated reference exhibit 1023 dressers form 10k year ended october 31 1997 1030 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dressers form 10k year ended october 31 1997 1031 dresser industries inc 1998 executive incentive compensation plan incorporated reference exhibit b dressers proxy statement dated february 10 1998 filed pursuant regulation 14a file 14003 1032 form waiver rights dresser industries inc longterm incentive retention plan incorporated reference exhibit 105 dressers form 10q quarter ended january 31 1998 1033 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dressers form 10q quarter ended april 30 1998 1034 halliburton executive performance plan effective january 1 2000 incorporated reference exhibit 102 halliburtons form 10q quarter ended march 31 2000 1035 employment agreement incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2000 1036 employment agreement incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2000 1037 employment agreement incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2000 1038 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburtons form 10q quarter ended september 30 2000 1039 employment agreement 1040 agreement plan recapitalization dated january 30 2001 incorporated reference halliburtons form 8ka dated march 6 2001 21 subsidiaries registrant 23 consent arthur andersen llp 241 powers attorney following directors signed february 1997 incorporated reference exhibit 24 halliburtons form 10k year ended december 31 1996 lord clitheroe robert l crandall w r howell c j silas 242 power attorney signed december 1997 charles j dibona incorporated reference exhibit 24b halliburtons form 10k year ended december 31 1997 243 powers attorney following directors signed october 1998 incorporated reference exhibit 243 halliburtons form 10k year ended december 31 1998 lawrence eagleburger ray l hunt j landis martin jay precourt filed form 10k b reports form 8k report independent public accountants supplemental schedule shareholders board directors halliburton company audited accordance generally accepted auditing standards consolidated financial statements included form 10k issued report thereon dated january 30 2001 except respect matters discussed notes 9 19 date march 23 200l audits made purpose forming opinion statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly stated material respects relation basic financial statements taken whole arthur andersen llp arthur andersen llp dallas texas january 30 2001 except respect matters discussed notes 9 19 date march 23 2001 halliburton company schedule ii valuation qualifying accounts millions dollars table presents valuation qualifying accounts continuing operations signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 27th day march 2001 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 27th day march 2001 signature title david j lesar chairman board president david j lesar chief executive officer gary v morris executive vice president gary v morris chief financial officer r charles muchmore jr vice president controller r charles muchmore jr principal accounting officer signature title lord clitheroe director lord clitheroe robert l crandall director robert l crandall charles j dibona director charles j dibona lawrence eagleburger director lawrence eagleburger w r howell director w r howell ray l hunt director ray l hunt j landis martin director j landis martin jay precourt director jay precourt c j silas director c j silas susan keith susan keith attorneyinfactitem 14 controls procedures supervision participation management including principal executive officer principal financial officer evaluated effectiveness design operation disclosure controls procedures within 90 days filing date annual report based evaluation principal executive officer principal financial officer concluded controls procedures effective significant changes internal controls factors could significantly affect controls subsequent date evaluation disclosure controls procedures controls procedures designed ensure information required disclosed us reports file submit exchange act recorded processed summarized reported within time periods specified securities exchange commissions rules forms disclosure controls procedures include without limitation controls procedures designed ensure information required disclosed us reports file exchange act accumulated communicated management including principal executive officer principal financial officer appropriate allow timely decisions regarding required disclosure part iv item 15item 14 principal accountant fees services information incorporated reference halliburton company proxy statement 2005 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2006 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2007 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2008 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2009 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2010 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2011 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2012 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2013 annual meeting stockholders file 13492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2014 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2015 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2016 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2019 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2020 annual meeting shareholders file 00103492 caption “fees paid kpmg llp” hal 2019 form 10k 68 part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2021 annual meeting shareholders file 00103492 caption “fees paid kpmg llp” hal 2020 form 10k 69 part iv item 15item 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 11 29 annual report see index page 6 2 financial statement schedules financial statements european marine contractors limited emc investment accounted equity method follow five year financial record emc financial statements prepared accordance accounting principles generally accepted united kingdom certain parent company adjustments included selected financial data presented note 4 companys financial statements order conform generally accepted accounting principles united states note schedules filed herein provision made rules regulation sx omitted applicable required information required therein included notes financial statements 3 exhibits exhibit number exhibits 3 bylaws company amended february 15 1996 4a resolutions board directors registrant adopted meeting held february 11 1991 special pricing committee board directors registrant adopted meeting held march 6 1991 incorporated reference exhibit 4c companys form 8k dated march 13 1991 4b subordinated indenture dated january 2 1991 company texas commerce bank national association trustee incorporated reference exhibit 4b companys form 8k dated march 13 1991 4c form debt security 875 debentures due february 15 2021 incorporated reference exhibit 4a companys form 8k dated february 20 1991 4d senior indenture dated january 2 1991 company texas commerce bank national association trustee incorporated reference exhibit 4b companys form 8k dated february 20 1991 4e resolutions companys board directors adopted meeting held february 11 1991 special pricing committee board directors registrant adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c companys form 8k dated february 20 1991 4f composite certificate incorporation filed may 26 1987 secretary state delaware certain certificate designation rights preferences related authorization companys junior participating preferred stock series incorporated reference exhibit 4d companys registration statement form s3 dated december 21 1990 4g copies instruments define rights holders miscellaneous longterm notes registrant subsidiaries totaling 02 million aggregate december 31 1995 filed commission registrant agrees herewith furnish copies instruments upon request 4h copies instruments define rights holder 40 notes payable totaling 50 million december 31 1995 filed commission registrant agrees herewith furnish copies instruments upon request 4i amended restated rights agreement dated december 15 1995 company chemical mellon shareholders llc rights agent includes form right certificate exhibit incorporated reference exhibit 21 companys form 8aa dated january 16 1996 10a halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a companys annual report form 10k year ended december 31 1992 10b retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c companys annual report form 10k year ended december 31 1992 exhibit number exhibits 10c halliburton company directors deferred compensation plan amended restated effective may 15 1990 incorporated reference exhibit 10d companys annual report form 10k year ended december 31 1992 10d summary plan description executive splitdollar life insurance plan incorporated reference exhibit 10g companys annual report form 10k year ended december 31 1992 10e halliburton company 1993 stock longterm incentive plan incorporated reference appendix companys proxy statement dated march 23 1993 10f asset acquisition agreement smith company dated january 14 1993 incorporated reference second amendment companys registration statement form s3 dated march 29 1993 10g halliburton company restricted stock plan nonemployee directors incorporated reference appendix b companys proxy statement dated march 23 1993 10h halliburton elective deferral plan effective january 1 1995 incorporated reference exhibit 10k companys annual report form 10k year ended december 31 1994 10i employment agreement incorporated reference exhibit 10 companys form 10q quarterly period ended september 30 1995 10j halliburton company senior executives deferred compensation plan amended restated effective january 1 1995 10k halliburton company annual reward plan 10l first amendment senior executives deferred compensation plan effective january 1 1996 10m second amendment senior executives deferred compensation plan effective january 1 1996 10n employment agreement 10o first amendment halliburton elective deferral plan effective november 1 1995 10p second amendment halliburton elective deferral plan effective january 1 1996 10q third amendment halliburton elective deferral plan effective january 1 1996 11 computation earnings per share 21 subsidiaries registrant exhibit number exhibits 24 form power attorney signed february 1996 following directors anne l armstrong richard b cheney lord clitheroe robert l crandall w r howell dale p jones c j silas roger staubach richard j stegemeier e l williamson 27 financial data schedules registrant filed electronically filed annual report b reports form 8k current report filed form 8k dated october 12 1995 reporting item 5 events regarding press release dated october 11 1995 announcing spinoff highlands insurance group inc current report filed form 8k dated october 27 1995 reporting item 5 events regarding press release dated october 24 1995 announcing third quarter results current report filed form 8k dated november 8 1995 reporting item 5 events regarding press release dated november 8 1995 announcing fourth quarter dividend current report filed form 8k dated december 8 1995 reporting item 5 events regarding press release dated december 7 1995 announcing renewal tenyear extension shareholders rights plan current report filed form 8k dated december 28 1995 reporting item 5 events regarding press release dated december 26 1995 announcing record distribution dates distribution highlands insurance group inc common stock first quarter 1996 date hereof current report filed form 8k dated january 24 1996 reporting item 5 events regarding press releases dated january 23 1996 announcing completion spinoff highlands insurance group inc fourth quarter 1995 earnings current report filed form 8k dated february 16 1996 reporting item 5 events regarding press release dated february 15 1996 announcing first quarter dividend signatures pursuant requirements section 13 15d securities exchange act 1934 registrant duly caused report signed behalf undersigned thereunto duly authorized 8th day march 1996 halliburton company richard b cheney richard b cheney chairman board president chief executive officer pursuant requirements securities exchange act 1934 report signed following persons capacities indicated 8th day march 1996 signature title richard b cheney chairman board president richard b cheney chief executive officer director david j lesar executive vice president david j lesar chief financial officer scott r willis controller principal scott r willis accounting officer signature title anne l armstrong director anne l armstrong lord clitheroe director lord clitheroe robert l crandall director robert l crandall w r howell director w r howell dale p jones vice chairman director dale p jones c j silas director c j silas roger staubach director roger staubach richard j stegemeier director richard j stegemeier e l williamson director e l williamson susan keith susan keith attorneyinfactitem 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 27 64 annual report see index page 12 2 financial statement schedules page report supplemental schedule arthur andersen llp 76 schedule ii valuation qualifying accounts three years ended december 31 1999 77 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation company filed secretary state delaware july 23 1998 incorporated reference exhibit 3a companys quarterly report form 10q quarterly period ended june 30 1998 32 bylaws company amended restated effective september 29 1998 incorporated reference exhibit 3 companys quarterly report form 10q quarterly period ended september 30 1998 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 41 companys registration statement form 8b dated december 12 1996 file 103492 43 resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 44 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 companys form 8k dated february 11 1997 45 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor company trustee incorporated reference exhibit 42 companys registration statement form 8b dated december 12 1996 file 103492 46 third supplemental indenture dated august 1 1997 company texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 companys form 10k year ended december 31 1998 47 fourth supplemental indenture dated september 29 1998 company chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 companys form 10k year ended december 31 1998 48 resolutions companys board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g companys annual report form 10k year ended december 31 1996 49 resolutions companys board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 companys form 10k year ended december 31 1998 410 restated rights agreement dated december 1 1996 company chasemellon shareholder services llc incorporated reference exhibit 44 companys registration statement form 8b dated december 12 1996 file 103492 411 copies instruments define rights holders miscellaneous longterm notes company subsidiaries totaling 25 million aggregate december 31 1999 filed commission company agrees herewith furnish copies instruments upon request 412 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 companys form 10q quarterly period ended march 31 1997 413 form debt security 627 notes due july 8 1999 incorporated reference exhibit 41 companys form 8k dated july 8 1997 414 form debt security 630 notes due august 5 2002 incorporated reference exhibit 41 companys form 8k dated august 5 1997 415 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 companys form 8k dated november 24 1998 416 form indenture dresser industries inc dresser nationsbank texas na trustee unsecured debentures notes evidences indebtedness incorporated reference exhibit 41 dressers registration statement form s3 registration 3359562 417 form indenture baroid corporation texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 401 registration statement form s3 registration 3360174 supplemented amended form supplemental indenture dresser baroid corporation texas commerce bank na trustee 8 guaranteed senior notes due 2003 incorporated reference exhibit 43 registration statement form s4 filed baroid corporation registration 3353077 418 second supplemental indenture dated october 30 1997 dresser texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 419 companys form 10k year ended december 31 1998 419 third supplemental indenture dated september 29 1998 dresser company guarantor chase bank texas national association trustee 8 senior notes due 2003 incorporated reference exhibit 420 companys form 10k year ended december 31 1998 420 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dressers form 8k filed august 9 1996 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors annual report form 10k year ended december 31 1992 102 retirement plan directors halliburton company adopted effective january 1 1990 incorporated reference exhibit 10c predecessors annual report form 10k year ended december 31 1992 103 halliburton company directors deferred compensation plan amended restated effective may 1 1994 incorporated reference exhibit 10c companys annual report form 10k year ended december 31 1996 104 halliburton company 1993 stock longterm incentive plan amended restated february 19 1998 incorporated reference exhibit 104 companys form 10k year ended december 31 1998 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 106 halliburton company elective deferral plan amended restated effective june 1 1999 incorporated reference exhibit 10 companys form 10q quarterly period ended june 30 1999 107 employment agreement incorporated reference exhibit 10 predecessors form 10q quarterly period ended september 30 1995 108 halliburton company senior executives deferred compensation plan amended restated effective january 1 1999 incorporated reference exhibit 108 companys form 10k year ended december 31 1998 109 halliburton company annual performance pay plan amended restated effective january 1 1997 incorporated reference exhibit 10k companys annual report form 10k year ended december 31 1996 1010 employment agreement incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 1011 employment agreement amendment thereto incorporated reference exhibit 10a companys quarterly report form 10q quarterly period ended september 30 1998 1012 supplement executive employment agreement 1013 employment agreement amendment thereto incorporated reference exhibit 10b companys quarterly report form 10q quarterly period ended september 30 1998 1014 employment agreement incorporated reference exhibit 1016 companys form 10k year ended december 31 1998 1015 employment agreement incorporated reference exhibit 1019 companys form 10k year ended december 31 1998 1016 dresser industries inc deferred compensation plan incorporated reference exhibit dressers proxy statement dated february 11 1966 filed pursuant regulation 14a file 14003 1017 dresser industries inc 1982 stock option plan incorporated reference exhibit dressers proxy statement dated february 12 1982 filed pursuant regulation 14a file 14003 1018 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dressers form 10k year ended october 31 1995 1019 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dressers form 10k year ended october 31 1995 1020 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dressers form 10k period ended october 31 1997 1021 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dressers registration statement form s8 registration 33340829 1022 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dressers registration statement form s8 registration 33340829 1023 dresser industries inc 1989 restricted incentive stock plan incorporated reference exhibit dressers proxy statement dated february 10 1989 filed pursuant regulation 14a file 14003 1024 longterm performance plan selected employees w kellogg company incorporated reference exhibit 10r dressers form 10k year ended october 31 1991 1025 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 7 1992 filed pursuant regulation 14a file 14003 1026 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1027 dresser industries inc 1995 executive incentive compensation plan incorporated reference exhibit b dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1028 special 1997 restricted incentive stock grant incorporated reference exhibit 1026 dressers form 10k year ended october 31 1996 1029 form executive life insurance agreement individual beneficiary incorporated reference exhibit 1022 dressers form 10k period ended october 31 1997 1030 form executive life insurance agreement trust beneficiary incorporated reference exhibit 1023 dressers form 10k period ended october 31 1997 1031 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dressers form 10k period ended october 31 1997 1032 dresser industries inc 1998 executive incentive compensation plan incorporated reference exhibit b dressers proxy statement dated february 10 1998 filed pursuant regulation 14a file 14003 1033 form waiver rights dresser industries inc longterm incentive retention plan incorporated reference exhibit 105 dressers form 10q period ended january 31 1998 1034 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dressers form 10q period ended april 30 1998 21 subsidiaries registrant 231 consent arthur andersen llp 232 consent pricewaterhousecoopers llp 241 powers attorney following directors signed february 1997 incorporated reference exhibit 24 annual report form 10k year ended december 31 1996 anne l armstrong richard b cheney lord clitheroe robert l crandall w r howell c j silas richard j stegemeier 242 power attorney signed december 1997 charles j dibona incorporated reference exhibit 24b annual report form 10k year ended december 31 1997 243 powers attorney following directors signed october 1998 incorporated reference exhibit 243 annual report form 10k year ended december 31 1998 lawrence eagleburger ray l hunt j landis martin jay precourt 27 financial data schedule registrant filed electronically twelve months ended december 31 1999 991 report independent accountants pricewaterhousecoopers llp b reports form 8k report independent public accountants supplemental schedule halliburton company audited accordance generally accepted auditing standards consolidated financial statements included form 10k issued report thereon dated january 27 2000 except respect matters discussed note 18 date february 16 2000 audits made purpose forming opinion statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly states material respects financial data required set forth therein relation basic financial statements taken whole arthur andersen llp arthur andersen llp dallas texas january 27 2000 except respect matters discussed note 18 date february 16 2000 halliburton company schedule ii valuation qualifying accounts millions dollars signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 13th day march 2000 halliburton company richard b cheney richard b cheney chairman board chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 13th day march 2000 signature title richard b cheney chairman board chief executive officer richard b cheney gary v morris executive vice president chief financial officer gary v morris r charles muchmore jr vice president controller principal accounting officer r charles muchmore jr signature title anne l armstrong director anne l armstrong lord clitheroe director lord clitheroe robert l crandall director robert l crandall charles j dibona director charles j dibona lawrence eagleburger director lawrence eagleburger w r howell director w r howell ray l hunt director ray l hunt j landis martin director j landis martin jay precourt director jay precourt c j silas director c j silas richard j stegemeier director richard j stegemeier susan keith susan keith attorneyinfactitem 14 principal accounting fees services information incorporated reference halliburton company proxy statement dated march 23 2004 file 13492 caption fees paid kpmg llp part iv item 15item 14 exhibits financial statement schedules reports form 8k 1 financial statements report arthur andersen llp independent public accountants financial statements company required part ii item 8 included pages 28 68 pages 72 73 annual report see index page 12 2 financial statement schedules page report supplemental schedule arthur andersen llp 83 schedule ii valuation qualifying accounts three years ended december 31 2001 84 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware july 23 1998 incorporated reference exhibit 3a halliburtons form 10q quarter ended june 30 1998 32 bylaws halliburton revised effective may 16 2000 incorporated reference exhibit 3 halliburtons form 10q quarter ended june 30 2000 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 file 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburtons registration statement form 8b dated december 12 1996 file 103492 43 resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 44 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburtons form 8k dated february 11 1997 45 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburtons registration statement form 8b dated december 12 1996 file 103492 46 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburtons form 10k year ended december 31 1998 47 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburtons form 10k year ended december 31 1998 48 resolutions halliburtons board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburtons form 10k year ended december 31 1996 49 resolutions halliburtons board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburtons form 10k year ended december 31 1998 410 restated rights agreement dated december 1 1996 halliburton mellon investor services llc formerly chasemellon shareholder services llc incorporated reference exhibit 44 companys registration statement form 8b dated december 12 1996 file 103492 411 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 17 million aggregate december 31 2001 filed commission halliburton agrees furnish copies instruments upon request 412 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburtons form 10q quarter ended march 31 1997 413 form debt security 630 notes due august 5 2002 incorporated reference exhibit 41 halliburtons form 8k dated august 5 1997 414 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburtons form 8k dated november 24 1998 415 form indenture baroid corporation texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 401 registration statement form s3 filed baroid corporation registration 3360174 supplemented amended form supplemental indenture dresser baroid corporation texas commerce bank na trustee 8 guaranteed senior notes due 2003 incorporated reference exhibit 43 registration statement form s4 filed baroid corporation registration 3353077 416 second supplemental indenture dated october 30 1997 dresser texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 419 halliburtons form 10k year ended december 31 1998 417 third supplemental indenture dated september 29 1998 dresser halliburton guarantor chase bank texas national association trustee 8 senior notes due 2003 incorporated reference exhibit 420 halliburtons form 10k year ended december 31 1998 418 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dressers form 8k filed august 9 1996 419 form debt security floating rate notes due july 16 2003 incorporated reference exhibit 41 halliburtons form 8k dated january 8 2002 420 form debt security 6 notes due august 1 2006 incorporated reference exhibit 42 halliburtons form 8k dated january 8 2002 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors form 10k year ended december 31 1992 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2000 103 halliburton company directors deferred compensation plan amended restated effective february 1 2001 incorporated reference exhibit 103 halliburtons form 10k year ended december 31 2000 104 halliburton company 1993 stock longterm incentive plan amended restated effective may 16 2000 incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2000 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 106 employment agreement incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 107 employment agreement incorporated reference exhibit 1016 halliburtons form 10k year ended december 31 1998 108 employment agreement incorporated reference exhibit 1019 halliburtons form 10k year ended december 31 1998 109 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburtons form 10k year ended december 31 2000 1010 dresser industries inc 1982 stock option plan incorporated reference exhibit dressers proxy statement dated february 12 1982 filed pursuant regulation 14a file 14003 1011 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dressers form 10k year ended october 31 1995 1012 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dressers form 10k year ended october 31 1995 1013 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dressers form 10k year ended october 31 1997 1014 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dressers registration statement form s8 registration 33340829 1015 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dressers registration statement form s8 registration 33340829 1016 longterm performance plan selected employees w kellogg company amended restated effective september 1 1999 incorporated reference exhibit 1023 halliburtons form 10k year ended december 31 2000 1017 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 7 1992 filed pursuant regulation 14a file 14003 1018 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 6 1995 filed pursuant regulation 14a file 14003 1019 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dressers form 10k year ended october 31 1997 1020 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dressers form 10q quarter ended april 30 1998 1021 employment agreement incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2000 1022 employment agreement incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2000 1023 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburtons form 10q quarter ended september 30 2000 1024 employment agreement incorporated reference exhibit 1039 halliburtons form 10k year ended december 31 2000 1025 agreement plan recapitalization amended restated effective april 10 2001 incorporated reference halliburtons form 8ka dated may 10 2001 1026 halliburton company supplemental executive retirement plan formerly part halliburton company senior executives deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2001 1027 halliburton company benefit restoration plan formerly part halliburton company senior executives deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2001 1028 employment agreement incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2001 1029 halliburton annual performance pay plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2001 1030 halliburton company performance unit program incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2001 1031 halliburton elective deferral plan amended restated effective january 1 2002 incorporated reference exhibit 41 halliburtons registration statement form s8 registration 33373046 filed november 9 2001 1032 employment agreement 1033 employment agreement 21 subsidiaries registrant 23 consent arthur andersen llp 241 powers attorney following directors signed february 1997 incorporated reference exhibit 24 halliburtons form 10k year ended december 31 1996 lord clitheroe robert l crandall w r howell c j silas 242 power attorney signed december 1997 charles j dibona incorporated reference exhibit 24b halliburtons form 10k year ended december 31 1997 243 powers attorney following directors signed october 1998 incorporated reference exhibit 243 halliburtons form 10k year ended december 31 1998 lawrence eagleburger ray l hunt j landis martin jay precourt 244 powers attorney following directors signed may 2001 incorporated reference exhibit 241 halliburtons form 10q quarter ended june 30 2001 kenneth derr aylwin b lewis debra l reed 245 powers attorney douglas l foshee robert r harl edgar j ortiz incorporated reference exhibit 242 halliburtons form 10q quarter ended june 30 2001 filed form 10k b reports form 8k report independent public accountants supplemental schedule shareholders board directors halliburton company audited accordance auditing standards generally accepted united states america consolidated financial statements included form 10k issued report thereon dated january 23 2002 audits made purpose forming opinion statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly stated material respects relation basic financial statements taken whole arthur andersen llp arthur andersen llp dallas texas january 23 2002 except respect certain matters discussed note 9 date february 21 2002 signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals day march 2002 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated day march 2002 signature title david j lesar chairman board president david j lesar chief executive officer douglas l foshee executive vice president douglas l foshee chief financial officer r charles muchmore jr vice president controller r charles muchmore jr principal accounting officer signature title lord clitheroe director lord clitheroe robert l crandall director robert l crandall kenneth derr director kenneth derr charles j dibona director charles j dibona lawrence eagleburger director lawrence eagleburger w r howell director w r howell ray l hunt director ray l hunt aylwin b lewis director aylwin b lewis j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed c j silas director c j silas susan keith susan keith attorneyinfactitem 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2017 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15item 14 principal accounting fees services information incorporated reference halliburton company proxy statement 2018 annual meeting stockholders file 00103492 caption “fees paid kpmg llp” part iv item 15 item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 8 16 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 8 14 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 7 10 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 7 12 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk pages 10 11 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 9 18 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk pages 14 15 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 12 20 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk page 17 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 15 46 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk page 39 annual report item 8item 7 management’s discussion analysis financial condition results operations information relating management’s discussion analysis financial condition results operations included pages 15 61 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included management’s discussion analysis financial condition results operations caption “financial instrument market risk” page 48 annual report item 8item 7 management’s discussion analysis financial condition results operations information relating management’s discussion analysis financial condition results operations included pages 14 60 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included management’s discussion analysis financial condition results operations caption “financial instrument market risk” page 46 annual report item 8item 7 management’s discussion analysis financial condition results operation information related management’s discussion analysis financial condition results operations included pages 17 68 annual report item 7a quantitative qualitative disclosures market risk information related market risk included management’s discussion analysis financial condition results operations caption “financial instrument market risk” page 49 annual report item 8item 7 management’s discussion analysis financial condition results operation information related management’s discussion analysis financial condition results operations included pages 13 44 annual report item 7a quantitative qualitative disclosures market risk information related market risk included management’s discussion analysis financial condition results operations caption “financial instrument market risk” page 32 annual report item 8item 7 management’s discussion analysis financial condition results operation information related management’s discussion analysis financial condition results operations included pages 13 51 annual report item 7a quantitative qualitative disclosures market risk information related market risk included management’s discussion analysis financial condition results operations caption “financial instrument market risk” page 37 annual report item 8item 7 management’s discussion analysis financial condition results operation information related management’s discussion analysis financial condition results operations included pages 10 45 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 33 annual report item 8item 7 management’s discussion analysis financial condition results operation information related management’s discussion analysis financial condition results operations included pages 33 58 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 57 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 43 68 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 66 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 30 49 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 47 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 20 38 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 37 annual report note 13 consolidated financial statements page 68 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 21 39 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 38 annual report note 14 consolidated financial statements page 68 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 21 41 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 40 annual report note 14 consolidated financial statements page 69 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 19 32 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” note 13 consolidated financial statements item 8item 7 executive overview business outlook 2019 closed decade shale revolution transformed united states worlds top hydrocarbon producer company early participant development invested innovated alongside customers since beginning unconventionals enter maturation phase capital spending customers decreased remain committed north american market taking appropriate actions thrive new environment cost containment measures took fourth quarter 2019 benefit business adapt dynamic market environment north america shale industry facing biggest challenge since 2015 downturn strong focus capital discipline fourth quarter 2019 market experienced longawaited attrition equipment expected exit market 2020 driven lower demand increasing service intensity systematically rationalizing reducing equipment supply 2019 adjust changing activity levels 2020 plan provide capacity maximizes returns overall fleet also expect customer spending behavior remain similar 2019 operators spend higher portion budgets earlier year north america customer spending expected decline 2020 continue strategy maximize returns appropriate level service capacity continuing invest technologies improve margins plan continue strategic growth opportunities nonhydraulic fracturing businesses wireline perforating artificial lift specialty chemical product lines produced strong doubledigit revenue growth 2019 despite overall market softness us land intend build momentum spread services internationally expect third consecutive year customer spending growth believe right footprint enhanced technology portfolio compete successfully across international markets pipeline projects strong expect continued growth drilling evaluation division icruise rotary steerable drilling platform rollout continues new offshore drilling activity begins around world operate full year norway integrated contracts pricing certain international regions improving expect momentum continue 2020 gaining pricing traction new work contract renewals making strategic choices work pursue deliver returnsdriven growth international markets intend prudent capital allocation strategic reallocation assets opportunities better returns driving right pricing discussions customers believe increased activity disciplined capital allocation pricing improvements ability compete larger share highmargin services achieve international margin expansion 2020 continue focus delivering margin expansion strong returns cash flow continuing build foundation longerterm recovery intend dynamically respond changing market invest effectively remain flexible cost structure believe responsible capital stewardship prioritizing capital efficiency investing technologies deliver differentiation returns continue collaborate engineer solutions maximize asset value customers align business customers fastest growing market segments attention sustainability business minimizing environmental impacts acting responsible corporate citizen intend continue strengthen product service lines combination organic growth investment selective acquisitions plan continue executing following strategies 2020 prudently allocating capital strategic markets around world collaborating engineering solutions maximize asset value customers leveraging broad technology offerings provide value customers enable efficiently drill complete wells investing technology help customers reduce reservoir uncertainty increase operational efficiency improve well productivity well help us reduce costs deliver acceptable returns improving working capital managing balance sheet maximize financial flexibility seeking additional ways one costefficient service providers industry optimizing costs maintaining capital discipline leveraging scale breadth operations striving achieve superior returns cash flow generation shareholders operating performance business outlook described detail “business environment results operations” hal 2019 form 10k 20 item 7 executive overview capital expenditures 2019 capital expenditures approximately 15 billion decrease 24 2018 predominantly made sperry drilling production enhancement artificial lift wireline perforating production solutions product service lines intend reduce capital expenditures 20 2020 approximately 12 billion believe level spend approximately 60 plan allocate completion production division allow continued investments anticipated international growth continuing adjust business current conditions north america within reduced budget continue investing growing certain businesses expanding artificial lift footprint continuing global rollout icruise rotary steerable drilling platform focusing digital efforts new technologies aimed improving efficiency reducing operating costs however allocation capital expenditures across business lines may change depending market conditions believe capital allocation decisions consistent focus generating strong cash flow investors regardless market environment financial markets liquidity capital resources believe invested cash balances conservatively secured sufficient financing help mitigate nearterm negative impact operations adverse market conditions december 31 2019 23 billion cash equivalents 35 billion available committed bank credit revolving credit facility expires 2024 believe provides us sufficient liquidity address challenges opportunities current market additional information market conditions see “liquidity capital resources” “business environment results operations” hal 2019 form 10k 21 item 7 liquidity capital resources liquidity capital resources december 31 2019 23 billion cash equivalents compared 20 billion cash equivalents december 31 2018 significant sources uses cash 2019 sources cash flows operating activities 24 billion included within cash flows operating activities negative impact primary components working capital receivables inventories accounts payable net 161 million primarily associated reduced payables buildup inventory related strategic technology deployments coupled approximately 144 million severance payments uses cash capital expenditures 15 billion predominantly made sperry drilling production enhancement artificial lift wireline perforating production solutions product service lines paid 630 million dividends shareholders repurchased approximately 45 million shares common stock share repurchase program total cost approximately 100 million future sources uses cash manufacture equipment provides flexibility increase decrease capital expenditures based market conditions capital spending 2020 currently expected approximately 12 billion reduction approximately 20 2019 additional information capital expenditures see “executive overview” actively evaluating debt maturity profile opportunities around uses cash could include paying portions nearterm debt funding acquisitions organic growth projects shareholder return opportunities currently quarterly dividend rate 018 per common share approximately 158 million subject board directors approval intention continue paying dividends current rate 2020 board directors authorized program repurchase common stock time approximately 52 billion remained authorized repurchases december 31 2019 may used open market share purchases contractual obligations following table summarizes significant contractual obligations longterm liabilities december 31 2019 represents principal amounts longterm debt including current maturities debt excludes unamortized debt issuance costs discounts b interest debt includes 77 years interest 300 million debentures 76 interest become due 2096 c amount 2020 primarily represents certain purchase orders goods services utilized ordinary course business represents pension funding obligations associated international plans 2020 based assumptions subject change currently able reasonably estimate contributions years 2020 due uncertainty respect timing potential future cash outflows associated uncertain tax positions able reasonably estimate period cash settlement respective taxing authorities therefore gross unrecognized tax benefits excluded contractual obligations table 425 million gross hal 2019 form 10k 22 item 7 liquidity capital resources unrecognized tax benefits excluding penalties interest december 31 2019 estimate 235 million may require cash payment us estimate 205 million cash payment settled within next 12 months factors affecting liquidity financial position current market december 31 2019 23 billion cash equivalents 35 billion available committed bank credit revolving credit facility expires 2024 furthermore financial covenants material adverse change provisions bank agreements debt maturities extend long period time believe cash hand cash flows generated operations available credit facility provide sufficient liquidity address challenges opportunities current market global cash needs 2020 including capital expenditures working capital investments dividends contingent liabilities guarantee agreements normal course business agreements financial institutions approximately 21 billion letters credit bank guarantees surety bonds outstanding december 31 2019 outstanding letters credit triggering events would entitle bank require cash collateralization credit ratings credit ratings standard poor’s sp remain longterm debt a2 shortterm debt negative outlook credit ratings moody’s investors service moodys remain baa1 longterm debt p2 shortterm debt stable outlook customer receivables line industry practice bill customers services arrears therefore subject customers delaying failing pay invoices weak economic environments may experience increased delays failures pay invoices due among reasons reduction customers’ cash flow operations access credit markets well unsettled political conditions customers delay paying fail pay us significant amount outstanding receivables could material adverse effect liquidity consolidated results operations consolidated financial condition see note 5 consolidated financial statements discussion hal 2019 form 10k 23 item 7 business environment results operations business environment results operations operate 80 countries throughout world provide comprehensive range services products energy industry revenue generated sale services products major national independent oil natural gas companies worldwide industry serve highly competitive many substantial competitors segment business 2019 2018 2017 based location services provided products sold 51 58 53 respectively consolidated revenue united states country accounted 10 revenue operations countries may adversely affected unsettled political conditions acts terrorism civil unrest force majeure war armed conflict health similar issues sanctions expropriation governmental actions inflation changes foreign currency exchange rates foreign currency exchange restrictions highly inflationary currencies well geopolitical factors believe geographic diversification business activities reduces risk interruption operations one country united states would materially adverse consolidated results operations activity within business segments significantly impacted spending upstream exploration development production programs customers also impacting activity status global economy impacts oil natural gas consumption significant determinants current future spending levels customers oil natural gas prices customers expectations future prices global oil supply demand completions intensity world economy availability credit government regulation global stability together drive worldwide drilling completions activity additionally many customers north america shifted strategy production growth operating within cash flow generating returns lower oil natural gas prices usually translate lower exploration production budgets lower rig count opposite usually true higher oil natural gas prices financial performance therefore significantly affected oil natural gas prices worldwide rig activity summarized tables following table shows average oil natural gas prices west texas intermediate wti united kingdom brent crude oil henry hub natural gas historical average rig counts based weekly baker hughes rig count data follows hal 2019 form 10k 24 item 7 business environment results operations crude oil prices extremely volatile past five years wti oil spot prices declined significantly beginning 2014 peak price 108 per barrel june 2014 low 26 per barrel february 2016 level experienced since 2003 since low point experienced early 2016 oil prices increased substantially wti oil spot prices reaching high 77 per barrel june 2018 late 2018 oil prices declined wti oil spot prices reaching low 44 per barrel december rising high 66 per barrel april 2019 average full year 2019 wti crude oil spot price 57 decreased 12 average 2018 price united states energy information administration eia january 2020 short term energy outlook eia projected brent prices average 65 per barrel 2020 68 per barrel 2021 wti prices projected average approximately 550 less per barrel 2020 2021 international energy agencys iea january 2020 oil market report forecasts 2020 global demand average approximately 1015 million barrels per day increase 1 2019 driven increases asia pacific region regions remain approximately henry hub natural gas spot price united states averaged 254 per mmbtu 2019 decrease 063 per mmbtu 20 2018 eia january 2020 “short term energy outlook” projects henry hub natural gas prices average 233 per mmbtu 2020 upward price pressures emerge 2021 causing average price increase 254 per mmbtu north america operations average north america rig count decreased 146 rigs 12 full year 2019 compared 2018 market drilling completion services softened second half 2019 continued reduction activity customers focused staying within capital spending budgets factors leading activity reductions included oversupplied gas market concerns oil demand softness 2020 based current information expect customers us land reduce capital spending approximately 10 2019 levels international operations average international rig count 2019 increased 110 rigs 11 compared 2018 continue see broadbased recovery across numerous international geographies expect revenue margin growth opportunities coming mature fields shallow water markets 2020 barring global economic slowdown broader offshore recovery add momentum international growth 2020 expect international spend customers slightly increase making third consecutive year spending growth venezuela general license issued office foreign assets control ofac us department treasury allows us continue operating venezuela despite ofac sanctions imposed venezuelan energy industry set expire july 27 2019 extended several times set expire april 22 2020 consequently unless ofac extends term general license cease operations venezuela date order comply sanctions event unlikely able remove assets remain venezuela assets may expropriated since previously written investment venezuela maintained limited operations country general license period expect expiration license material adverse effect business consolidated results operations consolidated financial condition hal 2019 form 10k 25 results operations 2019 compared 2018 consolidated revenue 2019 224 billion decrease 16 billion 7 compared 2018 primarily due lower activity pricing north america land primarily associated stimulation services well construction revenue north america 53 consolidated revenue 2019 60 consolidated revenue 2018 reported consolidated operating loss 448 million 2019 driven 25 billion impairments charges compares operating income 25 billion 2018 includes 265 million impairments charges related venezuela significant decline stimulation activity pricing north america land 2019 negatively impacted operating results coupled reduced drilling activity middle east see note 2 consolidated financial statements discussion impairments charges operating segments completion production completion production revenue 140 billion 2019 decrease 19 billion 12 compared 2018 operating income 17 billion 2019 27 decrease 23 billion 2018 results primarily driven reduced activity pricing stimulation services lower completion tool sales north america land partially offsetting results increased artificial lift activity north america land higher completion tool sales gulf mexico increased pressure pumping activity higher completion tool sales eastern hemisphere higher pressure pumping activity latin america drilling evaluation drilling evaluation revenue 84 billion 2019 increase 355 million 4 2018 results primarily driven global increase wireline activity increased activity multiple product service lines north sea mexico coupled improved drilling activity asia pacific higher testing activity eastern hemisphere improvements partially offset decreased activity drillingrelated services north america land lower project management activity middle east hal 2019 form 10k 26 operating income 642 million 2019 decrease 103 million 14 compared 2018 results primarily driven decline drilling activity north america land coupled lower project management drilling activity middle east partially offsetting results global improvements wireline activity increased drillingrelated services europeafricacis geographic regions north america north america revenue 119 billion 2019 18 decrease compared 2018 resulting lower activity pricing north america land primarily associated stimulation drillingrelated activity decline partially offset increased artificial lift activity north america land improved completion tool sales gulf mexico latin america latin america revenue 24 billion 2019 14 increase compared 2018 resulting primarily increased activity multiple product service lines mexico argentina partially offset decreased well construction activity brazil europeafricacis revenue 33 billion 2019 12 increase compared 2018 increases due higher activity multiple product service lines throughout region primarily north sea israel russia partially offset decreased pipeline services across region middle eastasia middle eastasia revenue 49 billion 2019 7 increase compared 2018 increases due higher activity throughout region primarily related pressure pumping completion tool sales wireline activity partially offset decreased drilling activity project management activity middle east operating items impairments charges 25 billion 2019 consisting asset impairments primarily associated pressure pumping drilling equipment well severance costs incurred adjusted cost structure year compares 265 million impairments charges recorded 2018 representing writedown remaining investment venezuela see note 2 consolidated financial statements discussion charges nonoperating items effective tax rate 2019 recorded total income tax provision 7 million pretax loss 11 billion resulting effective tax rate 06 2018 recorded total income tax provision 157 million pretax income 18 billion resulting effective tax rate 87 see note 11 consolidated financial statements significant drivers effective tax rates hal 2019 form 10k 27 results operations 2018 compared 2017 information related comparison operating results years 2018 2017 included item 7 managements discussion analysis financial condition results operations 2018 form 10k filed sec incorporated reference annual report form 10k hal 2019 form 10k 28 item 7 critical accounting estimates critical accounting estimates preparation financial statements requires use judgments estimates critical accounting policies described provide better understanding develop assumptions judgments future events related estimates impact financial statements critical accounting estimate one requires difficult subjective complex judgments assessments fundamental results operations identified critical accounting estimates forecasting effective income tax rate including future ability utilize foreign tax credits realizability deferred tax assets including net operating loss carryforwards providing uncertain tax positions legal investigation matters valuations longlived assets including intangible assets goodwill purchase price allocation acquired businesses allowance bad debts base estimates historical experience various assumptions believe reasonable according current facts circumstances results form basis making judgments carrying values assets liabilities readily apparent sources believe following critical accounting policies used preparation consolidated financial statements well significant estimates judgments affecting application policies discussion analysis read conjunction consolidated financial statements related notes included report income tax accounting recognize amount taxes payable refundable current year use asset liability approach recognizing amount deferred tax liabilities assets future tax consequences events recognized financial statements tax returns apply following basic principles accounting income taxes current tax liability asset recognized estimated taxes payable refundable tax returns current year deferred tax liability asset recognized estimated future tax effects attributable temporary differences carryforwards measurement current deferred tax liabilities assets based provisions enacted tax law effects potential future changes tax laws rates considered value deferred tax assets reduced necessary amount tax benefits based available evidence expected realized determine deferred taxes separately taxpaying component entity group entities consolidated tax purposes tax jurisdiction determination includes following procedures identifying types amounts existing temporary differences measuring total deferred tax liability taxable temporary differences using applicable tax rate measuring total deferred tax asset deductible temporary differences operating loss carryforwards using applicable tax rate measuring deferred tax assets type tax credit carryforward reducing deferred tax assets valuation allowance based available evidence likely portion deferred tax assets realized methodology recording income taxes requires significant amount judgment use assumptions estimates additionally use forecasts certain tax elements taxable income foreign tax credit utilization well evaluate feasibility implementing tax planning strategies given inherent uncertainty involved use variables significant variation anticipated actual results unforeseen events may significantly impact variables changes variables could material impact income tax accounts related continuing discontinued operations hal 2019 form 10k 29 item 7 critical accounting estimates operations 80 countries consequently subject jurisdiction significant number taxing authorities income earned various jurisdictions taxed differing bases including net income actually earned net income deemed earned revenuebased tax withholding tax filings routinely examined normal course business tax authorities final determination income tax liabilities involves interpretation local tax laws tax treaties related authorities jurisdiction well significant use estimates assumptions regarding scope future operations results achieved timing nature income earned expenditures incurred final determination tax audits changes operating environment including changes tax law currencyrepatriation controls could impact determination income tax liabilities tax year adverse effect financial statements tax filings subsidiaries unconsolidated affiliates related entities routinely examined normal course business tax authorities examinations may result assessments additional taxes work resolve tax authorities judicial process predicting outcome disputed assessments involves uncertainty factors availability settlement procedures willingness tax authorities negotiate operation impartiality judicial systems vary across different tax jurisdictions may significantly influence ultimate outcome review facts assessment utilize assumptions estimates determine likely outcome provide taxes interest penalties needed based outcome provide uncertain tax positions pursuant current accounting standards prescribe minimum recognition threshold measurement methodology tax position taken expected taken tax return required meet recognized financial statements standards also provide guidance derecognition classification interest penalties accounting interim periods disclosure transition legal investigation matters discussed note 10 consolidated financial statements subject various legal investigation matters arising ordinary course business december 31 2019 accrued estimate probable estimable costs resolution legal investigation matters material consolidated financial statements matters liability probable reasonably estimable accrued amounts attorneys legal department monitor manage claims filed us review pending investigations generally estimate probable costs related matters developed consultation internal outside legal counsel representing us estimates based upon analysis potential results assuming combination litigation settlement strategies accuracy estimates impacted among things complexity issues amount due diligence able perform attempt resolve matters settlements mediation arbitration proceedings possible actual settlement costs final judgments fines appeals differ estimates may material adverse effect future financial results past recorded significant adjustments initial estimates types contingencies value longlived assets including intangible assets goodwill carry variety longlived assets balance sheet including property plant equipment goodwill intangibles impairment condition exists carrying amount longlived asset exceeds fair value impairment charge record reduces operating income goodwill excess cost acquired entity net amounts assigned assets acquired liabilities assumed conduct impairment tests goodwill annually third quarter frequently whenever events changes circumstances indicate impairment may exist conduct impairment tests longlived assets goodwill whenever events changes circumstances indicate carrying value may recoverable conducting impairment test longlived assets goodwill first group individual assets based lowest level identifiable cash flows largely independent cash flows assets requires judgment compare estimated future undiscounted cash flows expected result use eventual disposition asset group carrying amount undiscounted cash flows less asset group’s carrying amount determine asset groups fair value using discounted cash flow analysis based estimates management’s shortterm longterm forecast operating performance including revenue growth rates expected profitability margins estimates remaining useful life service potential assets within asset group discount rate based weighted average cost capital impairment loss measured recorded amount asset groups carrying amount exceeds fair value see note 2 consolidated financial statements impairments charges recorded year ended december 31 2019 hal 2019 form 10k 30 item 7 critical accounting estimates perform goodwill impairment assessment reporting unit reportable segments completion production division drilling evaluation division comparing estimated fair value reporting unit reporting unit’s carrying value including goodwill estimate fair value reporting unit using discounted cash flow analysis based management’s shortterm longterm forecast operating performance analysis includes significant assumptions regarding discount rates revenue growth rates expected profitability margins forecasted capital expenditures timing expected future cash flows based market conditions estimated fair value reporting unit exceeds carrying amount goodwill reporting unit considered impaired carrying amount reporting unit exceeds estimated fair value impairment loss measured recorded impairment assessments discussed incorporate inherent uncertainties including projected commodity pricing supply demand services future market conditions difficult predict volatile economic environments could result impairment charges future periods actual results materially differ estimated assumptions utilized forecasts market conditions deteriorate including crude oil prices significantly declining remaining low levels sustained period time could required record additional impairments carrying value longlived assets future could material adverse impact operating results see note 1 consolidated financial statements accounting policies related longlived assets acquisitions purchase price allocation allocate purchase price acquired business identifiable assets liabilities based estimated fair values excess purchase price amount allocated assets liabilities recorded goodwill use available information estimate fair values including quoted market prices carrying value acquired assets widely accepted valuation techniques discounted cash flows engage thirdparty appraisal firms appropriate assist fair value determination inventories identifiable intangible assets significant assets liabilities judgments made determining estimated fair value assigned class assets acquired liabilities assumed well asset lives materially impact results operations acquisitions may also include contingent consideration earnout provisions provide additional consideration paid seller certain future conditions met earnout provisions estimated recognized fair value acquisition date based projected earnings financial metrics specified periods acquisition date estimates reviewed specified period adjusted based actual results allowance bad debts evaluate global accounts receivable continuous process assessing portfolio individual customer overall basis process consists thorough review historical collection experience current aging status customer accounts financial condition customers whether receivables involve retainages also consider economic environment customers marketplace geographic perspective evaluating need allowance based review factors establish adjust allowances specific customers process involves high degree judgment estimation frequently involves significant dollar amounts accordingly results operations affected adjustments allowance due actual writeoffs differ estimated amounts december 31 2019 allowance bad debts totaled 776 million 154 notes accounts receivable allowance december 31 2018 allowance bad debts totaled 738 million 128 notes accounts receivable allowance bad debts years primarily comprised accounts receivable primary customer venezuela hypothetical 100 basis point change estimate collectability notes accounts receivable balance december 31 2019 would resulted 51 million adjustment 2019 total operating costs expenses see note 5 consolidated financial statements information balance sheet arrangements december 31 2019 material balance sheet arrangements normal course business agreements financial institutions approximately 21 billion letters credit bank guarantees surety bonds outstanding december 31 2019 outstanding letters credit triggering events would entitle bank require cash collateralization none balance sheet arrangements either likely material effect consolidated financial statements hal 2019 form 10k 31 item 7 financial instrument market risk financial instrument market risk exposed market risk changes foreign currency exchange rates interest rates selectively manage exposures use derivative instruments including forward foreign exchange contracts foreign exchange options interest rate swaps objective risk management strategy minimize volatility fluctuations foreign currency interest rates use derivative instruments trading purposes counterparties forward contracts options interest rate swaps global commercial investment banks use sensitivity analysis model measure impact potential adverse movements foreign currency exchange rates interest rates respect foreign exchange sensitivity consideration impact foreign exchange hedges hypothetical 10 adverse change value foreign currency positions relative united states dollar december 31 2019 would result 91 million pretax loss net monetary assets denominated currencies united states dollars respect interest rates sensitivity consideration impact interest rate swap hypothetical 100 basis point increase libor rate would result approximately additional 1 million interest charges year ended december 31 2019 certain limitations inherent sensitivity analyses presented primarily due assumption exchange rates interest rates change instantaneously equally adverse fashion addition analyses unable reflect complex market reactions normally would arise market shifts modeled best estimate impact various scenarios estimates viewed forecasts information regarding foreign currency exchange risk interest rate risk credit risk see note 15 consolidated financial statements environmental matters subject numerous environmental legal regulatory requirements related operations worldwide information related environmental matters see note 10 consolidated financial statements part item 1a “risk factors” forwardlooking information private securities litigation reform act 1995 provides safe harbor provisions forwardlooking information forwardlooking information based projections estimates historical information statements form 10k forwardlooking use words like “may” “may not” “believe” “do believe” “plan” “estimate” “intend” “expect” “do expect” “anticipate” “do anticipate” “should” “likely” expressions may also provide oral written forwardlooking information materials release public forwardlooking information involves risk uncertainties reflects best judgment based current information results operations affected inaccurate assumptions make known unknown risks uncertainties addition factors may affect accuracy forwardlooking information result forwardlooking information guaranteed actual events results operations may vary materially assume responsibility publicly update forwardlooking statements regardless whether factors change result new information future events reason review additional disclosures make press releases forms 10k 10q 8k filed furnished sec also suggest listen quarterly earnings release conference calls financial analysts hal 2019 form 10k 32 item 7a quantitative qualitative disclosures market risk item 7a quantitative qualitative disclosures market risk information related market risk included item 7 management’s discussion analysis financial condition results operations financial instrument market risk” note 15 consolidated financial statements hal 2019 form 10k 33 item 8item 7 liquidity capital resources liquidity capital resources december 31 2020 26 billion cash equivalents compared 23 billion cash equivalents december 31 2019 significant sources uses cash 2020 sources cash •cash flows operating activities 19 billion included positive impact primary components working capital receivables inventories accounts payable net 800 million primarily associated lower customer receivables partially offset approximately 350 million severance payments uses cash •in march 2020 executed two transactions resulting reduction gross debt 500 million issued 10 billion aggregate principal amount senior notes used net proceeds issuance along cash hand repurchase 15 billion aggregate principal amount senior notes inclusive tender premium fees transactions resulted net payment approximately 654 million •capital expenditures 728 million •we paid 278 million dividends shareholders •we repurchased approximately 74 million shares common stock early march largely significant decline oil prices share repurchase program total cost approximately 100 million future sources uses cash manufacture equipment provides us flexibility increase decrease capital expenditures based market conditions capital spending 2021 currently expected approximately 750 million believe level spend allow us invest key strategic areas continue maintain capital discipline monitor rapidly changing market dynamics adjust capital spend accordingly additional information capital expenditures see executive overview debt payments 185 million 500 million due first quarter 2021 fourth quarter 2021 respectively based market outlook reduced quarterly dividend rate second quarter 2020 018 per common share 0045 per common share remained amount rest 2020 reducing cash outflows approximately 360 million 2020 continue maintain focus liquidity review quarterly dividend considering priorities future debt reduction market conditions evolve reinvesting business board directors authorized program repurchase common stock time approximately 51 billion remained authorized repurchases december 31 2020 may used open market share purchases hal 2020 form 10k 21 item 7 liquidity capital resources contractual obligations following table summarizes significant contractual obligations longterm liabilities december 31 2020 represents principal amounts longterm debt including current maturities debt excludes unamortized debt issuance costs discounts b interest debt includes 76 years interest 300 million debentures 76 interest become due 2096 c amounts 2021 primarily represent certain purchase orders goods services utilized ordinary course business includes pension funding obligations amounts pension funding obligations include international plans based assumptions subject change included 2021 currently able reasonably estimate contributions years 2021 due uncertainty respect timing potential future cash outflows associated uncertain tax positions able reasonably estimate period cash settlement respective taxing authorities therefore gross unrecognized tax benefits excluded contractual obligations table 355 million gross unrecognized tax benefits excluding penalties interest december 31 2020 estimate 211 million may require cash payment us estimate 193 million cash payment settled within next 12 months factors affecting liquidity financial position current market december 31 2020 26 billion cash equivalents 35 billion available committed bank credit revolving credit facility furthermore financial covenants material adverse change provisions bank agreements debt maturities extend long period time believe cash hand cash flows generated operations available credit facility provide sufficient liquidity address challenges opportunities current market global cash needs including capital expenditures working capital investments dividends debt repayment contingent liabilities guarantee agreements normal course business agreements financial institutions approximately 19 billion letters credit bank guarantees surety bonds outstanding december 31 2020 outstanding letters credit triggering events would entitle bank require cash collateralization however none triggering events occurred credit ratings credit ratings standard poor’s sp remain bbb longterm debt a2 shortterm debt negative outlook credit ratings moody’s investors service moodys remain baa1 longterm debt p2 shortterm debt negative outlook customer receivables line industry practice bill customers services arrears therefore subject customers delaying failing pay invoices weak economic environments may experience increased delays failures pay invoices due among reasons reduction customers’ cash flow operations access credit markets well unsettled political conditions given nature significance pandemic disruption oil gas industry experienced delayed customer payments payment defaults associated customer liquidity issues bankruptcies customers delay paying fail pay us significant amount outstanding receivables could material adverse effect liquidity consolidated results operations consolidated financial condition see note 5 consolidated financial statements discussion hal 2020 form 10k 22 item 7 business environment results operations business environment results operations operate 70 countries throughout world provide comprehensive range services products energy industry revenue generated sale services products major national independent oil natural gas companies worldwide industry serve highly competitive many substantial competitors segment business 2020 2019 2018 based location services provided products sold 38 51 58 respectively consolidated revenue united states country accounted 10 revenue operations countries may adversely affected unsettled political conditions acts terrorism civil unrest force majeure war armed conflict sanctions expropriation governmental actions inflation changes foreign currency exchange rates foreign currency exchange restrictions highly inflationary currencies well geopolitical factors believe geographic diversification business activities reduces risk interruption operations one country united states would materially adverse consolidated results operations activity within business segments significantly impacted spending upstream exploration development production programs customers also impacting activity status global economy impacts oil natural gas consumption covid19 pandemic efforts mitigate effect substantial negative impact global economy demand oil significant determinants current future spending levels customers oil natural gas prices customers expectations future prices global oil supply demand completions intensity world economy availability capital government regulation global stability together drive worldwide drilling completions activity additionally many customers north america shifted strategy production growth operating within cash flow generating returns lower oil natural gas prices usually translate lower exploration production budgets lower rig count opposite usually true higher oil natural gas prices financial performance therefore significantly affected oil natural gas prices worldwide rig activity summarized tables table shows average oil natural gas prices wti united kingdom brent crude oil henry hub natural gas historical average rig counts based weekly baker hughes rig count data follows hal 2020 form 10k 23 item 7 business environment results operations oil gas industry experienced unprecedented disruption 2020 result combination factors including substantial decline global demand oil caused covid19 pandemic subsequent mitigation efforts disruption created substantial surplus oil decline oil prices west texas intermediate wti oil spot prices decreased first quarter 2020 high 63 per barrel early january 2020 approximately 21 per barrel end first quarter 2020 although oil prices recovered moderately approximately 48 per barrel end december 2020 wti oil spot prices averaged approximately 43 per barrel fourth quarter 2020 39 per barrel year 2020 approximately 25 31 respectively less average price per barrel periods 2019 result oil gas activity declined significantly 2020 global rig count sinking lowest level since 1973 us international average rig counts dropped 54 25 respectively 2020 contributing global rig count decline 38 since 2019 crude oil prices traded within wide range 2020 averaging 63 barrel january 2020 brent prices fell average 18 barrel april lowest monthly average price since february 1999 low prices result significant declines oil consumption caused sharp rise global oil inventories however brent prices increased much rest 2020 rising oil demand reduced production caused global oil inventories fall prices rose monthly average 50 barrel december due expectations future economic recovery based roll multiple covid19 vaccines early part january 2021 brent prices reached highest levels 10 months saudi arabia announced onemonth unilateral cut crude oil production february march addition opec commitments oil prices back prepandemic levels driven global vaccine distribution unfolding demand recovery opec agreement production volume declining production base however surge covid19 infections globally expected gradual return spare production capacity make us cautious near term recovery united states energy information administration eia january 2021 short term energy outlook eia projected brent prices average 53 per barrel 2021 wti prices projected average approximately 300 less per barrel brent prices international energy agencys iea january 2021 oil market report forecasts 2021 global demand average approximately 966 million barrels per day increase 6 2020 recent widespread escalation covid19 cases remains significant factor impacting oil demand vaccination campaigns underway however several regions including areas united states dealing rebound pandemic resulting tighter mobility constraints less travel also concern whether vaccines effective different strains virus developed may develop future henry hub natural gas spot price united states averaged 204 per mmbtu 2020 decrease 050 per mmbtu 20 2019 eia expects henry hub natural gas prices rise annual average 301 per mmbtu 2021 forecasts prices rise average 327 per mmbtu 2022 north america operations average north america rig count decreased 52 full year 2020 compared 2019 decline activity rapid rig count completions activity started recover 2020 lows responded swiftly aggressively market conditions business conditions improve actions resulted margin improvements second half 2020 first quarter 2021 expect positive activity momentum continue completions activity increasing drilling eia estimates annual us crude oil production averaged 113 million barrels per day year ended 2020 10 million barrels per day compared year ended 2019 result well curtailment drop drilling activity related low oil prices eia expects production decline 2021 averaging 111 million barrels per day increase annual average 115 million barrels per day 2022 prices drilling conditions become favorable continue focus driving strategic changes building operating leverage created business maximizing cash flow generation north america international operations full year international revenue 2020 declined 17 rig counts customer spending 20 compared 2019 pace recovery depends trajectory demand improvement second half 2021 expect see increase international activity compared second half 2020 well positioned benefit increase strong presence mature fields completions interventions work resilient integrated contracts around world leverage unconventional developments latin america middle east leading position key active offshore areas eia expects recent rise covid19 infections reimposition restrictions ongoing changes consumer behaviors due pandemic continue adversely affect global oil demand first half 2021 despite uncertainty eia forecasts economic activity return prepandemic levels 2021 based partly assumptions regarding effect recent vaccine rollouts reopening efforts united states hal 2020 form 10k 24 item 7 business environment results operations pace oil consumption growth internationally may significant extent depend manufacture distribution effective vaccines global scale venezuela us government imposed sanctions venezuela effectively required us discontinue operations consequently connection us winding operations venezuela wrote remaining investment venezuela 2020 december 29 2020 longer employees venezuela although continue maintain local entity facilities equipment incountry permitted applicable law currently conducting operational activities venezuela hal 2020 form 10k 25 results operations 2020 compared 2019 consolidated revenue 2020 144 billion decrease 80 billion 36 compared 2019 mainly due lower activity pricing north america land primarily associated stimulation services well construction revenue north america 40 consolidated revenue 2020 53 consolidated revenue 2019 reported consolidated operating loss 24 billion 2020 driven part 38 billion impairments charges compares operating loss 448 million 2019 driven 25 billion impairments charges significant decline stimulation activity pricing north america land 2020 negatively impacted operating results partially offset increase stimulation activity completion tool sales middle eastasia see note 2 consolidated financial statements discussion impairments charges operating segments completion production completion production revenue 78 billion 2020 decrease 62 billion 44 compared 2019 operating income 10 billion 2020 40 decrease 17 billion 2019 results primarily driven reduced activity pricing pressure pumping services lower completion tool sales reduced artificial lift activity north america land partially offsetting results higher completion tool sales eastern hemisphere drilling evaluation drilling evaluation revenue 66 billion 2020 decrease 18 billion 21 2019 results primarily driven lower activity drillingrelated services north america land lower project management activity middle eastasia global decrease wireline activity operating income 569 million 2020 decrease 73 million 11 compared 2019 results primarily driven decline drilling activity north america land coupled lower project management activity hal 2020 form 10k 26 middle eastasia partially offsetting results improvements wireline profitability middle eastasia north sea well drillingrelated services north sea geographic regions north america north america revenue 57 billion 2020 52 decrease compared 2019 resulting lower activity pricing north america land primarily associated reduced stimulation well construction artificial lift wireline activity decline partially offset increased stimulation activity gulf mexico project management north america land latin america latin america revenue 17 billion 2020 29 decrease compared 2019 resulting primarily decreased activity multiple product service lines argentina colombia ecuador brazil partially offset increased project management activity mexico drillingrelated services guyana europeafricacis revenue 28 billion 2020 14 decrease compared 2019 decrease due lower activity multiple product service lines throughout region primarily nigeria egypt united kingdom partially offset increased completion tool sales north sea algeria azerbaijan drillingrelated activity north sea middle eastasia middle eastasia revenue 42 billion 2020 13 decrease compared 2019 decrease due lower activity throughout region primarily related project management stimulation saudi arabia well construction activity partially offset increased completion tool sales pipeline services middle eastasia operating items impairments charges 38 billion 2020 consisting asset real estate impairments primarily associated pressure pumping drilling equipment well severance costs incurred continued adjust cost structure year compares 25 billion impairments charges recorded 2019 consisting asset impairments primarily associated pressure pumping drilling equipment well severance costs incurred adjusted cost structure year see note 2 consolidated financial statements discussion charges nonoperating items loss early extinguishment debt year ended december 31 2020 recorded 168 million loss early extinguishment debt included tender premium unamortized discounts costs retired notes tender fees see note 9 consolidated financial statements information income tax provision benefit tax provisions benefits sensitive geographic mix earnings ability use deferred tax assets 2020 recorded total income tax benefit 278 million pretax loss 32 billion resulting effective tax rate 86 2019 recorded total income tax provision 7 million pretax loss 11 billion resulting effective tax rate 06 see note 11 consolidated financial statements significant drivers tax provisions benefits hal 2020 form 10k 27 results operations 2019 compared 2018 information related comparison operating results years 2019 2018 included item 7 managements discussion analysis financial condition results operations 2019 form 10k filed sec incorporated reference annual report form 10k hal 2020 form 10k 28 item 7 critical accounting estimates critical accounting estimates preparation financial statements requires use judgments estimates critical accounting policies described provide better understanding develop assumptions judgments future events related estimates impact financial statements critical accounting estimate one requires difficult subjective complex judgments assessments fundamental results operations identified critical accounting estimates forecasting income tax provision benefit including future ability utilize foreign tax credits realizability deferred tax assets including net operating loss carryforwards providing uncertain tax positions legal investigation matters valuations longlived assets including intangible assets goodwill allowance credit losses base estimates historical experience various assumptions believe reasonable according current facts circumstances results form basis making judgments carrying values assets liabilities readily apparent sources believe following critical accounting policies used preparation consolidated financial statements well significant estimates judgments affecting application policies discussion analysis read conjunction consolidated financial statements related notes included report income tax accounting recognize amount taxes payable refundable current year use asset liability approach recognizing amount deferred tax liabilities assets future tax consequences events recognized financial statements tax returns apply following basic principles accounting income taxes current tax liability asset recognized estimated taxes payable refundable tax returns current year deferred tax liability asset recognized estimated future tax effects attributable temporary differences carryforwards measurement current deferred tax liabilities assets based provisions enacted tax law effects potential future changes tax laws rates considered value deferred tax assets reduced necessary amount tax benefits based available evidence expected realized determine deferred taxes separately taxpaying component entity group entities consolidated tax purposes tax jurisdiction determination includes following procedures identifying types amounts existing temporary differences measuring total deferred tax liability taxable temporary differences using applicable tax rate measuring total deferred tax asset deductible temporary differences operating loss carryforwards using applicable tax rate measuring deferred tax assets type tax credit carryforward reducing deferred tax assets valuation allowance based available evidence likely portion deferred tax assets realized methodology recording income taxes requires significant amount judgment use assumptions estimates additionally use forecasts certain tax elements taxable income foreign tax credit utilization well evaluate feasibility implementing tax planning strategies given inherent uncertainty involved use variables significant variation anticipated actual results could material impact income tax accounts related continuing operations hal 2020 form 10k 29 item 7 critical accounting estimates operations 70 countries consequently subject jurisdiction significant number taxing authorities income earned various jurisdictions taxed differing bases including net income actually earned net income deemed earned revenuebased tax withholding tax filings routinely examined normal course business tax authorities final determination income tax liabilities involves interpretation local tax laws tax treaties related authorities jurisdiction well significant use estimates assumptions regarding scope future operations results achieved timing nature income earned expenditures incurred final determination tax audits changes operating environment including changes tax law currencyrepatriation controls could impact determination income tax liabilities tax year adverse effect financial statements tax filings subsidiaries unconsolidated affiliates related entities routinely examined normal course business tax authorities examinations may result assessments additional taxes work resolve tax authorities judicial process predicting outcome disputed assessments involves uncertainty factors availability settlement procedures willingness tax authorities negotiate operation impartiality judicial systems vary across different tax jurisdictions may significantly influence ultimate outcome review facts assessment utilize assumptions estimates determine likely outcome provide taxes interest penalties needed based outcome provide uncertain tax positions pursuant current accounting standards prescribe minimum recognition threshold measurement methodology tax position taken expected taken tax return required meet recognized financial statements standards also provide guidance derecognition classification interest penalties accounting interim periods disclosure transition legal investigation matters discussed note 10 consolidated financial statements subject various legal investigation matters arising ordinary course business december 31 2020 accrued estimate probable estimable costs resolution legal investigation matters material consolidated financial statements matters liability probable reasonably estimable accrued amounts attorneys legal department monitor manage claims filed us review pending investigations generally estimate probable costs related matters developed consultation internal outside legal counsel representing us estimates based upon analysis potential results assuming combination litigation settlement strategies accuracy estimates impacted among things complexity issues amount due diligence able perform attempt resolve matters settlements mediation arbitration proceedings possible actual settlement costs final judgments fines appeals differ estimates may material adverse effect future financial results past recorded significant adjustments initial estimates types contingencies value longlived assets including intangible assets goodwill carry variety longlived assets balance sheet including property plant equipment goodwill intangibles impairment condition exists carrying amount longlived asset exceeds fair value impairment charge record reduces operating income goodwill excess cost acquired entity net amounts assigned assets acquired liabilities assumed conduct impairment tests goodwill annually third quarter frequently whenever events changes circumstances indicate impairment may exist conduct impairment tests longlived assets goodwill whenever events changes circumstances indicate carrying value may recoverable conducting impairment test longlived assets goodwill first group individual assets based lowest level identifiable cash flows largely independent cash flows assets requires judgment compare estimated future undiscounted cash flows expected result use eventual disposition asset group carrying amount undiscounted cash flows less asset group’s carrying amount determine asset groups fair value using discounted cash flow analysis based estimates management’s shortterm longterm forecast operating performance including revenue growth rates expected profitability margins estimates remaining useful life service potential assets within asset group discount rate based weighted average cost capital impairment loss measured recorded amount asset groups carrying amount exceeds fair value see note 2 consolidated financial statements impairments charges recorded year ended december 31 2020 hal 2020 form 10k 30 item 7 critical accounting estimates perform goodwill impairment assessment reporting unit reportable segments completion production division drilling evaluation division comparing estimated fair value reporting unit reporting unit’s carrying value including goodwill estimate fair value reporting unit using discounted cash flow analysis based management’s shortterm longterm forecast operating performance analysis includes significant assumptions regarding discount rates revenue growth rates expected profitability margins forecasted capital expenditures timing expected future cash flows based market conditions estimated fair value reporting unit exceeds carrying amount goodwill reporting unit considered impaired carrying amount reporting unit exceeds estimated fair value impairment loss measured recorded impairment assessments discussed incorporate inherent uncertainties including projected commodity pricing supply demand services future market conditions difficult predict volatile economic environments could result impairment charges future periods actual results materially differ estimated assumptions utilized forecasts market conditions deteriorate including crude oil prices significantly declining remaining low levels sustained period time could required record additional impairments carrying value longlived assets future could material adverse impact operating results see note 1 consolidated financial statements accounting policies related longlived assets allowance credit losses evaluate global accounts receivable continuous process assessing portfolio individual customer overall basis process consists thorough review historical collection experience current aging status customer accounts financial condition customers whether receivables involve retainages also consider economic environment customers marketplace geographic perspective evaluating need allowance based review factors establish adjust allowances specific customers process involves judgment estimation frequently involves significant dollar amounts accordingly results operations affected adjustments allowance due actual writeoffs differ estimated amounts december 31 2020 allowance credit losses totaled 824 million 225 notes accounts receivable allowance december 31 2019 allowance credit losses totaled 776 million 154 notes accounts receivable allowance credit losses years primarily comprised accounts receivable primary customer venezuela hypothetical 100 basis point change estimate collectability notes accounts receivable balance december 31 2020 would resulted 37 million adjustment 2020 total operating costs expenses see note 5 consolidated financial statements information balance sheet arrangements december 31 2020 material balance sheet arrangements normal course business agreements financial institutions approximately 19 billion letters credit bank guarantees surety bonds outstanding december 31 2020 outstanding letters credit triggering events would entitle bank require cash collateralization however none triggering events occurred financial instrument market risk exposed market risk changes foreign currency exchange rates interest rates selectively manage exposures use derivative instruments including forward foreign exchange contracts foreign exchange options interest rate swaps objective risk management strategy minimize volatility fluctuations foreign currency interest rates use derivative instruments trading purposes counterparties forward contracts options interest rate swaps global commercial investment banks use sensitivity analysis model measure impact potential adverse movements foreign currency exchange rates interest rates respect foreign exchange sensitivity consideration impact foreign forward contracts options hypothetical 10 adverse change value foreign currency positions relative united states dollar december 31 2020 would result 83 million pretax loss net monetary assets denominated currencies united states dollars respect interest rates sensitivity consideration impact interest rate swap hypothetical 100 basis point increase libor rate would result approximately additional 1 million interest charges year ended december 31 2020 hal 2020 form 10k 31 item 7 financial instrument market risk certain limitations inherent sensitivity analysis presented primarily due assumption exchange rates interest rates change instantaneously equally adverse fashion addition analysis unable reflect complex market reactions normally would arise market shifts modeled best estimate impact various scenarios estimates viewed forecasts information regarding foreign currency exchange risk interest rate risk credit risk see note 15 consolidated financial statements environmental matters subject numerous environmental legal regulatory requirements related operations worldwide information related environmental matters see note 10 consolidated financial statements part item 1a “risk factors” forwardlooking information private securities litigation reform act 1995 provides safe harbor provisions forwardlooking information forwardlooking information based projections estimates historical information statements form 10k forwardlooking use words like “may” “may not” “believe” “do believe” “plan” “estimate” “intend” “expect” “do expect” “anticipate” “do anticipate” “should” “likely” expressions may also provide oral written forwardlooking information materials release public forwardlooking information involves risk uncertainties reflects best judgment based current information results operations affected inaccurate assumptions make known unknown risks uncertainties addition factors may affect accuracy forwardlooking information result forwardlooking information guaranteed actual events results operations may vary materially assume responsibility publicly update forwardlooking statements regardless whether factors change result new information future events reason review additional disclosures make press releases forms 10k 10q 8k filed furnished sec also suggest listen quarterly earnings release conference calls financial analysts hal 2020 form 10k 32 item 7a quantitative qualitative disclosures market risk item 7a quantitative qualitative disclosures market risk information related market risk included item 7 management’s discussion analysis financial condition results operations financial instrument market risk” note 15 consolidated financial statements hal 2020 form 10k 33 item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 7 9 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 13 26 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk pages 21 22 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 16 61 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk pages 47 48 annual report item 8item 7 managements discussion analysis financial condition results operations information relating managements discussion analysis financial condition results operations included pages 13 27 annual report item 7a quantitative qualitative disclosures market risk information relating market risk included managements discussion analysis financial condition results operations caption financial instrument market risk pages 23 24 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 19 38 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” page 37 annual report note 14 consolidated financial statements page 66 annual report item 8item 7 management’s discussion analysis financial condition results operations information related management’s discussion analysis financial condition results operations included pages 19 36 annual report item 7a quantitative qualitative disclosures market risk information related market risk included “management’s discussion analysis financial condition results operations financial instrument market risk” note 12 consolidated financial statements item 8 nannannannannannannannannannannannannannannannannannannannannannannannannannannannan item 8 financial statements supplementary data page responsibility financial reporting 17 report arthur andersen co independent public accountants 18 consolidated statements income years ended december 31 1993 1992 1991 19 consolidated balance sheets december 31 1993 1992 20 consolidated statements cash flows years ended december 31 1993 1992 1991 21 consolidated statements shareholders equity years ended december 31 1993 1992 1991 22 notes financial statements 23 43 quarterly data market price information 44 related financial statement schedules included part iv item 14 annual report managements discussion analysis results operations financial condition business environment business company significantly affected worldwide expenditures energy industry operations halliburton energy services impacted quickly shortterm increases decreases oil natural gas development activities major producing areas throughout world development activities sensitive legislative environment united states major countries developments middle east impact events pricing oil natural gas latter part 1993 price oil declined significantly due part excess supply worldwide reductions prices oil natural gas negatively impact cash flows companys customers may cause customers reduce expenditures exploration development prices return economic levels reduction oil prices may negatively impact demand companys energy services 1994 however activity united states natural gas drilling strong continue current natural gas prices sustained operations engineering construction services subject longerterm economic trends united states major countries major factor capital spending plans hydrocarbon processing major oil natural gas chemical companies throughout world factors include capital spending plans pulp paper industry environmental laws require emission standards performance existing new facilities governmental defense spending united states especially united kingdom worldwide economic slowdown caused existing future capital spending plans deferred economic factors improve likely negative impact nearterm operating results group recent economic indicators show improvement united states economy slow improvement economies europe present rate economic recovery significant impact operating results engineering construction services expected latter part 1995 1996 operations insurance services impacted legislative environment united states catastrophic events united states congress currently considering various healthcare plans may impact workers compensation coverages provided approximately 50 earned premiums insurance services 1993 company operates 100 countries operations countries may affected unsettled political conditions expropriation governmental actions exchange control currency problems company believes diversification activities reduces risk loss one countrys operations would material conduct operations taken whole results operations include operating income relating work performed libya foreign subsidiary companies 447 million 105 million 80 million 1993 1992 1991 respectively december 1993 united nations imposed sanctions certain transactions member nations libya foreign subsidiaries company continuing work libya compliance sanctions although implementation sanctions caused delay collection receivables work payment receivables permitted sanctions company expects payments continue results operations consolidated highlights revenues 1993 63508 million decrease 3 1992 revenues 65659 million 10 decrease 1991 revenues 70188 million energy services revenues increased 1993 compared 1992 1991 revenues engineering construction services insurance services declined 1992 1991 operating income 1993 loss 1326 million compared operating loss 1014 million 1992 operating income 959 million 1991 excluding special items noted operating income 1993 increased 28 1992 10 1991 increase operating income excluding special items energy services 1993 company recognized 3018 million charge energy services operating income 2638 million net income taxes reflect net realizable value companys geophysical business disposed january 1994 see note 18 consolidated financial statements company also provided 200 million charge fourth quarter 1993 130 million net income taxes related energy services nongeophysical employee severance costs addition company also provided 463 million charge 1993 210 million charge 1992 339 million net income taxes 1993 174 million 1992 related claims loss reserves united kingdom insurance business year expenses suspension underwriting activities 1993 united kingdom insurance services subsidiary see note 11 consolidated financial statements see note 17 financial statements description special charges 1992 1991 provided cost closing consolidation certain operating facilities globalizing employee benefits personnel reductions relocations associated employee benefit costs technological obsolescence certain inventories equipment related introduction new technologies realignment worldwide manufacturing capabilities writedown certain investments operations longer companys longterm strategic interest reduction value certain intangible assets items primarily related cost relocating equipment due actions consolidated net income 1993 loss 1610 million compared net loss 1373 million 1992 net income 266 million 1991 excluding special items net income would 1029 million 1993 640 million 1992 904 million 1991 net income per share 1993 loss 143 compared loss per share 128 1992 income per share 25 1991 excluding special items net income per share would 92 per share 1993 59 1992 85 1991 excluding special items noted results operations geophysical business sold january 1994 revenues operating income net income earnings per share would follows energy services latter part 1991 throughout 1992 number companys major customers began reducing size spending plans united states operations moving markets countries 1993 however companys major customers increased spending plans united states operations corresponding decreases spending plans due primarily incentive higher sustained natural gas prices addition throughout period energy services experienced increased demand customers packaged services products packaged services products relate phases oil natural gas exploration development initial exploration throughout production retirement wells response evolving customer demands desire deliver services products focused specific needs customers geographical area energy services 1993 reorganized ten separate business units constituted companys energy services segment single division halliburton company named halliburton energy services new organization provides broad range services products used exploration development production oil natural gas managerial control services products provided regional offices responsible five geographic regions world plus additional group focuses emerging opportunities former soviet union china revenues 1993 29534 million increase 8 1992 revenues 27263 million slight increase 1991 revenues 29390 million approximately onehalf increase 1992 acquisition drilling systems business 1993 falling postworld war ii low first part 1992 united states average rotary rig count increased 5 1993 1992 still 13 1991 level increase average rotary rig count favorably impacted united states revenues increased 22 1993 1992 declined 3 1991 addition higher levels completion activity experienced early part 1993 wells drilled prior december 31 1992 expiration section 29 tight sands gas tax credits revenues per average rotary rig united states excluding geophysical operations increased 15 1993 1992 12 1991 average united states rotary rig count normally affected seasonal declines early year however lower oil prices may reduce number working rotary rigs 1994 1993 levels impact lower oil prices may mitigated higher natural gas prices increase number offshore rotary rigs offshore rotary rigs tend committed longerterm periods landbased rotary rigs average rotary rig count outside united states increased 1 1993 compared 1992 four straight years decline reversal trend primarily due significant increase canadian rig count result higher sustained natural gas prices declines rig activity latin america north sea africa energy services experienced pricing pressures declining regions due increased competition available business overall 1993 revenues outside united states level 1992 3 1991 revenues per average rotary rig excluding geophysical operations increased 1993 6 1992 20 1991 operating income 1993 loss 1477 million compared loss 636 million 1992 income 361 million 1991 excluding special items operating income would 1741 million 1993 1184 million 1992 1546 million 1991 increase 1993 operating income excluding special items due primarily increased united states business activities partially offset declines profit margins related industry overcapacity countries operating income excluding special items includes operating losses geophysical business 201 million 1993 compared 266 million 1992 120 million 1991 operating income 1993 also includes 310 million resulting combination ongoing operations improved collections work performed libya foreign subsidiaries company compared 105 million 1992 48 million 1991 engineering construction services revenues 31407 million 1993 decrease 12 1992 revenues 35637 million 16 decrease 1991 revenues 37280 million united states revenues 1993 declined 14 1992 17 1991 result continuing economic slowdown decrease 1993 due reduction available engineering construction work downstream energy forest products related projects increases revenues three years environmental consulting decrease available engineering work future projects 1993 indication slow engineering construction activity nearterm united states evidence 1993 slowly improving united states economy however many industrial customers continue defer spending plans expansion overhaul existing facilities sustained growth economy stimulates sufficient demand two areas may increase available engineering work united states would infrastructure reinvestment compliance existing industrial facilities environmental emission standards revenues engineering construction projects outside united states 1993 decreased 7 1992 14 1991 decrease revenues 1993 due primarily uncertainty longterm oil prices united kingdom tax policies north sea development activity completion several large oil gas construction contracts middle east 1991 partially offset award additional longterm privatization service agreements internationally operating income 793 million compared loss 120 million 1992 income 737 million 1991 excluding special items operating income would 793 million 1993 706 million 1992 737 million 1991 operating income 1993 includes profits major gas compressor station project asia pacific support services relief efforts somalia construction gas pipeline north sea increased operating income outside united states 1993 partially offset reduced profit margins lower united states activity levels operating income 1992 includes losses environmental services contract completed california partially offset higher marine activities europe government munitions clean damage assessment saudi arabia kuwait included 1991 187 million loss provision relating oil gas facility contract middle east operating income includes income 137 million 1993 resulting primarily improved collections work performed libya foreign subsidiaries company backlog unfilled firm orders engineering construction projects 6 1993 1992 backlog may reliable indicator future profitability activity levels due duration many projects complexity various contract terms management expects overall engineering construction services revenues 1994 slightly higher 1993 aggregate operating margins difficult maintain insurance services company announced july 1992 would pursue divestiture wholly owned highlands insurance company subsidiary related companies highlands company concluded effort sell highlands without securing satisfactory transaction company concentrating improving financial results highlands operations revenues 2567 million 1993 decrease 7 1992 revenues 2759 million 27 decrease 1991 revenues 3518 million reduced revenues 1992 primarily result stop loss reinsurance agreement executed 1992 insurance services operating loss 422 million 1993 compared loss 1992 48 million income 1991 79 million excluding provisions claim loss reserves united kingdom business suspension underwriting activities united kingdom operating income would 41 million 1993 162 million 1992 79 million 1991 decrease operating income due primarily losses discontinued lines businesses additional loss development relating hurricane andrew world trade center bombing winter storms northeast losses partially offset refund texas workers compensation assigned risk pool premium adjustments investment income lower 1993 due primarily lower yields available investments reductions invested balances along realization 1992 gains sale certain investments companys insurance subsidiaries numerous reinsurance agreements insurance companies see note 11 financial statements prior june 30 1993 highlands wrote property insurance including homeowners florida reinsurance facility ceded 935 line business various reinsurance companies retaining 65 risk policies january 1993 highlands notified reinsurers reinsurance would available policies written renewed june 30 1993 highlands withdrew property business florida accordance floridas withdrawal statute rules may 1993 florida enacted moratorium law florida department insurance doi construed revoking highlands ability nonrenew homeowners policies means effecting withdrawal highlands contesting applicability moratorium law withdrawal constitutionality moratorium law doi order seeking impose penalties sanctions certain notices nonrenewal issued highlands november 1993 florida legislature extended moratorium three years allowed insurance companies reduce number homeowners policies 5 per annum established catastrophe fund reimburse insurance companies event hurricane catastrophe 75 losses excess two times annual property premiums written prior year protection offered catastrophe fund significantly reduces highlands exposure risk hurricane related losses nonoperating items interest income decreased 1993 139 million 420 million 1992 623 million 1991 excluding interest income tax refunds interest income decreased 1993 primarily due lower interest rates available invested cash equivalents lower levels invested cash foreign currency losses 1993 210 million compared 1992 losses 327 million 1991 losses 111 million losses relate primarily various latin american african currency exposures 1993 european african latin american currency exposures 1992 latin american african currencies prohibitively expensive hedge losses likely continue nonoperating income 1992 includes 136 million gain sale companys wholly owned healthcare cost management services company income taxes reduced 1993 404 million due settlement internal revenue service relating tax assessments 19801987 taxable years see note 7 financial statements income taxes reduced additional 64 million 1993 due changes federal income tax laws effective income tax rates excluding special items years 1993 1992 1991 43 48 49 respectively effective income tax rates negatively impacted lower united states taxable earnings shifts profitable activities foreign countries higher effective income tax rates occurrence losses certain countries losses could fully deducted tax purposes company reviews probable realizability deferred tax assets liabilities taxing jurisdiction utilizing historical forecast information valuation allowance provided deferred tax assets likely items either expire company able realize benefit future deductibility statutorily prohibited uncertain approximately 90 deferred tax assets december 31 1993 relates united states federal temporary differences company believes sufficient taxable income carryback years future reversals taxable temporary differences anticipated future taxable income utilize future deductions represented deferred tax assets addition company implement certain tax planning strategies accelerate taxable amounts utilize expiring carryforwards offset valuation allowance company changed methods accounting income taxes postretirement benefits pensions 1992 see notes 7 16 financial statements description changes accounting methods liquidity capital resources company ended year 1993 cash equivalents 488 million decrease 1845 million 1992 decrease 828 million 1991 excluding cash equivalents insurance services restricted general corporate purposes unless paid parent dividend cash equivalents end year 1993 75 million decrease 1389 million 1992 decrease 695 million 1991 company benefit sale geophysical business proceeds sale also eliminating source historically negative cash flows operating results company received 100 million cash january 1994 proceeds sale geophysical business make payments approximately 50 million 1994 note issued connection sale amount 738 million company also received notes 900 million intends convert cash 1994 net cash flows may increase decrease due additional asset sales settlements certain lease employee obligations retained company past three years geophysical business used cash 1060 million 1993 571 million 1992 567 million 1991 cash used acquisitions new equipment land marine seismic activities acquisition proprietary seismic data information licensed sold cash outflow includes capital expenditures past three years 513 million 1993 320 million 1992 308 million 1991 expenditures acquisition proprietary seismic data information included investing activities 387 million 1993 382 million 1992 609 million 1991 operating activities cash flows operating activities 1993 2431 million 3816 million 1992 2862 million 1991 cash flows operating activities 1993 excluding insurance services 2696 million 4350 million 1992 2863 million 1991 decrease cash flows operating activities 1993 due primarily increases accounts receivable related increased revenues services provided energy services smaller cash distributions unconsolidated engineering construction services companies investing activities acquisitions property plant equipment 2469 million 1993 3159 million 1992 4259 million 1991 reduction companys expenditures property plant equipment 1993 reflects part energy services optimizing resources support profitable product lines geographical regions targeting product lines geographic regions strategic positioning future company anticipates higher expenditures property plant equipment 1994 unless market conditions deteriorate significantly company believes current levels expenditures property plant equipment related energy services reduced historical levels adequate support current anticipated replacement requirements capital expenditures energy services expenditures primarily add equipment specialized certain locations respond new business opportunities replace upgrade existing equipment engineering construction services generally requires capital equipment specific contract needs insurance services general corporate requirements significant receipts sales property plant equipment 299 million 1993 479 million 1992 295 million 1991 payments made acquisitions businesses net cash acquired 267 million 1993 157 million 1992 230 million 1991 company also received cash 217 million 1992 see note 18 financial statements description companys acquisitions dispositions company net payments purchases marketable securities 1993 170 million compared net sales maturities 2115 million 1992 payments purchases marketable securities 1154 million 1991 net payments 1993 primarily due investment activities insurance services net receipts 1992 primarily due maturities companys investment cash available general corporate use shortterm securities time purchase maturities excess 90 days 1991 net payments primarily due initial purchase shortterm investments investing activities 818 million 1993 880 million 1992 723 million 1991 investing activities include investments inventories proprietary information licensed sold seismic data video training course materials computer software financing activities longterm debt 6239 million end 1993 compared 6567 million end 1992 6532 million end 1991 1993 company redeemed 565 million principal amount debentures company also issued 42 million shortterm debt fourth quarter 1992 refinanced longterm debt 1993 addition 1992 company redeemed 558 million principal amount debentures 1991 company issued two series debentures raised approximately 490 million cash repaid 540 million principal amount debentures see note 8 financial statements information two series debentures proceeds debt issues used supplement cash flow operations impacted increases accounts receivable inventory late 1990 1991 acquisitions property plant equipment total debt 27 26 23 total capitalization end 1993 1992 1991 respectively holder companys zero coupon convertible subordinated debentures option require company purchase debentures march 13 1996 purchase price equal issue price plus accrued original issue discount date purchase current market conditions redemption debentures holder would likely see note 8 financial statements regarding companys various shortterm lines credit july 1993 company filed registration statement securities exchange commission covering proposed public offering companys debt securities aggregate initial public offering price exceed 500 million company may offer sell timetotime one series debt securities terms determined time offering company sufficient ability borrow additional shortterm longterm funds necessary management anticipates additional 24 million debentures repaid 1994 1993 connection acquisition smith international incs directional drilling systems services business company issued 6857000 shares common stock previously held treasury stock see note 18 financial statements environmental matters company involved potentially responsible party remedial activities clean various superfund sites applicable federal law imposes joint several liability harm indivisible certain persons without regard fault legality original disposal ownership site although difficult quantify potential impact compliance environmental protection laws management company believes liability company respect two sites material adverse effect results operations company see note 14 financial statements description two sites discussion possible impact results operations financial condition company export matters see note 14 financial statements concerning certain export related matters including united states government investigation exports reexports former subsidiary company responsibility financial reporting halliburton company responsible preparation integrity fair presentation published financial statements financial statements prepared accordance generally accepted accounting principles include amounts based judgements estimates made management company also prepared information included annual report responsible accuracy consistency financial statements financial statements audited independent accounting firm arthur andersen co given unrestricted access financial records related data including minutes meetings stockholders board directors committees board company believes representations made independent auditors audit valid appropriate company maintains system internal control financial reporting designed provide reasonable assurance companys management board directors regarding preparation reliable published financial statements system includes documented organizational structure division responsibility established policies procedures including code conduct foster strong ethical climate communicated throughout company careful selection training development people internal auditors monitor operation internal control system report findings recommendations management board directors corrective actions taken address control deficiencies opportunities improving system identified board operating audit committee composed entirely directors officers employees company provides oversight financial reporting process inherent limitations effectiveness system internal control including possibility human error circumvention overriding controls accordingly even effective internal control system provide reasonable assurance respect reliability financial reporting furthermore effectiveness internal control system change circumstances company assessed internal control system december 31 1993 relation criteria effective internal control financial reporting described internal controlintegrated framework issued committee sponsoring organizations treadway commission based assessment company believes december 31 1993 system internal control financial reporting met criteria significant respects thomas h cruikshank jerry h blurton thomas h cruikshank jerry h blurton chairman board vice president chief executive officer finance report independent public accountants shareholders board directors halliburton company audited accompanying consolidated balance sheets halliburton company delaware corporation subsidiary companies december 31 1993 1992 related consolidated statements income cash flows shareholders equity three years period ended december 31 1993 financial statements responsibility halliburton companys management responsibility express opinion financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position halliburton company subsidiary companies december 31 1993 1992 results operations cash flows three years period ended december 31 1993 conformity generally accepted accounting principles discussed notes 2 11 financial statements required generally accepted accounting principles company changed methods accounting certain investments debt equity securities reinsurance shortduration longduration contracts effective december 31 1993 january 1 1993 respectively addition discussed notes 7 16 financial statements required generally accepted accounting principles company changed methods accounting income taxes accounting postretirement benefits respectively effective january 1 1992 arthur andersen co arthur andersen co dallas texas february 4 1994 note 1 significant accounting policies principles consolidation consolidated financial statements include accounts company majorityowned subsidiaries material intercompany accounts transactions eliminated investments affiliated companies company least 20 percent ownership management control accounted equity method certain prior year amounts including cost revenues general administrative expenses reclassified conform current organizational structure company cash equivalents company considers highly liquid investments original maturity three months less cash equivalents investments 1993 company adopted statement financial accounting standards 115 accounting certain investments debt equity securities sfas 115 requires classification debt equity securities following categories heldtomaturity availableforsale trading investments classified heldtomaturity measured amortized cost classification based upon companys intent ability hold securities full maturity investments classified availableforsale trading measured fair value balance sheets dates unrealized gains losses availableforsale investments reported separate component shareholders equity investments primarily relate activities companys insurance subsidiaries consist commercial paper bonds equity securities prior 1993 bonds carried amortized cost equity securities carried quoted market difference quoted market cost credited charged shareholders equity unrealized gains losses investments reinsurance recoverables 1993 company adopted statement financial accounting standards 113 accounting reporting reinsurance shortduration longduration contracts sfas 113 requires reinsurance receivables including amounts related claims incurred reported prepaid reinsurance premiums classified assets amounts recoverable reinsurers estimated consistent determination claim liability associated reinsured policy inventories stated cost excess market cost represents invoice production cost new items original cost less allowance condition used material returned stock production cost includes material labor manufacturing overhead onehalf sales items including related work process raw materials valued lastin firstout lifo basis inventories sales items owned foreign subsidiaries inventories operating supplies parts generally valued average cost depreciation maintenance depreciation financial reporting purposes provided primarily straightline method estimated useful lives assets expenditures maintenance repairs expensed expenditures renewals improvements generally capitalized upon sale retirement property plant equipment related cost accumulated depreciation removed accounts gain loss recognized excess cost net assets acquired excess cost fair value net assets acquired generally amortized straightline basis periods exceeding 40 years income taxes 1992 company adopted statement financial accounting standards 109 accounting income taxes requires recognition deferred tax assets liabilities expected future tax consequences events included financial statements tax returns prior 1992 provision income taxes based upon differences statement income financial reporting taxes computed taxes payable applicable statutes reserves insurance losses claims unearned premiums reserves insurance losses claims include estimates amounts required settle losses incurred reported changes estimates differences estimates ultimate payments reflected income period changes differences become known unearned premiums determined prorating policy premiums terms policies revenues income recognition company recognizes revenues services rendered products shipped distinction services product sales based upon overall business intent particular business operation revenues construction contracts reported percentage completion method accounting using measurements progress toward completion appropriate work performed known anticipated losses contracts provided currently claims additional compensation recognized period claims resolved foreign currency translation companys primary functional currency us dollar foreign entities translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates income expense accounts translated average rates effect year except depreciation cost product sales translated historical rates gains losses changes exchange rates recognized consolidated income year occurrence remaining entities use local currency functional currency translate net assets yearend rates income expense accounts translated average exchange rates adjustments resulting translations reflected shareholders equity section titled cumulative translation adjustment income per share income per share based weighted average number common shares common share equivalents outstanding year common share equivalents included computation represent shares issuable upon assumed exercise stock options dilutive effect note 2 investments 1993 company adopted sfas 115 accounting certain investments debt equity securities investments primarily held companys insurance subsidiaries december 31 1993 follows company trader bonds classified investments two categories availableforsale heldtomaturity investments classified heldtomaturity include bonds company ability intent hold contractual maturity reached investments classified availableforsale investments may sold fund liquidity requirements assist meeting regulatory capital requirements operating needs well reflect change credit worthiness issuer fair value investments based quoted market prices available quotes external pricing sources brokers similar investments issues individual security issue exceeds 2 total assets contractual maturities bonds held december 31 1993 follows net unrealized gains losses investments availableforsale included shareholders equity december 31 1993 93 million net income taxes 23 million note 3 receivables companys receivables generally collateralized notes accounts receivable december 31 1993 include 363 million 390 million december 31 1992 currently due customers accordance applicable retainage provisions engineering construction contracts december 31 1993 amount 285 million expected collected 1994 remainder due subsequent years unbilled work uncompleted contracts generally represents work currently billable work usually billed normal billing processes next month note 4 inventories consolidated inventories december 31 1993 1992 consist following onehalf sales items including related work process raw materials valued using lifo method average cost method use inventories lifo basis total inventories would 370 million 459 million higher reported december 31 1993 1992 respectively note 5 property plant equipment major classes fixed assets december 31 1993 1992 follows contractual obligations construction purchase facilities equipment december 31 1993 approximately 2035 million note 6 related companies company conducts operations various joint venture partnership forms principally accounted equity method summarized financial statements combined jointlyowned operations consolidated follows included companys revenues 1993 1992 1991 equity income related companies 763 million 405 million 433 million respectively company sells transfers assets affiliated company accounted equity basis affiliated company records assets fair value excess fair value assets companys net book value deferred amortized expected lives assets deferred gains included companys liabilities 228 million 293 million december 31 1993 1992 respectively note 7 income taxes 1992 company adopted statement financial accounting standards 109 accounting income taxes sfas 109 recognizes deferred tax assets liabilities expected future tax consequences existing differences financial reporting tax reporting bases assets liabilities operating loss tax credit carryforwards tax purposes cumulative impact adoption sfas 109 benefit 155 million 14 cents per share components benefit provision income taxes included deferred income taxes foreign tax credits 283 million 235 million 1992 1991 respectively net operating loss carryforwards utilized 91 million 73 million 1993 1992 respectively us foreign components income loss income taxes minority interest changes accounting methods follows primary components companys deferred tax assets liabilities related valuation allowances follows company foreign tax credits expire 1997 140 million benefit provision deferred taxes results temporary differences financial tax reporting 1991 consisted benefits 157 million accrual special charges 70 million insurance loss reserves discounted tax purposes 29 million related construction contract accounting methods partially offset provisions 20 million depreciation inventory net items company net foreign operating loss carryforwards expire follows 1994 88 million 1995 91 million 1996 240 million 1997 138 million 1998 2003 442 million indefinite 549 million reconciliations actual benefit provision income taxes computed applying us statutory rate income loss income taxes minority interest changes accounting methods follows 1990 1993 company received notices internal revenue service irs asserting deficiencies federal corporate income taxes companys 19801989 taxable years many 200 proposed separate adjustments companys tax returns settled 1992 adverse impact companys results operations financial position 1993 company reached settlement irs 19801987 taxable years result settlement well significant prepayments taxes prior years company receive refund net income increased 404 million 1993 company believes ultimate resolution asserted deficiencies 1988 1989 taxable years result material adverse impact companys consolidated results operations financial position note 8 lines credit longterm debt company shortterm lines credit totaling 4450 million several us banks borrowings outstanding december 31 1993 credit facilities december 31 1993 900 million commercial paper 20 million shortterm debt outstanding longterm debt december 31 1993 1992 consists following december 31 1993 fair value longterm debt based upon quotes brokers 6620 million february 20 1991 company issued 2000 million 875 debentures due february 15 2021 sinking fund applicable debentures redeemable prior maturity march 13 1991 company received net proceeds 2940 million issuance 7282 million principal amount maturity zero coupon convertible subordinated debentures due 2006 periodic interest payments made debentures issue price represents annual yield maturity 600 1000 principal amount maturity debenture convertible 6824 shares common stock company debenture holder option require company purchase debentures march 13 1996 march 13 2001 purchase price equal issue price debentures plus accrued original issue discount date purchase amount may paid company cash shares companys common stock five million shares companys common stock reserved event conversion presently antidilutive earnings per share purposes since march 13 1993 debentures redeemable cash time option company redemption price equal issue price debentures plus accrued original issue discount date redemption maturities longterm debt follows 1994 264 million 1995 4 million 1996 114 million 1997 106 million 211 million 1998 note 9 common stock 1993 shareholders company approved 1993 stock longterm incentive plan 1993 plan 1993 plan provides grant following types awards 1 stock options including incentive stock options nonqualified stock options 2 stock appreciation rights tandem stock options freestanding 3 restricted stock 4 performance share awards 5 stock value equivalent awards terms 1993 plan 55 million shares companys common stock reserved issuance key employees december 31 1993 47 million shares available future grants 1993 grants stock options made 327000 shares 371500 shares option prices per share 4025 3050 respectively stock options granted fair market value common stock grant date generally expire ten years grant date three years date retirement earlier stock options vest three year period onethird shares becoming exercisable first three anniversaries grant date none stock options exercisable december 31 1993 addition 107000 restricted shares issued 1993 plan 1993 shareholders company also approved restricted stock plan nonemployee directors restricted stock plan terms restricted stock plan nonemployee director receives annual award 200 restricted shares common stock part compensation company reserved 50000 shares common stock issuance nonemployee directors december 31 1993 48200 shares available future issuance terms companys career executive incentive stock plan adopted company 1969 75 million shares companys common stock reserved issuance officers key employees purchase price exceed par value 250 per share december 31 1993 61 million shares net 8 million shares forfeited issued plan grants made career executive incentive stock plan restricted shares issued 1993 plan restricted stock plan career executive incentive stock plan limited sale disposition restrictions lapsing periodically extended period time fair market value stock date issuance amortized charged income similar credits paidin capital excess par value generally average period restrictions lapse december 31 1993 unamortized amount 261 million see note 8 shares common stock reserved possible issuance note 10 series junior participating preferred stock 1986 company declared dividend one preferred stock purchase right outstanding share common stock par value 250 per share common shares terms outstanding rights subsequently modified companys board directors february 15 1990 amended rights agreement pursuant amended rights agreement right entitle holder thereof buy one onehundredth share companys series junior participating preferred stock without par value preferred shares exercise price 70 subject certain antidilution adjustments rights exercisable transferable apart common shares tenth business day person group acquires 20 common shares ii announces intention make tender exchange offer 20 common shares rights voting rights entitled dividends rights become exercisable company merges another entity ii acquiring entity merges company common shares company exchanged securities assets iii company sells 50 assets earning power right entitle holder purchase exercise price right number shares common stock acquiring company current market value two times exercise price right alternatively holder acquires 20 companys common shares right owned acquiring person group entitle holder purchase exercise price number common shares current market value two times exercise price right rights redeemable companys option 05 per right time prior time person group acquires beneficial ownership 20 common shares time person group acquires 20 common shares prior time acquiring person acquires 50 common shares companys board directors may redeem rights owned acquiring person whole part exchanging one common share two common shares right exercisable subject adjustment rights expire earlier occur june 1 1996 ii exchange redemption rights note 11 insurance subsidiaries consolidated financial statements include property casualty insurance subsidiaries health care management subsidiary sold effective september 30 1992 undistributed earnings 2000 million restricted payment dividends insurance subsidiaries december 31 1993 assets insurance subsidiaries exception dividend payments parent company available general corporate use insurance services written premiums follows united kingdom subsidiary company suspended underwriting activities due unacceptable loss experience recent years company recognized 463 million 210 million charge operating income 1993 1992 respectively additional claim loss reserves future administrative expenses claims processing activities related insurance coverage previously written united kingdom subsidiary may resume underwriting activities future market conditions improve companys insurance subsidiaries numerous reinsurance agreements insurance companies extent reinsurance company unable meet obligations reinsurance agreements companys insurance subsidiaries would remain obligated total reinsurance recoverables primarily relate ceded losses incurred reported claims major reinsurers include american reinsurance company general reinsurance corporation cigna property casualty company best ratings respectively 1993 company adopted sfas 113 accounting reporting reinsurance shortduration longduration contracts requires reinsurance receivables including amounts related claims incurred reported prepaid reinsurance premiums classified assets note 12 business segment information company operates three segments energy services engineering construction services insurance services see item 1 business page 2 description business segment companys equity income losses related companies included revenues operating income applicable segment insurance services revenues include 521 million 410 million 1588 million intersegment sales years ended december 31 1993 1992 1991 respectively intersegment revenues included revenues business segments immaterial sales geographic areas export sales also immaterial depreciation amortization expenses increased 1993 loss sale geophysical business 1994 discussed note 18 1289 million addition depreciation amortization expenses increased 1992 1991 special charges discussed note 17 follows general corporate assets primarily comprised cash equivalents certain investments note 13 research development research development expenses charged income incurred charges 1265 million 1993 1121 million 1992 1170 million 1991 addition company capitalized software development costs related primarily integrated information technologies project management 398 million 1993 448 million 1992 78 million 1991 note 14 commitments contingencies december 31 1993 company obligated noncancelable operating leases expiring various dates 2023 principally use land offices equipment field facilities aggregate rentals charged operations leases totaled 1336 million 1993 1374 million 1992 1338 million 1991 future aggregate rentals noncancelable operating leases follows 1994 1230 million 1995 761 million 1996 482 million 1997 325 million 1998 253 million thereafter 1088 million company involved potentially responsible party prp remedial activities clean various superfund sites applicable federal law imposes joint several liability harm indivisible certain persons without regard fault legality original disposal ownership site although difficult quantify potential impact compliance environmental protection laws management company believes liability company respect two sites material adverse effect results operations company respect site jasper county missouri jasper county superfund site nitro west virginia fikeartel chemical superfund site sufficient information developed permit management make determination management believes process determining nature extent remediation site total costs thereof lengthy brown root inc brown root subsidiary company named prp respect jasper county superfund site environmental protection agency epa jasper county superfund site includes areas mining activity occurred 1800s mid 1950s southwestern portion missouri site contains lead zinc mine tailings produced mining activity brown root one nine participating prps agreed perform remedial investigationfeasibility study rifs expected completed march 1995 although entire jasper county superfund site comprises 237 square miles listed national priorities list rifs scope work epa identified seven areas subsites within area need studied possibly remediated prps additionally administrative order consent rifs requires brown root perform rifs work one subsites within site neckalba subsite comprises 395 square miles brown roots share cost study expected material brown root cannot determine extent liability remediation costs reasonably practicable basis halliburton services division company hsd one 32 companies designated prps fikeartel chemical superfund site five operable units established epa connection remediation activities site epa recently instituted litigation us district court southern district west virginia united states v american cyanamid co inc et al prps seeking recovery past response costs operable unit 1 prps subject consent decree respect remediation operable unit 2 june 1993 epa issued unilateral administrative order requiring prps implement remediation operable unit 3 prps negotiating administrative order consent allow perform sitewide rifs past response costs alleged epa operable unit 1 remediation costs estimates operable units 2 3 cost estimates perform rifs range aggregate approximately 43 million approximately 70 million company believe hsds share response remediation costs operable units 1 2 3 rifs likely material companys financial statements present reliable estimates costs remediate operable units 4 5 epa yet proposed remediation methodology costs may however significantly larger estimates thereof units although liability associated site could possibly significant results operations future reporting period management believes based current knowledge hsds share costs site unlikely material adverse impact companys consolidated financial condition april 1991 us customs service initiated investigation subsidiary company halliburton logging services inc hls october 1991 result internal inquiry hls provided information us departments commerce justice case regarding export reexport certain oil field tools exported hls predecessors certain foreign affiliates reexported hls foreign affiliate libya without validated reexport license shipments involved thermal multigate decay tools used oil field logging operations occurred december 1987 june 1989 1992 hls received subpoenas produce documents related foregoing matter federal grand jury company believes us government take position shipments violated presidential executive orders imposing sanctions libya orders well export regulations department commerce regulations halliburton geophysical services inc hgs subsidiary acquired company 1988 unrelated matter advised us departments commerce justice march 1992 united kingdom subsidiary hgs small part business shipped libya period march 1987 april 1991 united states origin spare parts primarily equipment various types performed certain repairs training equipment consignee libyanbased geophysical company hgs owns indirect minority interest moreover certain items validly shipped consignee third country subsequently reexported libya without specific reexport authorization discovering matters uk subsidiary terminated activities support libyan companies operations although communication received us government regarding matter possible us government take position actions violated orders regulations july 1 1993 hls hgs well certain subsidiaries company merged company january 1994 company disposed geophysical business included substantially business hgs privilege exporting oil field tools products affiliates important company order support worldwide logging services sanctions corporations violations orders regulations range civil penalties including denial export privileges monetary penalties significant criminal fines company information regarding cannot predict nature type sanctions us government may seek respect either matters company subsidiaries parties various legal proceedings although ultimate disposition proceedings presently determinable opinion company liability might ensue would material relation consolidated financial position company note 15 financial instruments risk concentration company enters foreign currency exchange contracts including forward option swap contracts selective hedging exposure foreign currency fluctuations december 31 1993 company approximately 242 million net outstanding contracts market value gains losses arising foreign currency exchange contracts offset foreign exchange gains losses underlying hedged assets liabilities companys exposure credit currency risks contracts considered negligible financial instruments potentially subject company concentrations credit risk primarily cash equivalents investments trade receivables companys practice place cash equivalents investments high quality securities various investment institutions company derives majority revenues sales services including engineering construction energy industry within energy industry trade receivables generated broad diverse group customers concentrations receivables united states united kingdom company maintains allowance losses based upon expected collectibility trade accounts receivable note 16 retirement plans company offers postretirement medical plan certain employees qualify retirement last day active employment enrolled participants companys active employee medical plan companys liability limited fixed contribution amount participant dependent effective september 1993 coverage plan ceases participant reaches age 65 however participants aged 65 january 1 1994 option participate expanded prescription drug program lieu medical coverage plan participants share total cost benefits provided fixed company contribution participants contributions adjusted required cover benefit payments company made commitment adjust amount contributions therefore computed accumulated postretirement benefit obligation amount affected expected future healthcare cost inflation rate 1992 company adopted statement financial accounting standards 106 employers accounting postretirement benefits pensions sfas 106 requires accrual years employee renders services expected cost providing postretirement benefits january 1 1992 company recognized transition obligation 293 million charge net loss net income taxes 160 million 27 cents per share prior adoption sfas 106 company expensed contributions incurred amount expensed 1991 49 million net periodic postretirement benefit cost included following components weightedaverage discount rate used determining accumulated postretirement benefit obligation 7 1993 8 1992 companys postretirement medical plans funded status reconciled amounts included companys consolidated balance sheets december 31 1993 1992 follows company required fund future obligation plan company various retirement plans cover significant number employees major pension plans defined contribution plans provide pension benefits return services rendered provide individual account participant terms specify contributions participants account determined rather amount pension benefits participant receive contributions plans based pretax income andor discretionary amounts determined annual basis companys expense defined contribution plans totaled 561 million 737 million 606 million 1993 1992 1991 respectively pension plans include defined benefit plans define amount pension benefit provided usually function one factors age years service compensation plans funded operate actuarially sound basis assumed longterm rates return plan assets discount rates compensation increases vary different plans according local economic conditions assumed longterm return plan assets us plans 85 1993 1992 1991 international plans assumed longterm return 9 1993 9 10 1992 1991 discount rate used estimating benefit obligations us plans 75 1993 85 1992 international plans discount rate 4 85 1993 4 10 1992 rate compensation increase assumed us plans 425 1993 55 1992 international plans rate compensation increase 1 6 1993 1 7 1992 net periodic pension cost defined benefit plans follows reconciliation funded status defined benefit plans assets exceed accumulated benefits follows reconciliation funded status defined benefit plans accumulated benefits exceed assets follows note 17 special charges november 1992 company announced additional restructuring reorganization actions within energy services engineering construction services designed enable company effectively provide services products well better meet changing needs customers throughout world company implementation certain strategic initiatives recorded special charges 2646 million 1992 special charges include 597 million closing consolidation certain operating facilities 576 million globalizing employee benefits personnel reductions relocations associated employee benefits costs actions 535 million technological obsolescence certain inventories equipment related introduction new technologies 355 million realignment worldwide manufacturing capabilities includes outsourcing items previously manufactured company consolidation existing capacity 230 million certain investments operations longer companys longterm strategic interest 179 million reduction value certain intangible assets related primarily geophysical speculative data 174 million items primarily related cost relocating equipment result actions november 1991 company announced restructuring program within energy services designed enhance profit opportunities improve operating efficiencies respond changing needs customers driven primarily decline united states energy markets plans include restructuring business units consolidating administrative functions closing consolidating certain field locations reducing employment primarily united states result plans company recorded special charges 1185 million 1991 charges include 560 million early retirement severance benefits employee relocations employee organizational transition related items 441 million closing consolidating facilities impairment asset values inventories leases property equipment certain investments unconsolidated joint ventures whose value impaired due restructuring permanent changes market conditions 133 million various environmental efforts primarily involving removal underground storage tanks testing remediation activities comply wastewater discharge stormwater runoff standards 51 million items note 18 acquisitions dispositions january 1994 company sold substantially assets geophysical services products business western atlas international inc 1900 million cash notes subject certain adjustments notes 900 million payable two equal installments 1997 1998 rate interest 565 company intends sell 900 million notes cash first quarter 1994 addition company issued 738 million notes western atlas cover costs reducing certain geophysical operations including cost personnel reductions leases geophysical marine vessels closing duplicate facilities companys notes western atlas payable two years rate interest 4 initial installment 338 million february 1994 quarterly installments 5 million thereafter company recognized 3018 million charge 2638 million tax 1993 charge includes 1207 million writedown net realizable value equipment assets 540 million anticipated operating contract losses dates disposition completion 434 million marine vessel leases mobilization 351 million facility leases closures 344 million personnel severance 142 million transition costs related matters sale includes international business locations closings deferred pending certain approvals consents approvals consents expected received within next several months closings result additional consideration company retains ownership certain assets liabilities geophysical business including accounts receivable real estate properties lease obligations certain employee obligations majority interest international joint venture company expected remaining assets liabilities sold settled next several months services products provided geophysical business include seismic data collection data processing services land marine seismic exploration activities manufacturing sales seismic equipment revenues operating loss net loss geophysical operations excluding charge 1993 change accounting method special charges 1992 1991 follows march 1993 company acquired assets smith international incs directional drilling systems services business 6857000 shares halliburton company common stock previously held treasury stock valued approximately 247 million company recorded 1358 million excess cost net assets acquired excess cost net assets acquired amortized 40 years company announced july 1992 would pursue divestiture alternatives wholly owned highlands insurance company subsidiary related companies company concluded effort sell highlands 1993 without securing satisfactory transaction company concentrating improving financial results highlands operations march 1992 subsidiary company completed purchase substantially business assets manufacturer products serve gas lift portion artificial lift market 107 million cash company completed sale subsidiary engaged healthcare cost management services health economics corporation effective september 30 1992 sales price 24 million resulted pretax gain 136 million 8 cents per share tax reflected companys 1992 third quarter earnings september 1992 company announced acquiring remaining 50 interest rockwater offshore contractors rockwater previously owned smit international group rockwater formed 1990 merger companys 2w taylor subsidiary smit international groups smit offshore contractors provide underwater construction maintenance services worldwide rockwater acquisition accounted purchase used internal cash resources 46 million item 9item 8 financial statements supplementary data page responsibility financial reporting 15 report arthur andersen llp independent public accountants 16 consolidated statements income years ended december 31 1994 1993 1992 17 consolidated balance sheets december 31 1994 1993 18 consolidated statements cash flows years ended december 31 1994 1993 1992 19 consolidated statements shareholders equity years ended december 31 1994 1993 1992 20 notes financial statements 21 45 quarterly data market price information 46 related financial statement schedules included part iv item 14 annual report managements discussion analysis results operations financial condition business environment business company significantly affected worldwide expenditures energy industries company operates 100 countries operations countries may affected unsettled political conditions expropriation governmental actions exchange control currency problems company believes diversification activities reduces risk loss operations one country would material conduct operations taken whole operations halliburton energy services impacted quickly shortterm increases decreases oil natural gas development activities major producing areas throughout world development activities sensitive legislative environment united states major producing countries developments middle east impact events pricing oil natural gas operations engineering construction services subject longerterm economic trends united states major countries major economic factor capital spending plans hydrocarbon processing pipeline delivery networks major oil natural gas chemical companies throughout world factors include capital spending plans pulp paper industry environmental laws require emission standards performance existing new facilities governmental spending military logistical support united states united kingdom operations insurance services impacted legislative legal environment united states interest rates catastrophic events results operations consolidated highlights revenues 1994 57405 million decrease 10 1993 revenues 63508 million 13 decrease 1992 revenues 65659 million excluding revenues geophysical operations divested january 1994 revenues 1994 decreased 3 1993 6 1992 energy services revenues excluding geophysical revenues declined 1994 compared 1993 increased 1992 revenues engineering construction services insurance services declined 1993 1992 operating income 1994 2350 million compared operating losses 1326 million 1993 1014 million 1992 excluding items listed operating income 1994 increased 9 1993 32 1992 increase operating income excluding items listed energy services 1994 company recognized 426 million charge energy services operating income 277 million net income taxes recognize severance costs termination 2700 employees see note 17 consolidated financial statements 1993 company recognized 3018 million charge energy services operating income 2638 million net income taxes reflect net realizable value companys geophysical operations disposed january 1994 see note 19 consolidated financial statements company also provided 200 million charge 1993 130 million net income taxes related energy services nongeophysical employee severance costs addition company provided 463 million charge 1993 210 million charge 1992 339 million 174 million net income taxes 1993 1992 related claims loss reserves united kingdom insurance business year expenses suspension underwriting activities 1993 insurance services united kingdom subsidiary see note 11 consolidated financial statements see note 18 financial statements description special charges energy services engineering construction services 1992 provided closing consolidating certain operating facilities globalizing employee benefits personnel reductions relocations associated employee benefits costs technological obsolescence certain inventories equipment related introduction new technologies realignment worldwide manufacturing capabilities writedown certain investments operations longer companys longterm strategic interest reduction certain intangible assets items consolidated net income 1994 1778 million compared net losses 1610 million 1993 1373 million 1992 excluding items listed net income would 1412 million 1994 1232 million 1993 997 million 1992 net income per share 1994 156 compared loss per share 143 1993 loss per share 128 1992 excluding items listed net income per share would 124 per share 1994 110 1993 93 1992 energy services 1993 company reorganized ten separate business units energy services single division objectives reorganization deliver services products focused specific needs customers geographical area integrate products services processes deliver integrated services solutions customers easily adapt changes market sizes locations result produce acceptable operating results cash flows reorganization enabled company reduce number energy services employees 1994 addition company adopted performance measurement 1995 incentive compensation plan based upon cash flows shareholder value creation reduced cost structure improvements delivery products services customers organizational efficiencies improved energy services operating profit performance 1994 highest level since 1990 recently price natural gas declined expected remain 1994 price levels 1995 decline natural gas prices tends reduce exploration onland drilling activities north america quickly north american offshore activities impacted decline prices sustained longer period time period price oil risen net result factors reduce demand energy services products north america increase demand internationally result company expects demand energy services 1995 1994 slightly lower however energy services continue benefit reduced cost structure operational customer focus revenues 1994 25140 million 15 decrease 1993 revenues 29534 million 8 decrease 1992 revenues 27263 million excluding revenues divested geophysical operations revenues 1994 decreased 1 1993 increased 11 1992 decrease revenues 1994 1993 relates primarily reduced activities north sea middle east market disturbances nigeria brazil addition higher levels completion activity experienced early part 1993 wells drilled prior december 31 1992 expiration united states section 29 tight sands gas tax credits increase 1994 revenues 1992 relates primarily acquisition drilling systems business 1993 operating income 1994 1911 million compared losses 1477 million 1993 636 million 1992 excluding items listed operating income would 2337 million 20 increase 1993 income 1942 million 61 increase 1992 income 1450 million increase operating income related successful implementation strategic action plans continued lower cost structure improve organizational efficiencies particularly north america increased activities south america operating income 1994 includes 124 million compared 310 million 1993 105 million 1992 resulting combination ongoing operations collections work performed libya foreign subsidiaries company engineering construction services engineering construction services bid activities increased 1994 1993 trend expected continue 1995 1996 improved profits cash flows key industries served leading customers expand capital spending plans addition opportunities continue sought integration services offered engineering construction services energy services total energy field development operation integrated service arrangements offered alliances partnering agreements major energy companies governmentowned energy companies likely expand 1995 engineering construction services also continues seek arrangements government entities privatization services government entities try maintain reduce costs number opportunities provide services management contracts becoming available growth types opportunities along improving economic development major countries throughout world beneficial 1995 revenues 1994 29962 million 5 decrease 1993 revenues 31407 million 16 decrease 1992 revenues 35637 million decrease related decline available work downstream energy projects due primarily uncertainty longterm oil prices united kingdom tax policies north sea development activity well restrictions customers cash flows middle east decrease partially offset awards additional privatization service agreements primarily europe africa operating income 1994 672 million compared income 793 million 1993 loss 120 million 1992 excluding special charges 1992 operating income 1992 would 706 million decrease operating income 1994 due primarily contract losses north sea marine fabrication projects electric utility plant project united states decline 1994 operating income partially offset profitability pipeline construction projects north sea far east inclusion 50 million gain sale environmental remediation subsidiary operating income 1994 also includes income 51 million compared 137 million 1993 resulting primarily work performed libya foreign subsidiaries company backlog unfilled firm orders engineering construction projects increased 14 1994 1993 backlog may reliable indicator future profitability activity levels due duration many projects complexity various contract terms insurance services revenues 2303 million 1994 10 decrease 1993 17 decrease 1992 insurance services exited assumed reinsurance property catastrophe business 1994 however still exposed catastrophes may occur future writing direct property coverages primarily texas louisiana reduced revenues primarily result lower earned premiums discontinued lines business changes customers type workers compensation coverage deductible contract delays cash flow premiums received insurance services operating loss 04 million 1994 compared loss 422 million 1993 loss 48 million 1992 excluding provisions claim loss reserves united kingdom business suspension underwriting activities united kingdom 1993 1992 operating income would 41 million 1993 162 million 1992 investment income lower 1994 1993 compared 1992 due primarily lower yields available investments reductions invested balances 1994 along realization 1992 gains sale certain investments companys insurance subsidiaries numerous reinsurance agreements insurance companies see note 11 financial statements nonoperating items interest income 1992 includes interest income tax refund 128 million excluding interest refund interest income 1994 1993 lower 1992 due primarily lower interest rates available invested cash equivalents lower average levels invested cash foreign currency losses 1994 156 million compared 1993 losses 210 million 1992 losses 327 million foreign currency losses 1994 relate primarily brazil venezuela prior year losses related primarily various latin american african currency exposures 1993 european african latin american currency exposures 1992 economic programs recently initiated governments brazil mexico venezuela stabilize economies curtail rate devaluation local currencies programs successful future foreign exchange losses company countries significantly smaller past however programs unsuccessful future foreign exchange losses countries likely continue nigeria recently changed currency controls change likely result 8 million gain nigeria first quarter 1995 nonoperating income 1994 includes gain sale companys natural gas compression business 1020 million nonoperating income 1992 includes 136 million gain sale companys health care cost management services company income taxes reduced 1993 404 million due settlement internal revenue service relating tax assessments 19801987 taxable years see note 7 financial statements income taxes reduced 1993 additional 64 million due changes federal income tax laws effective income tax rates excluding items outlined years 1994 1993 1992 39 43 48 respectively decline companys effective income tax rate 1993 1992 primarily due improvement foreign earnings reduction foreign losses fully benefitted company reviews probable realizability deferred tax assets liabilities taxing jurisdiction utilizing historical forecast information valuation allowance provided deferred tax assets likely items either expire company able realize benefit future deductibility statutorily prohibited uncertain approximately 80 deferred tax assets december 31 1994 relate united states federal temporary differences company believes sufficient taxable income combination carryback years future reversals taxable temporary differences anticipated future taxable income utilize future deductions represented deferred tax assets addition company implement certain tax planning strategies accelerate taxable amounts utilize expiring carryforwards offset valuation allowance company changed methods accounting income taxes postretirement benefits pensions 1992 see notes 7 16 financial statements description changes accounting methods liquidity capital resources company ended year 1994 cash equivalents 4281 million increase 3793 million 1993 increase 1948 million 1992 excluding cash equivalents insurance services restricted general corporate purposes unless paid parent dividend cash equivalents end year 1994 3753 million increase 3678 million 1993 increase 2289 million 1992 increase cash due primarily increase cash flows proceeds sale geophysical business natural gas compression business outlined operating activities operating activities cash flows operating activities 1994 4434 million 2431 million 1993 3816 million 1992 increase cash flows operating activities 1994 primarily due improved profitability sale geophysical services eliminated source historically negative cash flows addition receivables inventories energy services declined partially offset declines payables primarily related payments geophysical related liabilities receivables also declined 1994 due collections income tax receivables investing activities cash flows investing activities provided 1943 million cash 1994 compared use 3425 million 1993 use 1385 million 1992 1994 increase due proceeds sale geophysical business natural gas compression business sale two small subsidiaries along reduced outflows software development capital expenditures elimination outflows related geophysical speculative data january 1994 company sold substantially assets geophysical services products business 1900 million cash notes subject certain adjustments notes received sold 1994 november 1994 company sold natural gas compression business 2050 million cash acquisitions property plant equipment 2347 million 1994 2469 million 1993 3159 million 1992 reduction companys expenditures property plant equipment reflects part energy services combining resources optimize profitable target market companys expenditures property plant equipment 1995 may slightly higher 1994 unless market conditions deteriorate company believes current levels expenditures property plant equipment related energy services reduced historical levels adequate support current anticipated replacement requirements company net payments purchases marketable securities 1994 162 million compared net payments 170 million 1993 net receipts sales maturities 2115 million 1992 net payments 1994 1993 primarily due investment activities insurance services net receipts 1992 primarily due maturities companys investment cash available general corporate use shortterm securities time purchase maturities excess 90 days receipts sales property plant equipment increased 1994 1993 1992 due primarily sale workover platforms investing activities 110 million 1994 818 million 1993 880 million 1992 investing activities include investments proprietary information licensed sold decrease due primarily disposal geophysical business financing activities cash flows financing activities used 2526 million 1994 compared 810 million 1993 1358 million 1992 1994 increase outflows related reduction shortterm indebtedness redemption longterm debt installments note issued company buyer geophysical business longterm debt 6431 million end 1994 compared 6239 million end 1993 6567 million end 1992 1994 company redeemed remaining 238 million 102 debentures made 488 million installments 738 million note issued company buyer geophysical business 1993 company redeemed 565 million principal amount debentures company issued 42 million shortterm debt 1992 refinanced longterm debt 1993 addition 1992 company redeemed 558 million principal amount debentures total debt 26 27 26 total capitalization end 1994 1993 1992 respectively holder companys zero coupon convertible subordinated debentures option require company purchase debentures march 13 1996 purchase price equal issue price plus accrued original issue discount date purchase aggregate amount debentures march 13 1996 expected 4032 million current market conditions redemption debentures holder would likely company sufficient ability borrow additional shortterm longterm funds necessary see note 8 financial statements regarding companys various shortterm lines credit july 1993 company filed registration statement securities exchange commission covering proposed public offering companys debt securities aggregate initial public offering price exceed 500 million company may offer sell timetotime one series debt securities terms determined time offering 1993 connection acquisition drilling systems business company issued 6857000 shares common stock previously held treasury stock see note 19 financial statements environmental matters company involved potentially responsible party remedial activities clean various superfund sites applicable federal law imposes joint several liability harm indivisible certain persons without regard fault legality original disposal ownership site although difficult quantify potential impact compliance environmental protection laws management company believes liability company respect two sites material adverse effect results operations company see note 14 financial statements additional information two sites export matters see note 14 financial statements concerning certain actions united states government concerning exports subsidiaries company responsibility financial reporting halliburton company responsible preparation integrity published financial statements financial statements prepared accordance accounting principles generally accepted united states include amounts based judgments estimates made management company also prepared information included annual report responsible accuracy consistency financial statements financial statements audited independent accounting firm arthur andersen llp given unrestricted access financial records related data including minutes meetings stockholders board directors committees board company maintains system internal control financial reporting intended provide reasonable assurance companys management board directors regarding preparation financial statements system includes documented organizational structure division responsibility established policies procedures including codes conduct foster strong ethical climate communicated throughout company careful selection training development people internal auditors monitor operation internal control system report findings recommendations management board directors corrective actions taken address control deficiencies opportunities improving system identified board operating audit committee composed entirely directors officers employees company provides oversight financial reporting process inherent limitations effectiveness system internal control including possibility human error circumvention overriding controls accordingly even effective internal control system provide reasonable assurance respect financial statement preparation furthermore effectiveness internal control system may change time company assessed internal control system relation criteria effective internal control financial reporting described internal controlintegrated framework issued committee sponsoring organizations treadway commission based upon assessment company believes december 31 1994 system internal control financial reporting met criteria halliburton company thomas h cruikshank jerry h blurton thomas h cruikshank jerry h blurton chairman board vice president chief executive officer finance report independent public accountants shareholders board directors halliburton company audited accompanying consolidated balance sheets halliburton company delaware corporation subsidiary companies december 31 1994 1993 related consolidated statements income cash flows shareholders equity three years period ended december 31 1994 financial statements responsibility halliburton companys management responsibility express opinion financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position halliburton company subsidiary companies december 31 1994 1993 results operations cash flows three years period ended december 31 1994 conformity generally accepted accounting principles discussed notes 2 11 financial statements required generally accepted accounting principles company changed methods accounting certain investments debt equity securities reinsurance shortduration longduration contracts effective december 31 1993 january 1 1993 respectively addition discussed notes 7 16 financial statements required generally accepted accounting principles company changed methods accounting income taxes accounting postretirement benefits respectively effective january 1 1992 arthur andersen llp arthur andersen llp dallas texas february 1 1995 note 1 significant accounting policies principles consolidation consolidated financial statements include accounts company majorityowned subsidiaries material intercompany accounts transactions eliminated investments affiliated companies company least 20 percent ownership management control accounted equity method certain prior year amounts reclassified conform current year presentation cash equivalents company considers highly liquid investments original maturity three months less cash equivalents investments 1993 company adopted statement financial accounting standards 115 accounting certain investments debt equity securities sfas 115 requires classification debt equity securities following categories heldtomaturity availableforsale trading investments classified heldtomaturity measured amortized cost classification based upon companys intent ability hold securities full maturity investments classified availableforsale trading measured fair value balance sheet dates unrealized gains losses availableforsale investments reported separate component shareholders equity investments primarily relate activities companys insurance subsidiaries consist commercial paper bonds equity securities reinsurance recoverables reinsurance receivables including amounts related claims incurred reported prepaid reinsurance premiums classified assets amounts recoverable reinsurers estimated consistent determination claim liability associated reinsured policy inventories stated cost excess market cost represents invoice production cost new items original cost less allowance condition used material returned stock production cost includes material labor manufacturing overhead onehalf sales items including related work process raw materials valued lastin firstout lifo basis inventories sales items owned foreign subsidiaries inventories operating supplies parts generally valued average cost depreciation maintenance depreciation financial reporting purposes provided primarily straightline method estimated useful lives assets expenditures maintenance repairs expensed expenditures renewals improvements generally capitalized upon sale retirement property plant equipment related cost accumulated depreciation removed accounts gain loss recognized excess cost net assets acquired excess cost fair value net assets acquired generally amortized straightline basis periods exceeding 40 years income taxes 1992 company adopted statement financial accounting standards 109 accounting income taxes requires recognition deferred tax assets liabilities expected future tax consequences events included financial statements tax returns derivative instruments company enters derivative financial transactions hedge existing projected exposures changing foreign exchange rates interest rates security prices commodity prices company enter derivative transactions speculative purposes gains losses commodity futures transactions involve hedging price movements life longterm fixed price contracts deferred futures contracts liquidated hedges commodity prices generally carried fair value resulting gains losses reflected results operations gains losses foreign exchange contracts local currency functional currency recorded separate component shareholders equity reserves insurance losses claims unearned premiums reserves insurance losses claims include estimates amounts required settle losses incurred reported changes estimates differences estimates ultimate payments reflected income period changes differences become known unearned premiums determined prorating policy premiums terms policies revenues income recognition company recognizes revenues services rendered products shipped distinction services product sales based upon overall business intent particular business operation revenues construction contracts reported percentage completion method accounting using measurements progress toward completion appropriate work performed known anticipated losses contracts provided currently claims additional compensation recognized period claims resolved foreign currency translation companys primary functional currency us dollar foreign entities translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates income expense accounts translated average rates effect year except depreciation cost product sales translated historical rates gains losses changes exchange rates recognized consolidated income year occurrence remaining entities use local currency functional currency translate net assets yearend rates income expense accounts translated average exchange rates adjustments resulting translations reflected shareholders equity section titled cumulative translation adjustment income per share income per share based weighted average number common shares common share equivalents outstanding year common share equivalents included computation represent shares issuable upon assumed exercise stock options dilutive effect note 2 investments company adopted sfas 115 accounting certain investments debt equity securities end 1993 investments primarily held companys insurance subsidiaries december 31 1994 1993 follows company trader bonds classified investments two categories availableforsale heldtomaturity investments classified availableforsale may sold fund liquidity requirements assist meeting regulatory capital requirements operating needs change credit worthiness issuer investments classified heldtomaturity investments include bonds company ability intent hold contractual maturity reached fair value investments based quoted market prices available quotes external pricing sources brokers similar investments issues individual security issue exceeds 2 total assets carrying fair value debt securities availableforsale heldtomaturity december 31 1994 shown contractual maturity actual maturities may differ contractual maturities securities may restructured called prepaid securities multiple maturity dates disclosed separately rather allocated several maturity groupings proceeds sales investments availableforsale 1994 630 million gross gains 16 million realized sales cost security sold specifically identified computing related realized gain loss net unrealized losses investments availableforsale included shareholders equity december 31 1994 76 million net income tax benefit 26 million december 31 1993 company net unrealized gains investments availableforsale included shareholders equity 93 million net income taxes 23 million securities classified heldtomaturity amortized cost 199 million called issuers prior maturity 1994 resulted net realized gain 03 million note 3 receivables companys receivables generally collateralized notes accounts receivable december 31 1994 include 301 million 363 million december 31 1993 currently due customers accordance applicable retainage provisions engineering construction contracts december 31 1994 amount approximately 291 million expected collected 1995 remainder due subsequent years unbilled work uncompleted contracts generally represents work currently billable work usually billed normal billing processes next month note 4 inventories consolidated inventories december 31 1994 1993 consist following onehalf sales items including related work process raw materials valued using lifo method average cost method use inventories lifo basis total inventories would 219 million 370 million higher reported december 31 1994 1993 respectively note 5 property plant equipment major classes fixed assets december 31 1994 1993 follows note 6 related companies company conducts operations various joint venture partnership forms principally accounted using equity method summarized financial statements combined jointlyowned operations consolidated follows european marine contractors limited 50 owned company part engineering construction services specializes engineering procurement construction marine pipelines included companys revenues 1994 1993 1992 equity income related companies 930 million 763 million 405 million respectively company sells transfers assets affiliated company accounted using equity method affiliated company records assets fair value excess fair value assets companys net book value deferred amortized expected lives assets deferred gains included companys liabilities 194 million 228 million december 31 1994 1993 respectively note 7 income taxes 1992 company adopted statement financial accounting standards 109 accounting income taxes sfas 109 recognizes deferred tax assets liabilities expected future tax consequences existing differences financial reporting tax reporting bases assets liabilities operating loss tax credit carryforwards tax purposes cumulative impact adoption sfas 109 benefit 155 million 14 cents per share components provision benefit income taxes included deferred income taxes foreign tax credits 184 million 1994 283 million 1992 net operating loss carryforwards utilized 91 million 73 million 1993 1992 respectively us foreign components income loss income taxes minority interest changes accounting methods follows primary components companys deferred tax assets liabilities related valuation allowances follows company foreign tax credits expire 1997 140 million company net foreign operating loss carryforwards expire follows 1995 61 million 1996 80 million 1997 91 million 1998 149 million 1999 2004 424 million indefinite 623 million reconciliations actual benefit provision income taxes computed applying us statutory rate income loss income taxes minority interest changes accounting methods follows 1994 company received statutory notice deficiency 1989 tax year internal revenue service irs 518 million excluding penalties interest company believes meritorious defenses expect liability resulting 1989 tax year result material adverse effect results operations financial position 1993 company reached settlement irs 19801987 taxable years result settlement well significant prepayments taxes prior years company received refund net income increased 404 million 1993 note 8 lines credit longterm debt company shortterm lines credit totaling 4450 million several us banks borrowings outstanding december 31 1994 credit facilities december 31 1994 307 million shortterm debt outstanding longterm debt december 31 1994 1993 consists following companys 875 debentures due february 15 2021 sinking fund requirements redeemable prior maturity companys 7282 million principal amount maturity zero coupon convertible subordinated debentures due 2006 periodic interest payment requirements annual yield maturity 600 1000 principal amount maturity debenture convertible 6824 shares common stock company debenture holder option require company purchase debentures march 13 1996 march 13 2001 purchase price equal issue price debentures plus accrued original issue discount date purchase amount may paid company cash shares companys common stock five million shares companys common stock reserved event conversion presently antidilutive earnings per share purposes debentures redeemable cash time option company redemption price equal issue price debentures plus accrued original issue discount date redemption 1994 company issued 738 million notes purchaser geophysical business cover costs reducing certain geophysical operations including cost personnel reductions leases geophysical marine vessels closing duplicate facilities companys notes payable two years rate 4 1994 company redeemed 488 million note payable june 1 1994 company redeemed remaining 238 million 102 sinking fund debentures due june 1 2005 maturities longterm debt succeeding five years follows 1995 201 million 1996 156 million 1997 105 million 1998 210 million maturities 1999 note 9 common stock 1993 shareholders company approved 1993 stock longterm incentive plan 1993 plan 1993 plan provides grant following types awards 1 stock options including incentive stock options nonqualified stock options 2 stock appreciation rights tandem stock options freestanding 3 restricted stock 4 performance share awards 5 stock value equivalent awards terms 1993 plan 55 million shares companys common stock reserved issuance key employees december 31 1994 36 million shares available future grants stock option transactions 1993 1994 summarized follows stock options granted fair market value common stock grant date generally expire ten years grant date three years date retirement earlier stock options vest three year period onethird shares becoming exercisable first three anniversaries grant date number stock option shares exercisable december 31 1994 243826 restricted shares awarded 1993 plan 1994 1993 80600 net forfeitures 5000 shares 107000 respectively 1993 shareholders company also approved restricted stock plan nonemployee directors restricted stock plan terms restricted stock plan nonemployee director receives annual award 200 restricted shares common stock part compensation company reserved 50000 shares common stock issuance nonemployee directors december 31 1994 46600 shares available future issuance 1994 company awarded 96750 restricted shares employees restricted stock plan company reserved 100000 shares common stock issuance employees officers december 31 1994 3250 shares available future issuance terms companys career executive incentive stock plan adopted company 1969 75 million shares companys common stock reserved issuance officers key employees purchase price exceed par value 250 per share december 31 1994 59 million shares net 10 million shares forfeited issued plan grants made career executive incentive stock plan restricted shares issued 1993 plan restricted stock plan employees restricted stock plan career executive incentive stock plan limited sale disposition restrictions lapsing periodically extended period time fair market value stock date issuance amortized charged income similar credits paidin capital excess par value generally average period restrictions lapse december 31 1994 unamortized amount 208 million see note 8 shares common stock reserved possible issuance note 10 series junior participating preferred stock 1986 company declared dividend one preferred stock purchase right outstanding share common stock par value 250 per share common shares terms outstanding rights subsequently modified companys board directors february 15 1990 amended rights agreement pursuant amended rights agreement right entitle holder thereof buy one onehundredth share companys series junior participating preferred stock without par value preferred shares exercise price 70 subject certain antidilution adjustments rights exercisable transferable apart common shares tenth business day person group acquires 20 common shares ii announces intention make tender exchange offer 20 common shares rights voting rights entitled dividends rights become exercisable company merges another entity ii acquiring entity merges company common shares company exchanged securities assets iii company sells 50 assets earning power right entitle holder purchase exercise price right number shares common stock acquiring company current market value two times exercise price right alternatively holder acquires 20 companys common shares right owned acquiring person group entitle holder purchase exercise price number common shares current market value two times exercise price right rights redeemable companys option 05 per right time prior time person group acquires beneficial ownership 20 common shares time person group acquires 20 common shares prior time acquiring person acquires 50 common shares companys board directors may redeem rights owned acquiring person whole part exchanging one common share two common shares right exercisable subject adjustment rights expire earlier occur june 1 1996 ii exchange redemption rights note 11 insurance subsidiaries consolidated financial statements include property casualty insurance subsidiaries health care management subsidiary sold effective september 30 1992 undistributed earnings 1775 million restricted payment dividends insurance subsidiaries december 31 1994 assets insurance subsidiaries exception dividend payments parent company available general corporate use insurance services written premiums follows united kingdom subsidiary company suspended underwriting activities due unacceptable loss experience 1993 1992 company recognized 463 million 210 million charge operating income 1993 1992 respectively additional claim loss reserves future administrative expenses claims processing activities related insurance coverage previously written united kingdom subsidiary may resume underwriting activities future market conditions improve companys insurance subsidiaries numerous reinsurance agreements insurance companies extent reinsurance company unable meet obligations reinsurance agreements companys insurance subsidiaries would remain obligated total reinsurance recoverables primarily relate ceded losses incurred reported claims major reinsurers include american reinsurance company general reinsurance corporation cigna property casualty company best ratings respectively 1993 company adopted sfas 113 accounting reporting reinsurance shortduration longduration contracts requires reinsurance receivables including amounts related claims incurred reported prepaid reinsurance premiums classified assets insurance losses claims related asbestos environmental remediation based upon managements best estimates using facts currently known taking consideration current legislative legal environment developed case law adequate claim history exist claims estimates liability reviewed updated continually due significant uncertainties related types claims past claim experience may representative future claim experience note 12 business segment information company operates three segments energy services engineering construction services insurance services energy services products services include drilling systems services pressure pumping equipment services logging perforating specialized completion production equipment services well control engineering construction services provides engineering construction project management facilities operation maintenance environmental services industrial government customers insurance services offers casualty property surety marine insurance services companys equity income losses related companies included revenues operating income applicable segment insurance services revenues include 344 million 521 million 410 million intersegment sales years ended december 31 1994 1993 1992 respectively intersegment revenues included revenues business segments immaterial sales geographic areas export sales also immaterial depreciation amortization expenses increased 1993 loss sale geophysical business 1994 discussed note 19 1289 million 1992 depreciation amortization expenses energy services engineering construction services increased 621 million 120 million respectively special charges discussed note 18 general corporate assets primarily comprised cash equivalents certain investments note 13 research development research development expenses charged income incurred charges 1095 million 1994 1265 million 1993 1121 million 1992 addition company capitalized software development costs related primarily integrated information technologies project management 64 million 1994 398 million 1993 448 million 1992 note 14 commitments contingencies december 31 1994 company obligated noncancelable operating leases expiring various dates 2108 principally use land offices equipment field facilities aggregate rentals charged operations leases totaled 1075 million 1994 1336 million 1993 1374 million 1992 future aggregate rentals noncancelable operating leases follows 1995 743 million 1996 533 million 1997 410 million 1998 312 million 1999 222 million thereafter 1011 million company involved potentially responsible party prp remedial activities clean various superfund sites applicable federal law imposes joint several liability harm indivisible certain persons without regard fault legality original disposal ownership site although difficult quantify potential impact compliance environmental protection laws management company believes liability company respect two sites material adverse effect results operations company respect site jasper county missouri jasper county superfund site nitro west virginia fikeartel chemical superfund site sufficient information developed permit management make determination management believes process determining nature extent remediation site total costs thereof lengthy brown root inc brown root subsidiary company named prp respect jasper county superfund site environmental protection agency epa jasper county superfund site includes areas mining activity occurred 1800s mid 1950s southwestern portion missouri site contains lead zinc mine tailings produced mining activity brown root one nine participating prps agreed perform remedial investigationfeasibility study rifs expected completed march 1995 although entire jasper county superfund site comprises 237 square miles listed national priorities list rifs scope work epa identified seven areas subsites within area need studied possibly remediated prps additionally administrative order consent rifs requires brown root perform rifs work one subsites within site neckalba subsite comprises 395 square miles brown roots share cost study expected material brown root cannot determine extent liability remediation costs reasonably practicable basis company one 32 companies designated prps fikeartel chemical superfund site six operable units established epa connection remediation activities site epa instituted litigation us district court southern district west virginia united states v american cyanamid co inc et al prps seeking recovery past response costs operable unit 1 prps subject consent decree respect remediation operable unit 2 june 1993 epa issued unilateral administrative order requiring prps implement remediation operable unit 3 prps entered administrative order consent allow perform sitewide rifs operable unit 4 companys share past response costs alleged epa operable unit 1 remediation cost estimates operable units 2 3 cost estimates perform rifs operable unit 4 range aggregate approximately 17 million approximately 23 million present reliable estimates costs remediate operable units 5 6 epa yet proposed remediation methodology costs may however significantly larger estimates thereof units although liability associated site could possibly significant results operations future reporting period management believes based current knowledge share costs site unlikely material adverse impact companys consolidated financial condition april 1991 us customs service initiated investigation subsidiary company halliburton logging services inc hls october 1991 result internal inquiry hls provided information us departments commerce justice case regarding export reexport certain oil field tools exported hls predecessors certain foreign affiliates reexported hls foreign affiliate libya without validated reexport license shipments involved thermal multigate decay tools used oil field logging operations occurred december 1987 june 1989 1992 hls received subpoenas produce documents related foregoing matter federal grand jury company believes us government take position shipments violated presidential executive orders imposing sanctions libya orders well export regulations department commerce regulations halliburton geophysical services inc hgs subsidiary acquired company 1988 unrelated matter advised us departments commerce justice march 1992 united kingdom subsidiary hgs small part business shipped libya period march 1987 april 1991 united states origin spare parts primarily equipment various types performed certain repairs training equipment consignee libyanbased geophysical company hgs owned indirect minority interest moreover certain items validly shipped consignee third country subsequently reexported libya without specific reexport authorization discovering matters uk subsidiary terminated activities support libyan companies operations company believes us government take position actions violated orders regulations july 1 1993 hls hgs well certain subsidiaries company merged company january 1994 company disposed geophysical business included substantially business hgs privilege exporting oil field tools products affiliates important company order support worldwide logging services sanctions corporations violations orders regulations range civil penalties including denial export privileges monetary penalties significant criminal fines although company cannot predict exact nature sanctions us government may seek respect matters company believes us government seek impose civil penalties criminal fines opinion company amount penalties fines would material results operations consolidated financial position company subsidiaries parties various legal proceedings although ultimate disposition proceedings presently determinable opinion company liability might ensue would material relation consolidated financial position company note 15 financial instruments risk concentration foreign exchange risk company operates 100 countries around world exposures currency fluctuations approximately 80 foreign currencies exposures subject company risk eventual dollar net cash flows sales customers purchases suppliers could adversely affected changes exchange rates currencies established markets facilitate active exchange one currency another traded currencies widely traded actively controlled respective governments nontraded currencies part companys efforts minimize foreign exchange risk company hedges foreign currency exposure traded currencies use simple currency derivative instruments foreign currency transactions speculative trading purposes permitted companys policy hedge significant exposures potential foreign exchange losses considering current market conditions future operating activities cost hedging exposure relation perceived risk loss techniques managing foreign exchange risk include limited foreign currency borrowing investments forward exchange contracts foreign exchange option contracts forward exchange contracts commitments buy sell specified amount foreign currency specified price time foreign exchange option contracts puts calls convey right obligation sell buy specified amount foreign currency specified price put option sell call option buy table provides comparison companys net asset liability position december 31 1994 traded us dollar nontraded currencies well fair value notional amounts hedging contracts company buyer seller buyer amounts represent us dollar equivalent contracts company purchaser foreign currencies seller amounts represent us dollar equivalent contracts company seller foreign currencies company limits ability benefit favorable fluctuations foreign exchange rates use forward contracts none forward option contracts utilized exchange traded december 31 1994 company outstanding forward contracts currency options fair values 118 million 122 million respectively manage foreign exchange risk contracts generally expiration date one year less forward contracts generally used hedge identifiable cash flows currency options generally used hedge cash flows indeterminable maturity date contracts involve exchange two foreign currencies according local needs foreign subsidiaries foreign currency amounts translated rates current reporting date gains losses amortization premiums paid contracts included foreign currency gains losses table summarizes major currency fair value notional amounts companys forward exchange option contracts us dollars december 31 1994 cash flow exposures nontraded currencies generally hedged due primarily cost considerations lack available markets company attempts manage working capital position minimize currency exposure nontraded currencies recognizes pricing services products offered countries cover cost exchange rate devaluations company historically incurred transaction losses nontraded currencies brazil venezuela mexico nigeria due magnitude currency devaluations rather size foreign currency exposures net foreign exchange losses four currencies 188 million 1994 248 million 1993 205 million 1992 december 31 1994 combined net asset position four currencies 76 million interest rate risk company interest rate cap agreement reduce risk changes interest rates 420 million floating rate longterm debt due 1998 company paid 5 million place maximum interest rate cap 655 per annum debt cumulatively 1995 1998 last three years credit agreement amounts receivable interest cap agreement treated adjustment interest expense period earned cost cap amortized interest expense three year period effective commodity exchange risk company often enters exchange traded commodity futures contracts protect company adverse fuel raw material price movements life longterm fixed price contracts engineering construction services business fuel andor raw materials consumed company reduces number contracts outstanding gains losses incurred liquidation contracts recognized part cost fuel raw materials gains losses rolling portfolio forward deferred contracts liquidated december 31 1994 company deferred losses contracts 2 million december 31 1994 notional amount contracts held company 29 million credit risk financial instruments potentially subject company concentrations credit risk primarily cash equivalents investments trade receivables companys practice place cash equivalents investments high quality securities various investment institutions company derives majority revenues sales services including engineering construction energy industry within energy industry trade receivables generated broad diverse group customers concentrations receivables united states united kingdom company maintains allowance losses based upon expected collectibility trade accounts receivable notional amounts companys foreign exchange contracts commodity futures contracts represent amounts exchanged parties thus measure exposure company credit exposure company foreign exchange contracts commodity futures contracts represented carrying amount contracts company expect counterparties fail meet obligations contracts given high credit ratings fair value financial instruments financial position company december 31 1994 includes certain financial instruments may fair value different value currently reflected financial statements reviewing financial instruments company certain assumptions methods used determine fair value category financial instruments practicable estimate value carrying amounts estimated fair value companys financial instruments december 31 1994 1993 follows carrying amounts derivatives included assets generally represent unamortized amounts paid instruments carrying amount shortterm financial instruments cash equivalents receivables certain liabilities approximates fair value due short maturity instruments fair value investments longterm debt foreign exchange risk instruments interest rate risk instruments based quoted market prices available quotes external pricing sources brokers similar investments issues carrying amount commodity exchange risk instruments based margin requirements instruments approximates fair value note 16 retirement plans company offers postretirement medical plan certain employees qualify retirement last day active employment enrolled participants companys active employee medical plan companys liability limited fixed contribution amount participant dependent effective september 1993 coverage plan ceases participant reaches age 65 however participants aged 65 january 1 1994 option participate expanded prescription drug program lieu medical coverage plan participants share total cost benefits provided fixed company contribution participants contributions adjusted required cover benefit payments company made commitment adjust amount contributions therefore computed accumulated postretirement benefit obligation amount affected expected future healthcare cost inflation rate 1992 company adopted statement financial accounting standards 106 employers accounting postretirement benefits pensions sfas 106 requires accrual years employee renders services expected cost providing postretirement benefits january 1 1992 company recognized transition obligation 293 million charge net loss net income taxes 160 million 27 cents per share prior adoption sfas 106 company expensed contributions incurred net periodic postretirement benefit cost included following components weightedaverage discount rate used determining accumulated postretirement benefit obligation 8 1994 7 1993 8 1992 companys postretirement medical plans funded status reconciled amounts included companys consolidated balance sheets december 31 1994 1993 follows company required fund future obligation plan company various retirement plans cover significant number employees major pension plans defined contribution plans provide pension benefits return services rendered provide individual account participant terms specify contributions participants account determined rather amount pension benefits participant receive contributions plans based pretax income andor discretionary amounts determined annual basis companys expense defined contribution plans totaled 987 million 561 million 737 million 1994 1993 1992 respectively pension plans include defined benefit plans define amount pension benefit provided usually function one factors age years service compensation result sizable reduction number employees curtailment gains 89 million reflected net amortization deferral component net periodic pension cost 1994 plans funded operate actuarially sound basis assumed longterm rates return plan assets discount rates estimating benefit obligations rates compensation increases vary different plans according local economic conditions rates used follows net periodic pension cost defined benefit plans follows reconciliation funded status defined benefit plans assets exceed accumulated benefits follows reconciliation funded status defined benefit plans accumulated benefits exceed assets follows note 17 energy services severance costs second quarter 1994 company recognized severance costs 426 million net 127 million previously accrued provide termination 2700 energy services employees terminations mostly impact middle senior management levels various product line support general administrative employees approximately 85 terminations occurred yearend remainder occur first quarter 1995 december 31 1994 remaining liability severance costs 78 million note 18 special charges november 1992 company announced restructuring reorganization actions within energy services engineering construction services designed enable company effectively provide services products well better meet changing needs customers throughout world company implementation certain strategic initiatives recorded special charges 2646 million 1992 special charges include 597 million closing consolidation certain operating facilities 576 million globalizing employee benefits personnel reductions relocations associated employee benefits costs actions 535 million technological obsolescence certain inventories equipment related introduction new technologies 355 million realignment worldwide manufacturing capabilities includes outsourcing items previously manufactured company consolidation existing capacity 230 million certain investments operations longer companys longterm strategic interest 179 million reduction value certain intangible assets related primarily geophysical speculative data 174 million items primarily related cost relocating equipment result actions note 19 acquisitions dispositions company sold natural gas compression business unit november 1994 205 million cash sale resulted pretax gain 102 million 56 cents per share tax business unit sold owns operates large natural gas compressor rental fleet united states canada compressors used assist production transportation storage natural gas additionally november 1994 company announced definitive agreement reached regarding sale industrial services business unit business unit provides chemical cleaning hydrojetting vacuum removal services petrochemical refining pulp paper power industries throughout united states closing sale completed first quarter 1995 january 1994 company sold substantially assets geophysical services products business western atlas international inc 1900 million cash notes subject certain adjustments notes 900 million sold cash first quarter 1994 addition company issued 738 million notes western atlas cover costs reducing certain geophysical operations including cost personnel reductions leases geophysical marine vessels closing duplicate facilities companys notes western atlas payable two years rate interest 4 initial installment 338 million made february 1994 eight quarterly installments 5 million payable thereafter company recognized 3018 million charge 2638 million tax 1993 related sale geophysical business charge includes 1207 million writedown net realizable value equipment assets 540 million anticipated operating contract losses dates disposition completion 434 million marine vessel leases mobilization 351 million facility leases closures 344 million personnel severance 142 million transition costs related matters sale includes international business locations closings deferred pending certain approvals consents approvals consents expected received within next several months closings result additional consideration company retains ownership certain assets liabilities geophysical business including accounts receivable real estate properties lease obligations certain employee obligations majority interest international joint venture company although disposition remaining assets uncertain remaining liabilities expected settled next several months services products provided geophysical business include seismic data collection data processing services land marine seismic exploration activities manufacturing sales seismic equipment revenues operating loss net loss geophysical operations excluding charge 1993 change accounting method special charges 1992 follows march 1993 company acquired assets smith international incs directional drilling systems services business 6857000 shares halliburton company common stock previously held treasury stock valued approximately 247 million company recorded 1358 million excess cost net assets acquired excess cost net assets acquired amortized 40 years march 1992 subsidiary company completed purchase substantially business assets manufacturer products serve gas lift portion artificial lift market 107 million cash company completed sale subsidiary engaged healthcare cost management services health economics corporation effective september 30 1992 sales price 24 million resulted pretax gain 136 million 8 cents per share tax reflected companys 1992 third quarter earnings european marine contractors limited combined financial statements december 31 1994 financial statements presented pounds sterling exchange rate pounds sterling 156 us dollar balance sheet date december 31 1994 index 1 2 directors report 3 statement directors responsibilities respect financial statements 4 auditors report 5 group profit loss account 6 group statement total recognised gains losses 7 group company balance sheets 8 group statement cashflows 9 20 notes financial statements directors f nanotti chairman r g beveridge general manager v oliveri cao n chambers l e farmer secretary r field registration 2150753 registered office emc house motspur park new malden surrey kt3 6jj european marine contractors limited directors report directors present report financial statements year ended 31 december 1994 results dividends group profit year taxation shown page 5 dividend pounds sterling30 million paid year principal activities principal activity group continued provision complete pipelaying marine construction services operations north sea waters business review future developments directors pleased report turnover increased 40 pounds sterling283 million 1994 operations year consisted primarily pipelaying services majority work executed north sea area although 36 turnover arose services performed mediterranean areas operating agreements saipem spa south china sea joint venture saipem spa high levels utilisation equipment achieved obtaining winter work programmes areas results enhanced improvements productivity reduced operating costs company successful winning new contract awards 1994 work contract 1994 year end remained good levels slightly lower previous year end work performed next two years shareholding shareholders company 31 december 1994 follows class shares ranks pari passu respects agreements transactions shareholders number staff employed shareholders made available group secondment agreements occupancy agreement brown root limited provision main administrative office terminated june 1994 european marine contractors limited moved new premises motspur park certain surveydiving subcontracts awarded brown root group companies engineering support advisory services provided shareholders request year projects pipelaying mediterranean straits gibraltar south china sea carried conjunction saipem group companies european marine contractors limited directors report directors interests directors year follows f nanotti r g beveridge v oliveri cao l e farmer k n henry resigned 23 february 1994 n chambers appointed 23 february 1994 director interest shares company market value land buildings opinion directors market value groups land buildings less net book value 31 december 1994 fixed assets changes fixed assets year summarised notes 9 10 auditors ernst young expressed willingness continue office auditors resolution proposing reappointment put members annual general meeting order board r field secretary 8 march 1995 european marine contractors limited statement directors responsibilities respect financial statements company law requires directors prepare financial statements financial year give true fair view state affairs company group profit loss group period preparing financial statements directors required select suitable accounting policies apply consistently make judgements estimates reasonable prudent state whether applicable accounting standards followed subject material departures disclosed explained financial statements prepare financial statements going concern basis unless inappropriate presume group continue business directors confirm financial statements comply requirements directors responsible keeping proper accounting records disclose reasonable accuracy time financial position group enable ensure financial statements comply companies act 1985 also responsible safeguarding assets group hence taking reasonable steps prevention detection fraud irregularities european marine contractors limited auditors report board directors european marine contractors limited audited accompanying consolidated balance sheets european marine contractors limited december 31 1994 1993 related consolidated statements income total recognised gains losses cashflows three years period ended december 31 1994 financial statements responsibility companys management responsibility express opinion financial statements based audit conducted audits accordance united kingdom auditing standards differ significant respect united states generally accepted auditing standards require plan perform audit obtain reasonable assurances whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects consolidated financial position european marine contractors limited december 31 1994 1993 consolidated results operations cash flows three years period ended december 31 1994 conformity accounting principles generally accepted united kingdom ernst young chartered accountants london england 8 march 1995 european marine contractors limited group profit loss account year ended 31 december 1994 european marine contractors limited group statement total recognised gains losses year ended 31 december 1994 european marine contractors limited balance sheets 31 december 1994 european marine contractors limited group statement cashflows year ended 31 december 1994 european marine contractors limited notes financial statements 31 december 1994 1 accounting policies accounting convention financial statements prepared historical cost convention modified include revaluation certain fixed assets accordance applicable accounting standards basis consolidation group financial statements consolidate financial statements european marine contractors limited emc nederland bv drawn 31 december year profit loss account present european marine contractors limited permitted section 230 companies act 1985 joint venture companys share results unincorporated joint venture proportionally consolidated group profit loss account balance sheet goodwill purchased goodwill amortised profit loss account directors original estimate useful life depreciation provided rates calculated write cost less expected residual value fixed asset expected useful life marine floating equipment 25 per annum reducing balance basis buildings leasehold improvements 315 years straight line basis plant machinery marine equipment 25 years straight line basis office equipment 45 years straight line basis depreciation assets construction provided assets partially brought use year appropriate rate equipment maintenance marine equipment drydock major repairs accordance statutory requirements maintenance works carried yearly basis provisions towards meeting costs made year based estimate costs incurred future utilisation programmes stocks valued lower cost net realisable value foreign currency company transactions denominated foreign currencies recorded sterling closing exchange rate previous month monetary assets liabilities translated rate exchange prevailing balance sheet date differences taken profit loss account european marine contractors limited notes financial statements 31 december 1994 foreign currency continued group financial statements consolidated undertakings translated rate exchange prevailing balance sheet date exchange adjustments arising retranslating opening net assets taken directly reserves operating leases rentals paid respect operating leases charged profit loss account straight line basis term lease pensions pension scheme contributions made accordance actuarial advice charged profit loss account spread pension cost anticipated period service scheme members government grants government grants capital expenditure credited deferral account released revenue expected useful life relevant asset equal annual amounts long term contracts profit long term contracts taken work carried final outcome assessed reasonable certainty profit included calculated basis reflect proportion work carried year end recording turnover related costs contract activity progresses turnover calculated proportion total contract value costs incurred date bear total expected costs contract revenues derived variations contracts recognised accept customer full provision made losses contracts year first foreseen deferred taxation deferred taxation provided liability method timing differences expected reverse future without replaced calculated rate estimated tax payable deferred tax assets recognised recovery reasonably certain european marine contractors limited notes financial statements 31 december 1994 2 turnover comprises part contract value represented work completed balance sheet date turnover excludes applicable vat 3 analysis turnover gross profitloss activities geographical markets included turnover 14407000 1993 29346000 1992 9528000 respect sales related undertakings constitute shareholders european marine contractors limited group undertakings turnover destination materially different net assets group substantially located north sea mediterranean sea south east asia 4 operating profit european marine contractors limited notes financial statements 31 december 1994 4 b reconciliation operating profit net cash inflow operating activities 5 interest payable similar charges 6 tax profit ordinary activities tax charge made follows european marine contractors limited notes financial statements 31 december 1994 7 emoluments directors emoluments excluding pension contributions directors company detailed follows directors including scale 8 staff costs average number persons employed group costs year including directors follows addition group used services average 601 1993 568 1992 532 persons directly employed shareholders european marine contractors limited group undertakings third party agencies european marine contractors limited notes financial statements 31 december 1994 9 tangible fixed assets group european marine contractors limited notes financial statements 31 december 1994 9 tangible fixed assets continued assets construction mainly consist barge enhancements progress year end historical cost vessels included marine floating equipment follows vessels revalued four years time unless market conditions change extent necessitates earlier revaluation increase depreciation charge year result revaluation 103m pounds sterling european marine contractors limited notes financial statements 31 december 1994 10 investments group financial statements include results emc nederland bv incorporated holland company owns 100 issued share capital emc nederland bv acts base north sea operations joint venture company 49 interest saipem spaemc ltd jv unincorporated joint venture based chiwan base shekou shenzen province peoples republic china company 50 interest saipem spaemc ltd jv unincorporated joint venture based bangkok thailand remaining interest joint ventures held joint venture partner saipem spa fellow group undertaking saipem uk limited shareholder company undertakings managed jointly management committees comprised representative joint venturer 11 stocks directors opinion replacement value stocks approximately pounds sterling157m pounds sterling15 million 1993 european marine contractors limited notes financial statements 31 december 1994 12 debtors included prepayments accrued income deferred tax asset pounds sterling5615000 1993 pounds sterling1675000 due one year details disclosed note 16 13 cash analysis balances shown group balance sheet changes current previous years 14 creditors amounts falling due within one year european marine contractors limited notes financial statements 31 december 1994 15 provisions liabilities charges provision made periodic drydocking marine floating equipment 16 deferred taxation deferred tax asset included debtors represents potential tax charge pounds sterling102m 1993 pounds sterling 12m would arise sale revalued vessels provided intention directors dispose assets 17 share capital number shares european marine contractors limited notes financial statements 31 december 1994 18 reserves 19 pensions one hundred twenty two 1993 92 1992 89 groups uk employees members pension scheme operated brown root limited controls overall administration scheme defined benefit type contributions amounting pounds sterling 315524 1993pounds sterling248698 1992 pounds sterling220673 charged profit loss account year scheme includes employee contributions percentage pensionable salaries pension cost assessed accordance advice independent qualified actuaries latest actuarial assessment scheme 1 january 1993 details brown root scheme included brown root limited accounts eight 1993 7 1992 6 uk employees members merchant navy officers pension fund set july 1992 contributions fund amounting pounds sterling15932 1993 pounds sterling 12129 1992 6207 made year 21 1993 21 1992 22 groups employees members emc nederland bv pension scheme charge profit loss account pounds sterling74550 1993 pounds sterling52195 1992 pounds sterling83810 respect scheme determined accordance best local practice 20 capital commitments board directors authorised capital expenditure pounds sterling 12816000 1993 pounds sterling9264000 mainly connection modification vessels approximately pounds sterling172000 1993pounds sterling 153000 authorised expenditure already contracted 21 contingent liabilities contingent liabilities existence date financial statements approved would material impact upon financial position company disclosed performance bonds issued ordinary course business bankers supported shareholders value pounds sterling859 million 1993 pounds sterling914 million liabilities expected arise provided financial statements european marine contractors limited notes financial statements 31 december 1994 22 leasing commitments amounts payable following year operating leases expire leases relate primarily charter support vessels item 9item 8 financial statements supplementary data page responsibility financial reporting 11 report arthur andersen llp independent public accountants 12 consolidated statements income years ended december 31 1996 1995 1994 13 consolidated balance sheets december 31 1996 1995 14 consolidated statements cash flows years ended december 31 1996 1995 1994 15 consolidated statements shareholders equity years ended december 31 1996 1995 1994 16 notes financial statements 17 32 quarterly data market price information 36 related financial statement schedules included part iv item 14 annual report item 9item 8 financial statements supplementary data related financial statement schedules included part iv item 14 annual report item 9item 8 financial statements supplementary data related financial statement schedules included part iv item 14 annual report item 9item 8 financial statements supplementary data halliburton company managements discussion analysis financial condition results operations section discuss operating results general financial condition halliburton company subsidiaries explain factors risks impact business earnings expenses year 2000 differ years 1999 1998 capital expenditures factors impacted cash flows items materially affect financial condition earnings business environment continuing business organized around two business segments energy services group engineering construction group also report results third business segment dresser equipment group discontinued operations largest provider products services petroleum energy industries majority consolidated revenues derived sale services products large oil gas companies conduct business 120 countries energy industrial governmental customers services products used earliest phases exploration development oil gas reserves refining distribution process industries serve highly competitive many substantial competitors segment country united states united kingdom accounts 10 operations unsettled political conditions expropriation governmental actions exchange controls currency devaluations may result increased business risk one country including among others algeria angola libya nigeria russia believe geographic diversification business activities reduces risk loss business one country would material consolidated results operations halliburton company year 2000 showed increased activity north american energy services environment international recovery 1999 levels expected materialize 2001 engineering construction business remains hampered lower customer commitments however believe longterm fundamentals remain sound rising populations many countries greater industrialization efforts continue propel worldwide economic expansion especially developing nations expect factors cause increasing demand oil gas needed refined products petrochemicals fertilizers power needs energy services group 2000 demand groups oilfield services products recovered lower levels 1999 late 1998 consistent past history activity levels united states first rebound increased demand products services improved pricing environment international activity began improve second half 2000 growth business driven primarily increased rotary rig count natural gas wells north america rotary rig count indicator activity hit nearterm record highs third fourth quarters brief drop first half year experts project average rig count 2001 increase 20 compared 2000 forecasts prove accurate would highest level activity north america since 1985 growth favorable impact energy services group crude oil prices remained near record highs throughout 2000 west texas intermediate ending year 32 per barrel natural gas prices continued climb result north america experiencing coldest weather recent years low volumes gas storage henry hub gas prices averaged 620mcf fourth quarter 2000 812mcf month december occasional spikes 1000mcf month year henry hub gas prices averaged 420mcf compared 227mcf 1999 believe continued high commodity prices bode well industry encourage customers increase investments exploration production internationally business activity levels increased much north america although customers focused oil projects starting increase global capital spending turnaround international rig activity continued fourth quarter highest average rig count since 1998 710 rigs working compared 576 1999 however expect see significant increase larger capitalintensive field development projects outside north america second half 2001 merger consolidation activities number large customers past two years affected demand products services companies merged continue evaluate oil gas properties refining distribution facilities organizations evaluation process translated shortterm reluctance undertake new investments resulting lower demand products services 2000 especially outside north america engineering construction group factors adversely affected energy services group 1999 1998 also affected engineering construction group since half groups revenues come customers oil gas industry believe higher rig counts experienced second half 2000 expected 2001 positively impact engineering construction group much later cycle energy services group customers group reluctant start large capital projects including refineries petrochemical plants periods uncertain oil prices merged customers rationalizing optimizing existing capabilities delayed project starts group seen number large potential projects deferred uncertain prices petroleum products group beginning experience increase inquiries bids proposals potential new projects including several large international liquefied natural gas projects engineering construction group continued expand services military united states abroad group sees improving opportunities provide additional support services united states agencies government agencies countries including united kingdom demand services expected grow governments levels seek control costs improve services outsourcing various functions results operations 2000 compared 1999 1998 revenues 2000 11944 million decrease 3 1999 revenues 12313 million decrease 18 1998 revenues 14504 million regard 2000 compared 1999 lower levels engineering construction revenues segments partially offset increased oilfield services revenues within energy services group particularly united states regard 2000 compared 1998 decline experienced segments oilfield services business recovered substantially 2000 activity levels still 10 lower 1998 2000 total engineering construction activity within segments almost 25 compared 1998 customers continued postpone major new investments international revenues 66 consolidated revenues 2000 compared 70 1999 68 1998 energy services group revenues 7916 million 2000 increase 13 1999 revenues 6999 million decrease 12 1998 revenues 9009 million international revenues 66 total segment revenues 2000 compared 71 1999 67 1998 revenues group positively impacted late 1999 throughout 2000 increased rig counts customer spending particularly within north america following increases oil gas prices began 1999 increased demand natural gas increased drilling activity positively benefited oilfield services product service lines pressure pumping logging product service lines achieved revenue growth 30 27 respectively compared 1999 drilling fluids increased 20 drill bits completion products service lines increased 14 drilling systems service line revenues increased 7 geographically strong north american activity resulted revenue growth 43 growth experienced across product service lines region compared 1999 north america generated 52 total oilfield service product service line revenues 2000 compared 44 1999 pressure pumping accounted approximately 50 increase revenues within north america reflecting higher activity levels work areas particularly gulf mexico south texas canada rocky mountains revenues middle east latin america regions increased 16 12 respectively compared 1999 europeafrica revenues slightly revenues asia pacific region declined 3 activity slower increase internationally throughout 2000 despite higher oil gas prices turnaround international rig activity started late second quarter 2000 continued fourth quarter 2000 international rig counts reached highest levels since late 1998 revenues also increased across regions outside north america fourth quarter 2000 customer spending exploration production began increase outside north america revenues upstream oil gas engineering construction services declined 2 2000 compared 1999 20 compared 1998 decrease 2000 reflects continued delay engineering construction project spending customers upstream engineering construction business revenues benefited 2000 deepwater projects latin america particularly mexico africa reflecting continued shift work north sea latin america africa asia pacific 1998 revenues upstream oil gas engineering construction services benefited large projects activities subsea pipecoating flexible pipe product service lines revenues integrated exploration production information systems reached record high levels 2000 breaking previous high set 1998 revenues integrated exploration production information systems increased 13 compared 1999 increased slightly 1998 increases software professional services revenues partially offset lower hardware revenues deemphasized software sales contributed 19 revenue growth professional services increased 7 compared 1999 many customers information system product lines put software purchases due customers consolidations lower activity levels internal focus year 2000 issues engineering construction group revenues 4028 million 2000 24 5314 million 1999 27 1998 revenues 5495 million higher oil gas prices 2000 translate customers proceeding new awards large downstream projects many large projects primarily gas liquefied natural gas projects also delayed continuing trend started 1999 group increased logistics support services military peacekeeping efforts balkans increased activities devonport dockyard united kingdom logistics support services military peacekeeping efforts balkans peaked fourth quarter 1999 main construction procurement phases contract completed increases partially offset lower revenues engineering construction projects particularly major projects europe africa winding revenues group 1998 reflect higher liquefied natural gas project revenues asia africa enhanced oil recovery project africa major ethylene project singapore operating income operating income 462 million 2000 compared 401 million 1999 170 million 1998 business segment results include restructuring charges 36 million 2000 related restructuring engineering construction businesses see note 11 excluding special credits 47 million 1999 special charges 959 million 1998 operating income 2000 increased 31 1999 decreased 59 1998 see note 12 energy services group operating income 2000 526 million increase 137 1999 operating income 222 million decrease 46 compared 1998 operating income 971 million operating margins 66 2000 32 1999 108 1998 approximately 33 energy services groups operating income derived international activities 2000 compared 54 1999 1998 2000 strengthening north american drilling oilfield activity resulted increased equipment utilization improved pricing within oilfield services product service lines pressure pumping operating income increased 135 compared 1999 levels 70 compared 1998 logging services operating income increased 200 compared 1999 drilling fluids drilling systems completion products impacted slow recovery international activity fourth quarter 2000 oilfield services recorded 8 million reversal bad debts related claims settled united nations iraq dating invasion kuwait 1990 geographically strong oil gas prices throughout 2000 led higher levels deepwater onshore gas drilling within north america activity increases gulf mexico south texas canada rocky mountain work areas greater areas operating income outside north america continued lag performance noted within north america reflecting continued delays international exploration production oil gas positive note fourth quarter 2000 operating income increased across international geographic regions compared third quarter reflecting increased international spending customers operating income 2000 upstream oil gas engineering construction activities declined 5 compared 1999 73 compared 1998 projects workloads increasingly shifting north sea latin america africa asia pacific operating income benefited 2000 third quarter 88 million gain sale two semisubmersible vessels one multipurpose support vessel lower activity levels north sea particularly united kingdom sector negatively impacted operating income 2000 1999 lower utilization engineering staff well utilization manufacturing fabricating capacity subsea equipment vessels carry large fixed costs given number technical complexity engineering construction projects perform project losses normal occurrences however environment negotiations customers claims change orders become difficult past years environment combined performance issues large technically complex jobs contributed unusually high job losses major projects 82 million 2000 including 48 million fourth quarter 77 million 1999 99 million 1998 addition upstream oil gas engineering construction business recorded 11 million restructuring charges 2000 operating income integrated exploration production information systems 2000 increased almost 200 compared 1999 operating income 2000 1999 lower 1998 due lower software sales volumes 1999 change software license product mix perpetual license sales income recognized time sale annual access licenses income recognized license period engineering construction group operating income 2000 14 million decreased 189 million 93 1999 223 million 94 1998 operating margin zero 2000 38 1999 43 1998 operating margins 2000 declined internationally north america due losses projects result higher estimated costs selected jobs claims negotiations jobs progressing anticipated fourth quarter 2000 job losses 109 million recorded result conditions time group recorded 25 million restructuring charges lower activity due trend delayed new projects continued year also negatively impacted operating income operating income 1999 benefited higher activity levels supporting united states military peacekeeping efforts balkans offset reduced engineering construction project profits due timing project awards revenue recognition operating income 1998 includes 16 million favorable settlement claim middle eastern construction project special credits 1999 result change estimate components 1998 special charges continuously monitor actual costs incurred reexamine estimates future costs second quarter 1999 concluded total costs particularly severance facility exit costs lower previously estimated therefore reversed 47 million 959 million special charge originally recorded see note 12 general corporate expenses 2000 78 million increase 7 million 1999 1 million compared 1998 2000 general corporate expenses increased primarily result costs related early retirement previous chairman chief executive officer 1998 general corporate expenses 79 million included expenses operating dressers corporate offices well corporate offices percent consolidated revenues general corporate expenses 07 2000 06 1999 05 1998 nonoperating items interest expense 146 million 2000 compared 141 million 1999 134 million 1998 interest expense 2000 due higher average interest rates shortterm borrowings additional shortterm debt used repurchase 759 million common stock share repurchase program mostly fourth quarter increases offset benefits lower borrowings earlier 2000 due use proceeds sale ingersolldresser pump dresserrand repay shortterm debt interest income 25 million declined 49 million 1999 1998 interest income 1999 included settlement income tax issues united states united kingdom imputed interest income note receivable sale ownership mi llc foreign currency gains losses netted loss 5 million losses 8 million 1999 10 million 1998 losses 2000 primarily asia pacific currencies euro losses 1999 occurred primarily russian latin american currencies losses 1998 occurred primarily asia pacific currencies net 2000 net loss 1 million compared net loss 19 million 1999 net gain 3 million 1998 net loss 1999 includes 26 million charge second quarter relating impairment kellogg brown roots net investment bufete industriale sa de cv large specialty engineering procurement construction company mexico provision income taxes continuing operations 129 million effective tax rate 385 compared 378 1999 2818 1998 excluding special charges related taxes effective rate 388 1999 378 1998 minority interest net income subsidiaries 18 million 2000 compared 17 million 1999 20 million 1998 income continuing operations 188 million 2000 174 million 1999 1998 continuing operations loss 120 million income discontinued operations 98 million 2000 124 million 1999 105 million 1998 gain disposal discontinued operations resulting sale 51 interest dresserrand 215 million aftertax 048 per diluted share 2000 1999 recorded gain sale 49 interest ingersolldresser pump 159 million aftertax 036 per diluted share cumulative effect change accounting method 1999 19 million aftertax 004 per diluted share reflects adoption statement position 985 reporting costs startup activities see note 13 net income 2000 501 million 112 per diluted share 1999 438 million 099 per diluted share 1998 net loss 15 million resulted 003 loss per diluted share liquidity capital resources ended 2000 cash equivalents 231 million compared 466 million 1999 203 million 1998 cash flows operating activities used 57 million 2000 compared 58 million used 1999 provided 150 million 1998 working capital items include receivables inventories accounts payable working capital net used 563 million cash 2000 compared providing 2 million 1999 using 533 million 1998 included changes working capital net changes special charge usage personnel reductions facility closures merger transaction costs integration costs 54 million 2000 202 million 1999 112 million 1998 cash flows used investing activities 411 million 2000 107 million 1999 790 million 1998 capital expenditures 578 million 2000 11 higher 1999 31 lower 1998 capital spending mostly equipment halliburton energy services included investing cementing equipment designed integrate pumping mixing systems new safety technological features cash flows investing activities 1999 include 254 million collected receivables sale 36 interest mi llc imputed interest receivable 11 million included operating cash flows 1998 net cash used investing activities includes various acquisitions businesses approximately 40 million cash flows financing activities used 584 million 2000 provided 189 million 1999 267 million 1998 repaid 308 million longterm debt 2000 net shortterm borrowings consisting commercial paper bank loans provided 629 million 2000 proceeds exercises stock options provided cash flows 105 million 2000 compared 49 million 1999 1998 dividends shareholders used 221 million cash 2000 1999 april 2000 board directors approved plan implement share repurchase program december 31 2000 repurchased 20 million shares cost 759 million addition repurchased 10 million common stock 2000 1999 20 million 1998 employees settle income tax liabilities primarily restricted stock lapses may periodically repurchase common stock deem appropriate cash flows discontinued operations provided 826 million 2000 compared 234 million 235 million 1999 1998 respectively cash flows 2000 include proceeds sale dresserrand ingersolldresser pump approximately 913 million capital resources internally generated funds access capital markets sufficient fund working capital requirements share repurchases investing activities combined shortterm notes payable longterm debt 40 35 32 total capitalization end 2000 1999 1998 respectively 2000 reduced shortterm debt proceeds sales ingersolldresser pump dresserrand joint ventures early year increased shortterm debt fourth quarter fund share repurchases plan use proceeds dresser equipment group sale pay debt recently incurred repurchase shares return debttocapitalization ratio 30 35 range end second quarter 2001 financial instrument market risk exposed financial instrument market risk changes foreign currency exchange rates interest rates limited extent commodity prices selectively hedge exposures use derivative instruments mitigate market risk exposures objective hedging protect cash flows related sales purchases goods services fluctuations currency rates use derivative instruments includes following types market risk volatility currency rates time horizon derivative instruments market cycles type derivative instruments used use derivative instruments trading purposes consider hedging activities material see note 1 additional information accounting policies derivative instruments see note 17 additional disclosures related derivative instruments restructuring activities oil gas prices continued maintain strength provides positive uplift oilfield services integrated exploration production information systems businesses engineering construction businesses continue experience delays customer commitments new upstream downstream projects exception deepwater projects shortterm prospects increased engineering construction activities either upstream downstream businesses positive continued delays upstream downstream projects resulting decrease backlog levels work make difficult achieve acceptable margins 2001 engineering construction businesses accordingly fourth quarter 2000 approved plan recombine engineering construction businesses one business unit result reorganization engineering construction businesses took actions rationalize operating structure including writeoffs equipment engineering reference designs capitalized software 20 million recorded severance costs 16 million third fourth quarters 1998 incurred special charges totaling 980 million related dresser merger industry downturn 21 million recorded discontinued operations second quarter 1999 reversed 47 million 1998 special charges based reassessment total costs incurred complete actions covered charges process program exit approximately 500 properties including service administrative manufacturing facilities accrued expenses exit approximately 400 properties 1998 special charges properties within energy services group december 31 2000 vacated 97 approximate 500 total facilities sold returned owner 94 vacated properties environmental matters subject numerous environmental legal regulatory requirements related operations worldwide result obligations involved specific environmental litigation claims clean properties operated efforts meet correct compliancerelated matters see note 9 forwardlooking information private securities litigation reform act 1995 provides safe harbor provisions forwardlooking information forwardlooking information based projections estimates historical information statements annual report forwardlooking may also provide oral written forwardlooking information materials release public forwardlooking information involves risks uncertainties forwardlooking information provide reflects best judgement based current information results operations affected inaccurate assumptions make known unknown risks uncertainties addition factors may affect accuracy forwardlooking information result forwardlooking information guaranteed actual events results operations may vary materially possible identify factors continue face many risks uncertainties could cause actual results differ forwardlooking statements including geopolitical legal trade restrictions economic embargoes imposed united states countries unsettled political conditions war civil unrest currency controls governmental actions numerous countries operate operations countries significant amounts political risk including example algeria angola libya nigeria russia changes foreign exchange rates changes governmental regulations numerous countries operate including example regulations encourage mandate hiring local contractors require foreign contractors employ citizens purchase supplies particular jurisdiction litigation including example asbestos litigation environmental litigation environmental laws including example require emission performance standards facilities weather related effects severe weather conditions including example hurricanes tornadoes operations facilities impact prolonged severe mild weather conditions demand price oil natural gas customers vendors magnitude governmental spending outsourcing military logistical support type provide changes capital spending customers oil gas industry exploration development production processing refining pipeline delivery networks changes capital spending governments infrastructure projects sort perform consolidation customers oil gas industry claim negotiations engineering construction customers cost variances change orders major projects industry technological structural changes industries serve changes price oil natural gas including opecs ability set maintain production levels prices oil level oil production nonopec countries policies governments regarding exploration production development oil natural gas reserves level demand oil natural gas changes price availability commodities use risks result entering fixed fee engineering procurement construction projects types provide failure meet schedules cost estimates performance targets could result nonreimbursable costs cause project meet expected profit margins risks result entering complex business arrangements technically demanding projects failure one parties could result monetary penalties risk inherent use derivative instruments sort use could cause change value derivative instruments result adverse movements foreign exchange rates interest rates commodity prices value time period derivative different exposures cash flows hedged personnel mergersreorganizationsdispositions increased competition hiring retention employees specific areas including example energy services operations accounting finance integration acquired businesses halliburton including standardizing information systems integrating data multiple systems maintaining uniform standards controls procedures policies combining operations personnel acquired businesses effectively reorganizing operations personnel within halliburton replacing discontinued lines businesses acquisitions add value complement core businesses successful completion planned dispositions addition future trends pricing margins revenues profitability remain difficult predict industries serve assume responsibility publicly update forwardlooking statements regardless whether factors change result new information future events reason advise review additional disclosures make 10q 8k 10k reports securities exchange commission also suggest listen quarterly earnings release conference calls financial analysts issues conversion euro currency january 1 1999 member countries european union established fixed conversion rates existing currencies european unions common currency euro first step towards transition existing national currencies use euro common currency transition period introduction euro ends june 30 2002 issues resulting introduction euro include converting information technology systems reassessing currency risk negotiating amending existing contracts processing tax accounting records addressing issues expect euro material effect financial condition results operations implementation sab 101 securities exchange commission sec issued staff accounting bulletin sab 101 revenue recognition financial statements december 1999 sab summarizes sec staffs views applying generally accepted accounting principles revenue recognition financial statements completed thorough review revenue recognition policies determined policies consistent sab 101 accounting change june 1998 financial accounting standards board issued statement financial accounting standards sfas 133 accounting derivative instruments hedging activities subsequently amended sfas 137 sfas 138 standard requires entities recognize derivatives statement financial position assets liabilities measure instruments fair value accounting gains losses changes fair values specified standard depending intended use derivative criteria completed review contracts embedded derivatives evaluated accounting policies derivatives hedging activities adopted sfas 133 effective january 2001 determined initial adoption material effect financial condition results operations report independent public accountants shareholders board directors halliburton company audited accompanying consolidated balance sheets halliburton company delaware corporation subsidiary companies december 31 2000 1999 related consolidated statements income cash flows shareholders equity three years period ended december 31 2000 financial statements responsibility companys management responsibility express opinion financial statements based audits conducted audits accordance auditing standards generally accepted united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position halliburton company subsidiary companies december 31 2000 1999 results operations cash flows three years ended december 31 2000 conformity accounting principles generally accepted united states arthur andersen llp arthur andersen llp dallas texas january 30 2001 except respect matters discussed notes 9 19 date march 23 2001 responsibility financial reporting responsible preparation integrity published financial statements financial statements prepared accordance accounting principles generally accepted united states accordingly include amounts based judgements estimates made management also prepared information included annual report responsible accuracy consistency financial statements financial statements audited independent accounting firm arthur andersen llp arthur andersen given unrestricted access financial records related data including minutes meetings stockholders board directors committees board halliburtons audit committee board directors consists directors business judgement board directors independent new york exchange listing standards board operating audit committee provides oversight financial reporting process integral process audit committees review discussion management external auditors quarterly annual financial statements prior respective filing maintain system internal control financial reporting intended provide reasonable assurance management board directors regarding reliability financial statements system includes documented organizational structure division responsibility established policies procedures including code conduct foster strong ethical climate communicated throughout company careful selection training development people internal auditors monitor operation internal control system report findings recommendations management board directors corrective actions taken address control deficiencies opportunities improving system identified accordance securities exchange commissions new rules improve reliability financial statements interim financial statements reviewed arthur andersen llp inherent limitations effectiveness system internal control including possibility human error circumvention overriding controls accordingly even effective internal control system provide reasonable assurance respect reliability financial statements also effectiveness internal control system may change time assessed internal control system relation criteria effective internal control financial reporting described internal controlintegrated framework issued committee sponsoring organizations treadway commission based upon assessment believe december 31 2000 system internal control financial reporting met criteria halliburton company david j lesar gary v morris david j lesar gary v morris chairman board executive vice president chief financial officer chief executive officer halliburton company consolidated statements income millions dollars shares except per share data halliburton company consolidated balance sheets millions dollars shares except per share data halliburton company consolidated statements shareholders equity millions dollars shares halliburton company consolidated statements shareholders equity millions dollars shares continued halliburton company consolidated statements cash flows millions dollars halliburton company notes annual financial statements note 1 significant accounting policies employ accounting policies accordance generally accepted accounting principles united states preparation financial statements conformity generally accepted accounting principles requires us make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ultimate results could differ estimates principles consolidation consolidated financial statements include accounts company majorityowned subsidiaries material intercompany accounts transactions eliminated investments companies 20 50 interest accounted using equity method specific prior year amounts reclassified conform current year presentation revenues income recognition recognize revenues services rendered products shipped distinction services product sales based upon overall activity particular business operation revenues engineering construction contracts reported percentage completion method accounting using measurements progress towards completion appropriate work performed known anticipated losses contracts provided currently claims change orders process negotiated customers extra work changes scope work included revenue collection deemed probable postcontract customer support agreements recorded deferred revenues recognized revenue ratably contract period generally one years duration training consulting service revenues recognized services performed sales perpetual software licenses net deferred maintenance fees recorded revenue upon shipment sales use licenses recognized revenue license period research development research development expenses charged income incurred see note 4 research development expense business segment software development costs developing software sale charged expense incurred research development technological feasibility established product technological feasibility established software development costs capitalized software ready general release customers capitalized costs related software developed resale 7 million 2000 12 million 1999 13 million 1998 amortization expense software development costs 12 million 2000 15 million 1999 18 million 1998 software ready release amortization software development costs begins capitalized software development costs amortized periods exceed three years income per share basic income per share based weighted average number common shares outstanding year diluted income per share includes additional common shares would outstanding potential common shares dilutive effect issued see note 10 reconciliation basic diluted income per share cash equivalents consider highly liquid investments original maturity three months less cash equivalents receivables generally collateralized exception claims change orders process negotiated customers unbilled work uncompleted contracts generally represents work currently billable work usually billed normal billing processes next month claims change orders included unbilled receivables amounted 113 million 98 million december 31 2000 1999 respectively generally expected collected following year included notes accounts receivable notes varying interest rates notes receivable totaled 38 million december 31 2000 41 million december 31 1999 inventories stated lower cost market cost represents invoice production cost new items original cost less allowance condition used material returned stock production cost includes material labor manufacturing overhead cost inventories determined using either firstin firstout method average cost method although cost united states manufacturing field service inventories determined using lastin firstout method inventories sales items owned foreign subsidiaries inventories operating supplies parts generally valued average cost property plant equipment property plant equipment reported cost less accumulated depreciation generally provided straightline method estimated useful lives assets depreciated accelerated methods accelerated depreciation methods also used tax purposes wherever permitted upon sale retirement asset related costs accumulated depreciation removed accounts gain loss recognized events changes circumstances indicate assets may impaired evaluation performed estimated future undiscounted cash flows associated asset compared assets carrying amount determine writedown market value discounted cash flow value required follow successful efforts method accounting oil gas properties maintenance repairs expenditures maintenance repairs generally expensed expenditures renewals improvements generally capitalized use accrueinadvance method accounting major maintenance repair costs marine vessel dry docking expense major aircraft overhauls repairs method anticipate need major maintenance repairs charge estimated expense operations actual work performed time work performed actual cost incurred charged amounts previously accrued deficiency excess charged credited operating expense excess cost net assets acquired excess cost net assets acquired amortized straightline basis periods exceeding 40 years excess cost net assets acquired continually monitored potential impairment negative conditions significant current projected operating losses exist review performed determine projected undiscounted future cash flows indicate impairment exists impairment exists excess cost net assets acquired appropriate associated assets reduced reflect estimated discounted cash flows generated underlying business consistent methodologies statement financial accounting standards 121 accounting impairment longlived assets longlived assets disposed income taxes valuation allowance provided deferred tax assets likely items either expire able realize benefit future deductibility uncertain deferred tax assets liabilities recognized expected future tax consequences events realized financial statements tax returns derivative instruments enter derivative financial transactions hedge existing projected exposures changing foreign exchange rates interest rates commodity prices enter derivative transactions speculative trading purposes derivative financial instruments hedge exposure indeterminable maturity date generally carried fair value resulting gains losses reflected results operations gains losses hedges identifiable commitments deferred recognized offsetting gains losses related hedged items recognized deferred gains losses hedges terminated prior transaction date recognized underlying hedged transactions recognized event identifiable commitment longer expected realized deferred gains losses hedges associated commitment recognized currently costs associated entering contracts presented assets deferred gains losses included liabilities assets respectively consolidated balance sheets recognized gains losses derivatives entered manage foreign exchange risk included foreign currency gains losses consolidated statements income gains losses interest rate derivatives commodity derivatives included interest expense operating income respectively years ended december 31 2000 1999 1998 enter significant transactions hedge interest rates commodity prices foreign currency translation foreign entities whose functional currency united states dollar translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates income expense accounts translated average rates effect year except depreciation cost product sales revenues expenses associated nonmonetary balance sheet accounts translated historical rates gains losses changes exchange rates recognized consolidated income year occurrence foreign entities whose functional currency local currency translate net assets yearend rates income expense accounts average exchange rates adjustments resulting translations reflected consolidated statements shareholders equity titled cumulative translation adjustment note 2 acquisitions dispositions pes acquisition february 2000 offer acquire remaining 74 shares pes international limited already accepted pes shareholders pes based aberdeen scotland developed technology complements halliburton energy services realtime reservoir solutions acquire remaining 74 pes issued 12 million shares halliburton common stock also issued rights result issuance 850000 21 million additional shares halliburton common stock february 2001 february 2003 issued 1 million shares february 2001 rights preliminarily recorded subject final valuation intangible assets costs 115 million goodwill amortized 20 years pes part energy services group dresser merger september 29 1998 completed acquisition dresser industries inc converting outstanding dresser common stock approximately 176 million shares common stock also reserved approximately 7 million shares common stock outstanding dresser stock options employee directors plans merger qualified taxfree exchange dressers shareholders united states federal income tax purposes accounted using pooling interests method accounting business combinations financial statements restated include results dresser operations periods presented combined separate company results halliburton company dresser industries inc period preceding merger follows acquisitions acquired businesses 2000 1999 1998 10 million 13 million 42 million respectively businesses significant effect revenues earnings joint venture divestitures october 1999 announced sales 49 interest ingersolldresser pump joint venture 51 interest dresserrand joint venture ingersollrand see note 3 sales triggered ingersollrands exercise option joint venture agreements cause us either buy interests sell joint ventures part dresser equipment group segment ingersolldresser pump interest sold december 1999 approximately 515 million recorded gain disposition discontinued operations 253 million tax 159 million aftertax net gain 036 per diluted share 1999 sale ingersolldresser pump proceeds sale payment intercompany balance received form 377 million promissory note annual interest rate 35 collected january 14 2000 february 2 2000 completed sale 51 interest dresserrand price approximately 579 million proceeds sale net intercompany amounts payable joint venture 536 million resulting gain disposition discontinued operations 356 million tax 215 million aftertax net gain 048 per diluted share first quarter 2000 proceeds sales used repay shortterm borrowings general corporate purposes lwd divestiture march 1999 connection dresser merger sold majority premerger worldwide loggingwhiledrilling business portion premerger measurementwhiledrilling business sale accordance consent decree united states department justice financial impact sale reflected third quarter 1998 special charge see note 12 business previously part energy services group continue provide separate loggingwhiledrilling services sperrysun drilling systems business line acquired part merger dresser part energy services group addition continue provide sonic loggingwhiledrilling services using technologies merger dresser mi llc drilling divestiture august 1998 sold 36 interest mi llc smith international inc 265 million payment made form noninterestbearing promissory note collected april 1999 sale completed commitment united states department justice sell mi interest connection merger dresser mi previously part energy services group continue offer drilling fluid products services baroid drilling fluids business line acquired part merger dresser part energy services group note 3 discontinued operations dresser equipment group 1999 comprised six operating divisions two joint ventures manufacture market equipment used primarily energy petrochemical power transportation industries late 1999 announced intentions sell subsequently sold interests two joint ventures within segment joint ventures represented nearly half groups revenues operating profit 1999 see note 2 sale interests segments joint ventures prompted strategic review remaining businesses within dresser equipment group segment result review determined businesses closely fit core businesses longterm goals strategic objectives april 2000 board directors approved plans sell remaining businesses within dresser equipment group segment january 2001 signed definitive agreement expect close sale businesses second quarter 2001 total consideration agreement 155 billion cash less assumed liabilities subject adjustments closing changes net assets part terms transaction retain 5 equity interest dresser equipment group closing financial results dresser equipment group segment presented discontinued operations financial statements prior periods restated reflect presentation gain disposal discontinued operations reflects gain sale dresserrand february 2000 gain sale ingersolldresser pump december 1999 net assets discontinued operations december 31 2000 1999 composed following items revenues assets liabilities declined 1999 primarily due sales dresserrand ingersolldresser pump joint ventures note 4 business segment information two business segments organized around products services provided customers serve see following tables information business segments energy services group segment provides pressure pumping equipment services logging perforating drilling systems services drilling fluids systems drill bits specialized completion production equipment services well control integrated solutions reservoir description also included energy services group upstream oil gas engineering construction maintenance services specialty pipecoating insulation underwater engineering services integrated exploration production information systems professional services petroleum industry energy services group three business units halliburton energy services brown root energy services landmark graphics longterm performance business units linked longterm demand oil gas products services group provides designed help discover develop produce oil gas customers segment major oil companies national oil companies independent oil gas companies engineering construction group segment provides engineering procurement construction project management facilities operation maintenance hydrocarbon processing industrial governmental customers engineering construction group two business units kellogg brown root brown root services business units engaged delivery engineering construction services equity pretax income losses unconsolidated related companies accounted equity method included revenues operating income applicable segment intersegment revenues included revenues business segments sales geographic areas immaterial general corporate assets included business segment primarily composed receivables deferred tax assets shared assets including investment enterprisewide information system tables present information continuing operations business segments operations business segment operations business segment continued operations geographic area note 5 inventories support continuing operations december 31 2000 1999 composed following inventories lastin firstout method 66 million december 31 2000 1999 average cost method used total inventories would 28 million higher reported december 31 2000 35 million higher reported december 31 1999 note 6 property plant equipment property plant equipment support continuing operations december 31 2000 1999 composed following december 31 2000 1999 machinery equipment property includes oil gas investments approximately 363 million 309 million respectively software developed information system 223 million 197 million respectively note 7 related companies conduct operations various joint ventures partnership corporate business forms principally accounted using equity method information pertaining related companies continuing operations set larger unconsolidated entities include european marine contractors limited brederoshaw part energy services group european marine contractors limited 50owned specializes engineering procurement construction marine pipelines brederoshaw 50owned specializes pipecoating sold 36 ownership interest mi smith international inc august 31 1998 transaction completed commitment united states department justice sell mi interest connection merger dresser industries inc see note 2 information sale mi prior sale interest accounted interest mi equity method combined summarized financial information jointly owned operations consolidated follows note 8 lines credit notes payable longterm debt december 31 2000 committed shortterm lines credit totaling 185 billion borrowings outstanding lines credit fees committed lines credit immaterial shortterm debt consists primarily 154 billion commercial paper effective interest rate 66 30 million facilities varying rates interest longterm debt end 2000 1999 consists following repaid 300 million 625 notes came due june 2000 76 debentures due 2096 875 debentures due 2021 8 senior notes due 2003 may redeemed prior maturity sinking fund requirements december 31 2000 outstanding notes mediumterm note program follows holder 675 mediumterm notes right require us repay holders notes whole part february 1 2007 may redeem 563 mediumterm notes whole part time notes issued mediumterm note program may redeemed prior maturity mediumterm notes sinking fund requirements debt matures follows 8 million 2001 84 million 2002 139 million 2003 none 2004 2005 826 million thereafter note 9 commitments contingencies leases year end 2000 obligated noncancelable operating leases expiring various dates 2021 principally use land offices equipment field facilities warehouses total rentals charged continuing operations noncancelable leases 2000 1999 1998 follows future total rentals noncancelable operating leases follows 94 million 2001 80 million 2002 66 million 2003 45 million 2004 32 million 2005 84 million thereafter asbestos litigation since 1976 subsidiary dresser industries inc former divisions subsidiaries involved litigation alleging products manufactured contained asbestos injured persons inhaled fibers dresser entered agreements insurance carriers cover whole part indemnity payments legal fees expenses specific categories claims dresser negotiating insurance carriers coverage remaining categories claims agreements governed exposure dates payment type product involved covered amount varies claim addition lawsuits pending several carriers seeking recover additional amounts related claims engineering construction group also involved asbestos litigation third parties allege sustained injuries inhalation asbestos fibers contained materials used various construction renovation projects involving brown root subsidiary named kellogg brown root inc insurance coverage kellogg brown root applicable periods written highlands insurance company highlands subsidiary halliburton prior spinoff shareholders early 1996 negotiations highlands produced agreement amount insurance coverage asbestos defense costs april 5 2000 highlands filed suit delaware chancery court alleging part spinoff 1996 halliburton assumed liability asbestos claims filed halliburton spinoff highlands also alleges halliburton adequately disclose highlands existence halliburtons subsidiaries potential asbestos liability august 23 2000 highlands issued letter denying coverage policies based claims asserted delaware action believe highlands contractually obligated provide insurance coverage asbestos claims filed kellogg brown root highlands lawsuit denial coverage without merit intend assert right insurance coverage vigorously april 24 2000 halliburton filed suit highlands harris county texas claiming highlands breached contractual obligation provide insurance coverage asked court order highlands provide coverage asbestos claims guaranteed cost policies issued highlands kellogg brown root march 21 2001 delaware chancery court ruled highlands obligated provide insurance coverage asbestos claims filed kellogg brown root courts opinion agreements entered highlands halliburton time spinoff terminated policies previously written highlands would otherwise cover claims ruling reversed appeal would eliminate primary insurance covering asbestos claims kellogg brown root periods prior spinoff claims filed kellogg brown root allege exposure asbestos prior spinoff disposed less limits highlands policies however legal counsel vinson elkins llp believe courts ruling wrong intend appeal ruling delaware supreme court soon possible vinson elkins opined us likely ruling chancery court reversed ruling clearly contravenes provisions applicable agreements highlands halliburton vinson elkins also opined us likely ultimately prevail ligitation since 1976 approximately 282000 claims filed various current former divisions subsidiaries 25000 claims relate kellogg brown root balance claims relate dresser former divisions subsidiaries approximately 165000 claims settled disposed gross cost approximately 124 million insurance carriers paying approximately 32 million claims continue filed 45000 claims filed 2000 established accrual estimating liability known asbestos claims estimate based historical litigation experience settlements expected recoveries insurance carriers expected insurance recoveries based agreements carriers agreements still negotiation litigation estimate recoveries believe insurance carriers signed agreements able meet share future obligations agreements prior chancery courts ruling highlands insurance group inc parent highlands insurance company stated sec filings lost litigation us required pay asbestos claims kellogg brown root could material adverse impact highlands insurance groups financial position highlands incurance company reported statutory capital surplus 152 million texas insurance commission quarterly statement september 30 2000 march 12 2001 highlands insurance group inc announced expected report significant loss fourth quarter 2000 full year 2000 although know extent impact loss highlands insurance company believe highlands ability pay substantially asbestos claims litigation resolved favor december 31 2000 117000 open claims including 23000 associated recoveries expect highlands open claims december 31 2000 also include 9000 settlements pending number open claims end 2000 compares approximately 107700 open claims end prior year accrued liabilities claims corresponding billed estimated recoveries carriers follows december 31 2000 accounts receivable highlands insurance company 11 million payments made asbestos claims appeal chancery courts ruling highlands litigation unsuccessful unable collect account receivable 39 million estimated accrued recovery highlands asbestos claims may material adverse impact results operations financial position time accounts receivable billings insurance carriers payments made claims 13 million december 31 2000 9 million december 31 1999 recognize uncertainties litigation possibility series adverse court rulings new legislation affecting claims settlement process could materially impact expected resolution asbestos related claims however based upon historical experience similar claims time elapsed since dresser former divisions subsidiaries discontinued sale products containing asbestos time elapsed since kellogg brown root used asbestos construction process understanding facts circumstances gave rise asbestos claims believe pending asbestos claims resolved without material effect financial position results operations resolution dispute global industrial technologies inc previously reported agreement entered time spinoff global industrial technologies inc formerly indresco inc dresser industries inc global assumed liability asbestos related claims filed dresser july 31 1992 relating refractory products manufactured marketed former harbisonwalker refractories division dresser business operations transferred global spinoff asbestos claims subject agreements dressers insurance carriers cover expense indemnity payments however insurance coverage incomplete global todate paid uncovered portion asbestos claims funds also reported dispute arose global concerning agreements led arbitration litigation proceedings resolved dispute agreed global arbitration related litigation dismissed global acknowledges obligation assume responsibility new asbestos claims filed date spinoff global agrees continue cooperate dresser dressers remaining refractory claims dresser continues make available direct insurance program global assumed asbestos liabilities fort ord litigation brown root services defendant civil litigation pending federal court sacramento california lawsuit alleges brown root services violated provisions false claims act performing work united states army fort ord california lawsuit filed former employee 1997 brown root services denied allegations preparing defend trial proceedings civil lawsuit stayed investigation referred next paragraph ongoing believe remote civil litigation result material amount damages assessed company although cost defense could well exceed 1 million matter brought conclusion although 1998 united states department justice declined join litigation advised us brown root services target federal grand jury investigation regarding contract administration issues raised civil litigation brown root services served grand jury subpoenas required production documents relating fort ord contract similar contracts locations also informed several current former employees called testify grand jury retained independent counsel employees cooperating investigation united states department justice made specific allegations brown root services environmental subject numerous environmental legal regulatory requirements related operations worldwide take proactive approach evaluating addressing environmental impact operations year assess remediate contaminated properties order avoid future liabilities comply legal regulatory requirements occasion involved specific environmental litigation claims including cleanup properties operated well efforts meet correct compliancerelated matters subsidiaries former operating entities involved potentially responsible party prp remedial activities cleanup several superfund sites united states federal law comparable state laws kellogg brown root inc one subsidiaries one nine prps named tristate mining district superfund site also known jasper county superfund site reported past based negotiations federal regulatory authorities evaluation responsibility remediation small portions site believe compelled make expenditures material adverse effect financial position results operations however united states department interior state missouri indicated might make separate claim kellogg brown root natural resource damages discussions concluded unable make judgement amount damages may seek also incur costs related compliance everchanging environmental legal regulatory requirements jurisdictions operate difficult quantify potential liabilities expect expenditures material adverse effect consolidated financial position results operations accrued liabilities environmental matters 31 million december 31 2000 29 million december 31 1999 party various legal proceedings expense cost legal fees related proceedings believe liabilities may arising proceedings material consolidated financial position results operations note 10 income per share income per share discontinued operations includes 049 036 basic 048 036 diluted gain sale discontinued operations 2000 1999 respectively basic income per share based weighted average number common shares outstanding period diluted income per share includes additional common shares would outstanding potential common shares dilutive effect issued included computation diluted income per share rights issued connection pes acquisition 850000 21 million shares halliburton common stock excluded computation diluted income per share options purchase 1 million shares common stock 2000 2 million shares 1999 1 million shares 1998 options outstanding respective years excluded option exercise price greater average market price common shares since incurred loss 1998 diluted earnings per share year excludes 3 million potential common shares antidilutive earnings per share purposes note 11 engineering construction reorganization table summarizes nonrecurring charges 36 million pretax recorded december 2000 related reorganization engineering construction businesses charges reflected following captions consolidated statements income asset related charges result reorganization engineering construction businesses took actions rationalize cost structure including writeoffs equipment engineering reference designs capitalized software cost services includes 20 million charges equipment licenses engineering reference designs related specific projects discontinued result reorganization equipment licenses net book value 10 million abandoned engineering reference designs specific project net book value 4 million written software developed internal use net book value 6 million longer plan use due standardization systems also written personnel charges personnel charges 16 million include severance related costs incurred planned reduction approximately 30 senior management positions terminated first quarter 2001 expect payments severance arrangements completed mid2001 note 12 special charges credits table summarizes 1998 pretax expenses special charges accrued amounts utilized adjusted december 31 2000 1998 results operations reflect special charges totaling 980 million provide costs associated dresser industries inc merger industry downturn due declining oil gas prices charges reflected following captions consolidated statements income restructuring activities accrued 1998 special charges completed expended end 1999 utilized 63 million 2000 sales facilities actions initiated 1999 concluded 2000 inception december 31 2000 used 368 million cash items associated 1998 special charges unutilized special charge reserve balance december 31 2000 expected result future cash outlays 6 million december 31 2000 adjustments reversals remaining accrued special charges planned second quarter 1999 reversed 47 million 1998 special charge based reassessment total costs incurred complete actions covered special charges components reversal follows 30 million personnel charges primarily due reduction estimated legal costs associated employee layoffs lower anticipated average severance per person fewer expected terminations due voluntary employee resignations 16 million facility consolidation charges due fewer initially estimated facility exits resulting estimated 7 million reduction facilities consolidation costs combined factors including favorable exit costs anticipated 1 million merger transaction costs primarily result lower previously estimated legal professional costs asset related charges asset related charges include impairments writeoffs intangible assets excess andor duplicate machinery equipment inventory capitalized software charges also include writeoffs lease cancellation costs related acquired information technology equipment replaced standard common office equipment exit costs leased assets result merger halliburton companys dresser industries incs completion products operations formation evaluation businesses combined excluded halliburtons loggingwhiledrilling business portion measurementwhiledrilling business required disposed connection united states department justice consent decree see note 2 recorded impairments based upon anticipated future cash flows accordance statement financial accounting standards 121 based change strategic direction outlook industry decision standardize equipment product offerings expected loss disposition loggingwhiledrilling business following table summarizes resulting writedowns excess cost net assets acquired longlived assets associated directional drilling formation evaluation businesses acquired 1993 smith international inc formation evaluation business acquired 1988 acquisition gearhart industries inc mono pumps ava acquired 1990 1992 discussed merger caused management reevaluate realizability excess cost net assets acquired related longlived assets product service lines business considered impaired sfas 121 guidance overall market assumptions impairment computations made assumed 1999 calendar year drilling activity measured worldwide rig count would 1900 rigs 1700 level third quarter 1998 rig count calendar year 2000 beyond assumed increase 3 per year based upon estimated longterm growth worldwide demand oil gas assumptions based market data available time merger addition assumptions management utilized 10year timeframe future projected cash flows discount rate approximates average cost capital specific assumptions future performance product service line significant assumptions discussed case analyses represented managements best estimate future results product service lines drilling operations premerger halliburton energy services premerger drilling business consisted loggingwhiledrilling measurementwhiledrilling directional drilling services majority premerger loggingwhiledrilling business portion premerger measurementwhiledrilling business required sold united states department justice consent decree integrated remaining drilling business sperrysun operations dresser strategy focuses generally operating sperrysun name using sperrysuns superior technology tools industry reputation remaining premerger drilling assets technology deemphasized wear become obsolete tools replaced resulting significant decreases future cash flows impairment excess cost net assets related longlived assets significant forecast assumptions included revenue decline remaining premerger drilling business due measurementwhiledrilling sale first year related revenue operating income following 10 years projected decline due reduced business opportunities resulting shift focus toward sperrysuns tools technologies determined 125 million impairment excess cost net assets acquired addition related longlived asset impairments consisted 61 million property equipment 14 million related spare parts value estimated using held use model forecast period impairment 3 million recorded related property equipment 18 million spare parts using held sale model sold accordance consent decree united states department justice see note 2 logging operations premerger halliburton energy services merger halliburton company dresser industries inc enabled acceleration formation evaluation strategy takes advantage sperrysuns loggingwhiledrilling competitive position reputation reliability combined magnetic resonance imaging logging mrilr technology acquired numar acquisition 1997 prior merger focused growing traditional logging business working toward development new systems maximize mrilr technology merger allowed us implement new strategy place traditional logging business sustaining mode change focus strategy resulted shift operating cash flows away traditional logging business created impairment excess cost net assets related longlived assets related logging business significant forecast assumptions included revenues decreasing slowly 10year period reflecting decline traditional logging markets operating income initially forecasted increase due cost cutting activity decline revenue decreased due significant fixed costs product service line calculated 51 million impairment excess cost net assets acquired addition related longlived asset impairments consisted 22 million property equipment 32 million spare parts management estimated using held use model forecast period mono pump operations premerger dresser amount impairment 43 million represents excess cost net assets acquired associated business strategy mono pump focus primarily oilfield business including manufacturing power sections drilling motors prior strategy included emphasis nonoilfield related applications pumping technology majority mono pump revenues related nonoilfield sales change strategy result reduced future cash flows resulting impairment excess costs net assets acquired significant forecast assumptions included stable revenue several years slowly declining due decreasing emphasis industrial market applications operating income forecasted initially even current levels decline period revenues declined fixed costs per unit increased ava operations dresser oil tools amount impairment 37 million 34 million relates excess costs net assets acquired plan dressers ava business line supplies subsurface safety valves completion equipment rationalize product lines overlap preexisting completion equipment business line vast majority ava product lines deemphasized except supporting installed base ava equipment specific special order requests customers ava products generally aimed highend custom completion products market strategy focus standardized highend products based upon premerger halliburton designs thus reducing future ava cash flows impairing assets related excess costs net assets acquired additional asset related charges additional asset related charges include 37 million various excess fixed assets result merging similar product lines future use assets scrapped 33 million assets related capitalized software became redundant merger major components included redundant computer aided design systems capitalized costs related portion enterprisewide information system abandoned due changed requirements post merger company redundant computer aided design systems used energy services group engineering construction group immediately abandoned replaced superior systems required meet needs merged company 26 million inventory charge relates excess inventory result merging similar product lines andor industry downturn included approximately 17 million related overlapping product lines excess inventory completion products business 9 million related various dresser equipment group divisions due excess inventory related industry downturn inventory overlapping due merger segregated scrapped inventory reserves increased cover estimated writedown market inventory future use determined excess result industry downturn future sales expected approximate new lower carrying value inventory 5 million impairment excess cost net assets acquired related well construction technology became redundant merger complete due similar superior technology offered sperrysun technology longer used part integrated service offerings thus reducing future cash flows however continue market technology individually third parties impairment based held use model calculated using 10year discounted cash flow model discount rate approximates average cost capital 1 million writeoff excess cost net assets acquired related steamford product line dresser equipment group valve control division management made strategic decision exit product line asset related charges reflected direct reductions associated asset balances personnel charges personnel charges include severance related costs incurred announced employee reductions 10850 affecting business segments corporate shared service functions personnel charges also include personnel costs related change control june 1999 management revised planned employee reductions 10100 due large part higher anticipated voluntary employee resignations december 31 2000 terminations employees consultants contract personnel related 1998 special charge completed facility consolidation charges facility consolidation charges include costs dispose owned properties exit leased facilities result merger dresser industry downturn recorded charge costs vacate sell close excess redundant service manufacturing administrative facilities throughout world majority facilities within energy services group expenses 126 million included 85 million writedown owned facilities anticipated losses planned disposals based upon difference assets net book values anticipated future net realizable value based upon disposed method 37 million lease buyout costs early lease termination cost including estimated costs buy leases facility refurbishmentrestoration expenses required lease order exit property sublease differentials applicable related brokeragent fees negotiate close buyouts 4 million facility maintenance costs maintain vacated facilities abandonment date expected disposition date maintenance costs include lease expense depreciation maintenance utilities thirdparty administrative costs december 31 2000 substantially completed work vacate sell close service manufacturing administrative facilities related 1998 special charge majority sold returned vacated properties located north america eliminated energy services group remaining expenditures made remaining properties vacated sold merger transaction charges merger transaction costs include investment banking filing fees legal professional fees merger related costs estimated merger transaction costs 64 million charges 46 million include estimated contract exit costs associated elimination duplicate agents suppliers various countries throughout world december 31 2000 utilized substantially estimated amount special charge costs note 13 change accounting method april 1998 american institute certified public accountants issued statement position 985 reporting costs startup activities statement requires costs startup activities organization costs expensed incurred adopted statement position 985 effective january 1 1999 recorded expense 30 million pretax 19 million aftertax 004 per diluted share components 30 million pretax cost contained within energy services group previously deferred include 23 million mobilization costs associated specific contracts installation offshore cementing equipment onto third party marine drilling rigs vessels 7 million costs incurred opening new manufacturing facility united kingdom note 14 income taxes components provision benefit income taxes included federal income taxes continuing operations foreign tax credits 113 million 2000 52 million 1999 94 million 1998 united states foreign components income loss continuing operations income taxes minority interests follows primary components deferred tax assets liabilities related valuation allowances follows accrued potential repatriation undistributed earnings foreign subsidiaries consider earnings amounts tax provided permanently reinvested additional earnings could become subject additional tax repatriated repatriation anticipated additional amount tax practicable estimate net operating loss carryforwards 44 million expire 2001 2005 also net operating loss carryforwards 75 million indefinite expiration dates reconciliations actual provision income taxes computed applying united states statutory rate income continuing operations income taxes minority interest follows note 15 common stock june 25 1998 shareholders voted increase number authorized shares 400 million 600 million 1993 stock longterm incentive plan provides grant following types awards stock options including incentive stock options nonqualified stock options stock appreciation rights tandem stock options freestanding restricted stock performance share awards stock value equivalent awards terms 1993 stock longterm incentive plan amended 49 million shares common stock reserved issuance key employees plan specifies 16 million shares awarded restricted stock december 31 2000 27 million shares available future grants 1993 stock longterm incentive plan 127 million shares remaining available restricted stock awards connection acquisition dresser 1998 assumed outstanding stock options stock option plans maintained dresser see note 2 stock option transactions summarized include amounts 1993 stock longterm incentive plan stock plans dresser acquired companies awards made stock plans acquired companies options outstanding december 31 2000 composed following 95 million options exercisable weighted average exercise price 2896 december 31 1999 78 million options exercisable weighted average exercise price 2572 december 31 1998 stock options 1993 stock longterm incentive plan including options granted employees dresser since acquisition granted fair market value common stock grant date fair value options date grant estimated using blackscholes option pricing model weighted average assumptions resulting fair values options granted follows stock options generally expire 10 years grant date stock options 1993 stock longterm incentive plan vest threeyear period onethird shares becoming exercisable first second third anniversaries grant date plans vesting periods ranging three 10 years options nonemployee directors plan vest six months account option plans accordance accounting principles board opinion 25 compensation cost recognized stock option awards compensation cost stock option programs calculated consistent statement financial accounting standards 123 accounting stockbased compensation set forth pro forma basis restricted shares awarded 1993 stock longterm incentive plan 695692 2000 352267 1999 414510 1998 shares awarded net forfeitures 69402 2000 72483 1999 136540 1998 weighted average fair market value per share date grant shares granted 4225 2000 4341 1999 3477 1998 restricted stock plan nonemployee directors allows nonemployee director receive annual award 400 restricted shares common stock part compensation reserved 100000 shares common stock issuance nonemployee directors plan issued 3600 restricted shares 2000 4800 restricted shares 1999 3200 restricted shares 1998 december 31 2000 28800 shares issued nonemployee directors plan weighted average fair market value per share date grant shares granted 4681 2000 4613 1999 3631 1998 employees restricted stock plan established employees officers 200000 shares common stock reserved december 31 2000 152850 shares net 42550 shares forfeited issued forfeitures 7450 2000 8400 1999 1900 1998 grants made plan terms career executive incentive stock plan 15 million shares common stock reserved issuance officers key employees purchase price exceed par value 250 per share december 31 2000 117 million shares net 22 million shares forfeited issued plan grants made career executive incentive stock plan restricted shares issued 1993 stock longterm incentive plan restricted stock plan nonemployee directors employees restricted stock plan career executive incentive stock plan limited sale disposition restrictions lapse periodically extended period time exceeding ten years restrictions may also lapse early retirement conditions accordance established policies fair market value stock date issuance amortized charged income similar credits paidin capital excess par value generally average period restrictions lapse december 31 2000 unamortized amount 63 million recognized compensation costs income 18 million 2000 11 million 1999 8 million 1998 note 16 series junior participating preferred stock previously declared dividend one preferred stock purchase right outstanding share common stock dividend also applicable share common stock issued subsequent adoption rights agreement entered mellon investor services llc preferred stock purchase right entitles holder buy one twohundredth share series junior participating preferred stock without par value exercise price 75 preferred stock purchase rights subject antidilution adjustments described rights agreement entered mellon preferred stock purchase rights voting rights entitled dividends preferred stock purchase rights become exercisable limited circumstances involving potential business combination preferred stock purchase rights become exercisable preferred stock purchase right entitle holder amount common stock circumstances securities acquirer total market value equal two times exercise price preferred stock purchase right preferred stock purchase rights redeemable option time become exercisable preferred stock purchase rights expire december 15 2005 event 2000 made preferred stock purchase rights exercisable note 17 financial instruments risk management foreign exchange risk techniques managing foreign exchange risk include limited foreign currency borrowing investing use currency derivative instruments selectively hedge significant exposures potential foreign exchange losses considering current market conditions future operating activities cost hedging exposure relation perceived risk loss purpose foreign currency hedging activities protect us risk eventual dollar cash flows resulting sale purchase products services foreign currencies adversely affected changes exchange rates hold issue derivative financial instruments trading speculative purposes hedge currency exposure use currency derivative instruments contracts generally expiration date two years less forward exchange contracts commitments buy sell specified amount foreign currency specified price time generally used hedge identifiable foreign currency commitments losses 1 million identifiable foreign currency commitments deferred december 31 2000 forward exchange contracts foreign exchange option contracts convey right obligation sell buy specified amount foreign currency specified price generally used hedge foreign currency commitments indeterminable maturity date none forward option contracts exchange traded hedging instruments subject fluctuations value fluctuations generally offset value underlying exposures hedged use contracts may limit ability benefit favorable fluctuations foreign exchange rates notional amounts open forward contracts options continuing operations 281 million 297 million yearend 2000 1999 respectively amounts related discontinued operations 61 million 96 million december 31 2000 1999 respectively notional amounts foreign exchange contracts generally represent amounts exchanged parties thus measure exposure cash requirements relating contracts amounts exchanged calculated reference notional amounts terms derivatives exchange rates actively monitor foreign currency exposure adjust amounts hedged appropriate exposures currencies generally hedged due primarily lack available markets cost considerations nontraded currencies attempt manage working capital position minimize foreign currency commitments nontraded currencies recognize pricing services products offered countries cover cost exchange rate devaluations historically incurred transaction losses nontraded currencies credit risk financial instruments potentially subject us concentrations credit risk primarily cash equivalents investments trade receivables practice place cash equivalents investments highquality securities various investment institutions derive majority revenues sales services including engineering construction energy industry within energy industry trade receivables generated broad diverse group customers concentrations receivables united states united kingdom maintain allowance losses based upon expected collectibility trade accounts receivable significant concentrations credit risk individual counterparty groups counterparties related derivative contracts select counterparties based creditworthiness continually monitor counterparties ability perform obligations terms transactions expect counterparties fail meet obligations contracts given high credit ratings therefore consider credit risk associated derivative contracts minimal fair market value financial instruments estimated fair market value longterm debt yearend 2000 1999 1066 million 1352 million respectively compared carrying amount 1057 million yearend 2000 1364 million yearend 1999 fair market value fixed rate longterm debt based quoted market prices similar instruments carrying amount variable rate longterm debt approximates fair market value instruments reflect market changes interest rates see note 8 carrying amount shortterm financial instruments cash equivalents receivables shortterm notes payable accounts payable reflected consolidated balance sheets approximates fair market value due short maturities instruments fair market value currency derivative instruments generally approximates carrying amount based upon thirdparty quotes fair market values derivative instruments used fair value hedging cash flow hedging immaterial note 18 retirement plans company subsidiaries various plans cover significant number employees plans include defined contribution plans provide retirement contributions return services rendered provide individual account participant terms specify contributions participants account determined rather amount pension benefits participant receive contributions plans based pretax income andor discretionary amounts determined annual basis expense defined contribution plans continuing discontinued operations totaled 182 million 146 million 152 million 2000 1999 1998 respectively retirement plans include defined benefit plans define amount pension benefit provided usually function age years service compensation plans funded operate actuarially sound basis plan assets primarily invested cash shortterm investments real estate equity fixed income securities entities domiciled country plans operation plan assets expenses obligations retirement plans following tables include continuing discontinued operations recognized additional minimum pension liability underfunded defined benefit plans additional minimum liability equal excess accumulated benefit obligation plan assets accrued liabilities corresponding amount recognized either intangible asset reduction shareholders equity assumed longterm rates return plan assets discount rates estimating benefit obligations rates compensation increases vary different plans according local economic conditions rates used follows projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 172 million 154 million 82 million respectively december 31 2000 205 million 199 million 183 million respectively december 31 1999 postretirement medical plan offer postretirement medical plans specific eligible employees plans liability limited fixed contribution amount participant dependent plan participants share total cost benefits provided fixed contribution participants contributions adjusted required cover benefit payments made commitment adjust amount contributions therefore computed accumulated postretirement benefit obligation amount affected expected future health care cost inflation rate postretirement medical plans contributory generally absorb majority costs may elect adjust amount contributions plans result expected future health care cost inflation rate affects accumulated postretirement benefit obligation amount plans assumed health care trend rates weighted based current year benefit obligation 2000 10 expected decline 5 2005 obligations expenses postretirement medical plans following tables include continuing discontinued operations assumed health care cost trend rates significant effect amounts reported total health care plans onepercentagepoint change assumed health care cost trend rates would following effects note 19 subsequent event march 2001 offer acquire pgs data management division petroleum geoservices asa pgs accepted pgs shareholders pgs data management developed cost effective internet enabled storage browsing retrieval large volumes exploration production data information terms agreement include cash transfer 175 million prior working capital contribution contract landmark manage seismic library pgs three years pgs data management become part landmark graphics business included energy services group note 20 dresser financial information since becoming wholly owned subsidiary dresser industries inc ceased filing periodic reports securities exchange commission dressers 8 guaranteed senior notes initially issued baroid corporation remain outstanding fully unconditionally guaranteed halliburton january 1999 part legal reorganization associated merger halliburton delaware inc firsttier holding company subsidiary merged dresser majority operating assets activities included dresser subsidiaries august 2000 securities exchange commission released new rule governing financial statements guarantors issuers guaranteed securities registered sec following condensed consolidating financial information presents halliburton subsidiaries standalone basis using equity method current organizational structure place periods presented halliburton company selected financial data unaudited restated prior year information display dresser equipment group discontinued operations halliburton company selected financial data unaudited continued restated prior year information display dresser equipment group discontinued operations halliburton company quarterly data market price information unaudited part iii item 10item 8 financial statements supplementary data related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data page management’s report internal control financial reporting reports independent registered public accounting firm 6364 consolidated statements operations years ended december 31 2004 2003 2002 consolidated balance sheets december 31 2004 2003 consolidated statements shareholders’ equity years ended december 31 2004 2003 2002 consolidated statements cash flows years ended december 31 2004 2003 2002 notes consolidated financial statements 69119 selected financial data unaudited quarterly data market price information unaudited related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data page management’s report internal control financial reporting reports independent registered public accounting firm consolidated statements operations years ended december 31 2008 2007 consolidated balance sheets december 31 2008 2007 consolidated statements shareholders’ equity years ended december 31 2008 2007 consolidated statements cash flows years ended december 31 2008 2007 notes consolidated financial statements selected financial data unaudited quarterly data market price information unaudited related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data page management’s report internal control financial reporting reports independent registered public accounting firm consolidated statements operations years ended december 31 2009 2008 consolidated balance sheets december 31 2009 2008 consolidated statements shareholders’ equity years ended december 31 2009 2008 consolidated statements cash flows years ended december 31 2009 2008 notes consolidated financial statements selected financial data unaudited quarterly data market price information unaudited item 9item 8 financial statements supplementary data page management’s report internal control financial reporting reports independent registered public accounting firm consolidated statements operations years ended december 31 2010 2009 2008 consolidated balance sheets december 31 2010 2009 consolidated statements shareholders’ equity years ended december 31 2010 2009 2008 consolidated statements cash flows years ended december 31 2010 2009 notes consolidated financial statements selected financial data unaudited quarterly data market price information unaudited item 9item 8 financial statements supplementary data page management’s report internal control financial reporting reports independent registered public accounting firm consolidated statements operations years ended december 31 2011 2010 2009 consolidated balance sheets december 31 2011 2010 consolidated statements shareholders’ equity years ended december 31 2011 2010 2009 consolidated statements cash flows years ended december 31 2011 2010 notes consolidated financial statements selected financial data unaudited quarterly data market price information unaudited item 9item 8 financial statements supplementary data item 9item 8 financial statements supplementary data item 9item 8 financial statements supplementary data item 9item 8 financial statements supplementary data item 9item 8 financial statements supplementary data item 9item 8 financial statements supplementary data hal 2019 form 10k 34 management’s report internal control financial reporting management halliburton company responsible establishing maintaining adequate internal control financial reporting defined securities exchange act rule 13a15f internal control financial reporting matter well designed inherent limitations therefore even systems determined effective provide reasonable assurance respect financial statement preparation presentation changes conditions effectiveness internal control financial reporting may vary time supervision participation management including chief executive officer chief financial officer conducted evaluation assess effectiveness internal control financial reporting december 31 2019 based upon criteria set forth internal control integrated framework 2013 issued committee sponsoring organizations treadway commission based assessment believe december 31 2019 internal control financial reporting effective effectiveness halliburton’s internal control financial reporting december 31 2019 audited kpmg llp independent registered public accounting firm stated report included herein halliburton company jeffrey miller lance loeffler jeffrey miller lance loeffler chairman board president executive vice president chief executive officer chief financial officer hal 2019 form 10k 35 report independent registered public accounting firm shareholders board directors halliburton company opinion consolidated financial statements audited accompanying consolidated balance sheets halliburton company subsidiaries company december 31 2019 2018 related consolidated statements operations comprehensive income loss shareholders’ equity cash flows years threeyear period ended december 31 2019 related notes collectively consolidated financial statements opinion consolidated financial statements present fairly material respects financial position company december 31 2019 2018 results operations cash flows years threeyear period ended december 31 2019 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states pcaob company’s internal control financial reporting december 31 2019 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission report dated february 11 2020 expressed unqualified opinion effectiveness company’s internal control financial reporting change accounting principle discussed note 6 consolidated financial statements company changed method accounting leases january 1 2019 due adoption accounting standards codification topic 842 leases basis opinion consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion critical audit matters critical audit matters communicated matters arising current period audit consolidated financial statements communicated required communicated audit committee 1 relate accounts disclosures material consolidated financial statements 2 involved especially challenging subjective complex judgments communication critical audit matters alter way opinion consolidated financial statements taken whole communicating critical audit matters providing separate opinions critical audit matters accounts disclosures relate evaluation realizability deferred tax assets discussed notes 1 11 consolidated financial statements company gross deferred tax assets 33 billion related valuation allowance 11 billion december 31 2019 identified evaluation realizability deferred tax assets critical audit matter evaluation realizability deferred tax assets specifically related net operating loss carryforwards foreign tax credits required subjective auditor judgment assess forecasts future taxable income periods temporary differences become deductible changes assumptions regarding forecasted taxable income could impact company’s evaluation realizability deferred tax assets hal 2019 form 10k 36 primary procedures performed address critical audit matter included following tested certain internal controls related company’s evaluation realizability deferred tax assets including controls related development forecasts future taxable income evaluated assumptions used development forecasts future taxable income comparing historical actuals considering current anticipated future commodity prices market events also evaluated company’s history realizing deferred tax assets evaluating expiration net operating loss carryforwards foreign tax credits assessment fair value property plant equipment discussed notes 1 2 8 consolidated financial statements gross amount property plant equipment december 31 2019 199 billion related accumulated depreciation 126 billion company recognizes impairment property plant equipment undiscounted cash flows expected result use eventual disposition asset group less carrying amount asset group company recognized impairment charge 14 billion year ended december 31 2019 identified assessment company’s estimate fair value property plant equipment critical audit matter high degree subjectivity evaluating significant assumptions used determining discounted cash flows needed estimate fair value asset groups specifically revenue growth rates operating margin discount rate used primary procedures performed address critical audit matter included following tested certain internal controls company’s process estimate discounted cash flows asset groups including controls related significant assumptions evaluated company’s development revenue growth rates operating margin assumptions identifying assessing sources data management used assessment evaluated revenue growth rates operating margin consistency relevant historical data changes business external industry data addition involved valuation professionals specialized skills knowledge assist evaluating selected discount rate comparing discount rate range independently developed using publicly available market data comparable companies kpmg llp served company’s auditor since 2002 houston texas february 11 2020 hal 2019 form 10k 37 report independent registered public accounting firm shareholders board directors halliburton company opinion internal control financial reporting audited halliburton companys subsidiaries company internal control financial reporting december 31 2019 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission opinion company maintained material respects effective internal control financial reporting december 31 2019 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets company december 31 2019 2018 related consolidated statements operations comprehensive income loss shareholders equity cash flows years threeyear period ended december 31 2019 related notes collectively consolidated financial statements report dated february 11 2020 expressed unqualified opinion consolidated financial statements basis opinion companys management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying managements report internal control financial reporting responsibility express opinion companys internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit internal control financial reporting included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate kpmg llp houston texas february 11 2020 hal 2019 form 10k 38 hal 2019 form 10k 39 hal 2019 form 10k 40 hal 2019 form 10k 41 hal 2019 form 10k 42 hal 2019 form 10k 43 item 8 notes consolidated financial statements halliburton company notes consolidated financial statements note 1 description company significant accounting policies description company halliburton company one worlds largest providers products services energy industry predecessor established 1919 incorporated laws state delaware 1924 help customers maximize asset value throughout lifecycle reservoir locating hydrocarbons managing geological data drilling formation evaluation well construction completion optimizing production throughout life asset serve major national independent oil natural gas companies throughout world operate two divisions form basis two operating segments report completion production segment drilling evaluation segment use estimates financial statements prepared conformity united states generally accepted accounting principles requiring us make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period believe significant estimates assumptions associated forecasting effective income tax rate valuation deferred taxes legal reserves longlived asset valuations purchase price allocations allowance bad debts ultimate results could differ estimates basis presentation consolidated financial statements include accounts company subsidiaries control variable interest entities determined primary beneficiary material intercompany accounts transactions eliminated investments companies controlling interest exercise significant influence accounted using equity method accounting significant influence use cost method accounting addition certain reclassifications prior period balances made conform current period presentation revenue recognition services products generally sold based upon purchase orders contracts customers include fixed determinable prices include right return provisions significant postdelivery obligations vast majority service product contracts shortterm nature recognize revenue based transfer control customers ability benefit services products amount reflects consideration expect receive exchange services products also assess customers ability intention pay based variety factors including historical payment experience financial condition customers rates services typically priced per day per meter per manhour similar basis see note 4 information revenue recognition research development maintain active research development program improves products processes engineering standards practices serve changing needs customers related high pressure high temperature environments also develops new products processes research development costs expensed incurred 404 million 2019 390 million 2018 360 million 2017 cash equivalents consider highly liquid investments original maturity three months less cash equivalents inventories stated lower cost net realizable value cost represents invoice production cost new items original cost production cost includes material labor manufacturing overhead majority inventory recorded average cost method regularly review inventory quantities hand record provisions excess obsolete inventory based primarily historical usage estimated product demand technological developments hal 2019 form 10k 44 item 8 notes consolidated financial statements allowance bad debts establish allowance bad debts review several factors including historical collection experience current aging status customer accounts financial condition customers policy write bad debts customer accounts determined uncollectible property plant equipment assets written fair values due impairment property plant equipment reported cost less accumulated depreciation generally provided straightline method estimated useful lives assets accelerated depreciation methods used tax purposes wherever permitted upon sale retirement asset related costs accumulated depreciation removed accounts gain loss recognized planned major maintenance costs generally expensed incurred expenditures additions modifications conversions capitalized increase value extend useful life asset goodwill intangible assets record goodwill excess purchase price fair value tangible identifiable intangible assets acquired business acquisition changes carrying amount goodwill detailed reportable segment reported amounts goodwill reporting unit reviewed impairment annual basis third quarter frequently circumstances indicate impairment may exist due impairments charges recorded fourth quarter 2019 updated goodwill impairment assessment december 31 2019 result goodwill impairment assessments performed years ended december 31 2019 2018 2017 determined fair value reporting unit exceeded net book value therefore goodwill impairments deemed necessary information goodwill impairment assessments see item 7 management’s discussion analysis financial condition results operations critical accounting estimates” amortize identifiable intangible assets finite life straightline basis period asset expected contribute future cash flows ranging one year twentyeight years components intangible assets generally consist patents license agreements noncompete agreements trademarks customer lists contracts evaluating impairment longlived assets events changes circumstances indicate longlived assets goodwill may impaired evaluation performed assets classified held use first group individual assets based lowest level identifiable cash flows largely independent cash flows assets compare estimated future undiscounted cash flows expected result use eventual disposition asset group carrying amount asset groups undiscounted cash flows less carrying amount determine asset groups fair value using discounted cash flow analysis recognize resulting impairment asset classified held sale asset’s book value evaluated adjusted lower carrying amount fair value less cost sell addition depreciation amortization ceased classified held sale see note 2 information impairments charges recorded 2019 income taxes recognize amount taxes payable refundable year addition deferred tax assets liabilities recognized expected future tax consequences events recognized financial statements tax returns valuation allowance provided deferred tax assets likely items realized hal 2019 form 10k 45 item 8 notes consolidated financial statements assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversal deferred tax liabilities projected future taxable income tax planning strategies making assessment based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely realize benefits deductible differences net existing valuation allowances recognize interest penalties related unrecognized tax benefits within provision income taxes continuing operations consolidated statements operations derivative instruments times enter derivative financial transactions hedge existing projected exposures changing foreign currency exchange rates interest rates enter derivative transactions speculative trading purposes recognize derivatives balance sheet fair value derivatives hedges adjusted fair value reflected results operations derivative designated hedge depending nature hedge changes fair value derivatives either offset change fair value hedged assets liabilities firm commitments earnings recognized comprehensive income hedged item recognized earnings ineffective portion derivative’s change fair value recognized earnings recognized gains losses derivatives entered manage foreign currency exchange risk included “other net” consolidated statements operations gains losses interest rate derivatives included “interest expense net” foreign currency translation foreign entities whose functional currency united states dollar translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates revenue expense transactions translated average rates effect year except expenses associated nonmonetary balance sheet accounts translated historical rates gains losses remeasurement monetary assets liabilities due changes exchange rates recognized consolidated statements operations “other net” year occurrence stockbased compensation stockbased compensation cost measured date grant based calculated fair value award recognized expense employee’s service period generally vesting period equity grant additionally compensation cost recognized based awards ultimately expected vest therefore reduced cost estimated forfeitures based historical forfeiture rates forfeitures estimated time grant revised subsequent periods reflect actual forfeitures see note 13 additional information related stockbased compensation hal 2019 form 10k 46 item 8 notes consolidated financial statements note 2 impairments charges market conditions negatively impacted business 2019 particularly north america experienced continued pricing pressure customer activity reductions products services north america land rig count decreased 26 high point early 2019 low point december 2019 idled equipment throughout year adjust changing activity levels fourth quarter 2019 north america market continued deteriorate 9 decrease average land rig count compared third quarter customer activity declined across basins affecting drilling completions businesses pricing pressure persisted yearend tendering season result market conditions service delivery improvement strategy took actions fourth quarter 2019 proactively manage equipment fleet rationalize portfolio real estate facilities initiate reductions global workforce effort mitigate impact market deterioration better align workforce anticipated activity levels part real estate rationalization identified owned properties sell leased properties abandon reviewed recoverability longlived assets based upon impairment assessments determined carrying amount longlived assets exceeded respective fair values determined fair value longlived assets based discounted cash flow analysis exception real estate facilities classified held sale fair value based third party sales price estimates fair value assessments required use estimates represent significant unobservable inputs discounted cash flow analysis utilized management’s shortterm longterm forecast operating performance including revenue growth rates expected profitability margins remaining useful life service potential asset discount rate based weighted average cost capital analyses incorporate inherent uncertainties commodity prices supply demand services future market conditions difficult predict volatile economic environments market conditions worsen fair value assumptions estimated future cash flows could materially altered may required record additional asset impairments potential impairment charge could material adverse impact operating results result events described recorded impairments charges approximately 25 billion year ended december 31 2019 following table presents various pretax charges recorded years ended december 31 2019 2018 2017 reflected within impairments charges consolidated statements operations 25 billion impairments charges recorded year ended december 31 2019 approximately 16 billion attributable completion production segment approximately 849 million attributable drilling evaluation segment longlived asset impairments include impairments property plant equipment intangible assets real estate facilities 16 billion longlived asset impairments consists following 759 million attributable hydraulic fracturing equipment majority located north america 243 million related legacy drilling equipment 215 million related real estate properties owned classified held sale 139 million related rightofuse assets associated operating leases 98 million related intangible assets 148 million fixed asset impairments included within inventory costs writedowns table amounts associated certain supply contracts coupled writedown inventory exceeded market value also rationalized portfolio existing joint ventures recorded resulting charges within joint ventures table hal 2019 form 10k 47 item 8 notes consolidated financial statements note 3 business segment geographic information operate two divisions form basis two operating segments report completion production segment drilling evaluation segment information product service lines included segment see part item 1 business” business operations divisions organized around four primary geographic regions north america latin america europeafricacis middle eastasia equity earnings losses unconsolidated affiliates accounted using equity method accounting included within cost services cost sales statements operations part operating income applicable segment operations business segment following tables present financial information business segments includes certain expenses attributable particular business segment costs related support functions corporate executives operating lease assets also includes amortization expense associated intangible assets recorded result acquisitions b impairments charges follows year ended december 31 2019 amount includes approximately 16 billion attributable completion production 849 million attributable drilling evaluation 56 million attributable corporate years ended december 31 2018 december 31 2017 recorded aggregate charges 265 million 647 million respectively writedown investment venezuela hal 2019 form 10k 48 item 8 notes consolidated financial statements assets associated specific segments primarily include receivables inventories property plant equipment operating lease rightofuse assets equity advances related companies goodwill b corporate primarily include cash equivalents deferred tax assets operations geographic region following tables present information geographic area 2019 2018 2017 based location services provided products sold 51 58 53 respectively consolidated revenue united states december 31 2019 december 31 2018 59 62 property plant equipment located united states country accounted 10 revenue property plant equipment periods presented note 4 revenue recognized based transfer control customers ability benefit services products amount reflects consideration expect receive exchange services products vast majority service product contracts shortterm nature recognizing revenue services products determine transaction price purchase orders contracts customers may consist fixed variable consideration also assess customers ability intention pay based variety factors including historical payment experience financial condition customers payment terms conditions vary contract type although terms generally include requirement payment within 20 60 days judgments involved recognizing revenue include assessment progress towards completion performance obligations certain longterm contracts involve estimating total costs determine progress towards contract completion calculating corresponding amount revenue recognize disaggregation revenue disaggregate revenue contracts customers types services products consistent two reportable segments addition geographical area based location services provided products sold 51 58 53 consolidated revenue united states years ended december 31 2019 2018 2017 respectively country accounted 10 revenue following table presents information disaggregated revenue hal 2019 form 10k 49 item 8 notes consolidated financial statements contract balances perform obligations contracts customers transferring services products exchange consideration timing performance often differs timing customer’s payment results recognition receivables deferred revenue deferred revenue represents advance consideration received customers contracts revenue recognized future performance service deferred revenue well revenue recognized period relating amounts included deferred revenue beginning period material consolidated financial statements transaction price allocated remaining performance obligations remaining performance obligations represent firm contracts work performed future revenue recognition expected elected practical expedient permitting exclusion disclosing remaining performance obligations contracts original expected duration one year less longterm contracts related software integrated project management services lump sum turnkey contracts software contracts revenue generally recognized time throughout license period software considered right access intellectual property lump sum turnkey projects recognize revenue time using input method requires us exercise judgment revenue allocated remaining performance obligations longterm contracts material note 5 receivables december 31 2019 36 net trade receivables customers united states december 31 2018 43 net trade receivables customers united states country single customer accounted 10 net trade receivables dates routinely monitor financial stability customers employ extensive process evaluate collectability outstanding receivables process involves high degree judgment utilizing significant assumptions includes analysis customers’ historical time pay financial condition various financial metrics debt structure credit agency ratings production profile well political economic factors countries operations customerspecific factors table presents rollforward global allowance bad debts 2017 2018 2019 represents increases allowance bad debts charged costs expenses net recoveries b includes writeoffs balance sheet reclassifications activity c allowance bad debts years primarily comprised full reserve accounts receivable primary customer venezuela hal 2019 form 10k 50 item 8 notes consolidated financial statements note 6 leases adopted comprehensive new lease accounting standard effective january 1 2019 details significant changes accounting policies resulting adoption new standard set adopted standard using optional modified retrospective transition method accordingly comparative information december 31 2018 years ended december 31 2018 2017 adjusted continue reported previous lease standard new lease standard assets liabilities arise leases required recognized balance sheet lessees previously capital leases referred finance leases recorded balance sheet adoption standard resulted recognition approximately 10 billion operating lease rightofuse assets operating lease liabilities consolidated balance sheets january 1 2019 adoption standard materially impact consolidated results operations year ended december 31 2019 see note 17 additional information new accounting standard beginning january 1 2019 leases term excess 12 months recognized lease liability equal present value lease payments rightofuse asset representing right use underlying asset lease term operating leases lease expense lease payments recognized straightline basis lease term finance leases include operating expense interest expense component leases term 12 months less elected practical expedient recognize lease assets liabilities recognize lease expense shortterm leases straightline basis lease term lessee numerous operating leases primarily related real estate transportation equipment vast majority operating leases remaining lease terms 10 years less include options extend leases include options terminate leases generally include renewal termination options assessment leases unless extension termination certain assets deemed reasonably certain accounting leases may require judgment includes determining whether contract contains lease determining incremental borrowing rates utilize net present value calculation lease payments lease agreements provide implicit rate assessing likelihood renewal termination options also lease agreements lease nonlease components generally accounted single lease component certain equipment leases offshore vessels drilling rigs account lease nonlease components separately following tables illustrate financial impact leases year ended december 31 2019 along supplemental information existing leases years ended december 31 2018 2017 total rentals operating leases previous lease standard net sublease rentals 680 million 574 million respectively hal 2019 form 10k 51 item 8 notes consolidated financial statements year ended december 31 2019 139 million impairment charge recorded related operating lease rightofuse assets see note 2 consolidated financial statements discussion impairments charges primarily consists operating lease rightofuse assets exchanged lease obligations upon implementation new lease accounting standard january 1 2019 following table summarizes maturity operating finance leases december 31 2019 december 31 2018 future total rentals noncancellable operating leases previous lease standard 975 million aggregate consisted following 275 million 2019 146 million 2020 122 million 2021 100 million 2022 78 million 2023 254 million thereafter hal 2019 form 10k 52 item 8 notes consolidated financial statements note 7 inventories consisted following amounts table reported net obsolescence reserves 149 million december 31 2019 219 million december 31 2018 note 8 property plant equipment property plant equipment composed following year ended december 31 2019 14 billion impairment charge recorded related property plant equipment see note 2 consolidated financial statements discussion impairments charges classes assets depreciated following useful lives hal 2019 form 10k 53 item 8 notes consolidated financial statements note 9 debt total debt including shortterm borrowings current maturities longterm debt consisted following senior debt senior notes debentures rank equally existing future senior unsecured indebtedness semiannual interest payments sinking fund requirements may redeem senior notes time notes series time applicable redemption prices plus accrued unpaid interest 675 notes due february 2027 76 senior debentures due august 2096 875 senior debentures due february 2021 may redeemed prior maturity revolving credit facilities revolving credit facility capacity 35 billion expires march 2024 facility working capital general corporate purposes full amount revolving credit facility available december 31 2019 debt maturities longterm debt matures follows 11 million 2020 697 million 2021 4 million 2022 11 billion 2023 amounts 2024 remainder thereafter note 10 commitments contingencies company subject various legal governmental proceedings claims investigations including personal injury property damage environmental taxrelated matters arising ordinary course business resolution opinion management material adverse effect consolidated results operations consolidated financial position inherent risk litigation claim investigation assurance given outcome proceedings guarantee arrangements normal course business agreements financial institutions approximately 21 billion letters credit bank guarantees surety bonds outstanding december 31 2019 outstanding letters credit triggering events would entitle bank require cash collateralization none balance sheet arrangements either likely material effect consolidated financial statements hal 2019 form 10k 54 item 8 notes consolidated financial statements note 11 income taxes components provision income taxes continuing operations united states foreign components income loss continuing operations income taxes follows reconciliations actual provision income taxes continuing operations computed applying united states statutory rate income loss continuing operations income taxes follows year ended december 31 2019 recorded total income tax provision 7 million pretax loss 11 billion resulting effective tax rate 06 effective tax rate 2019 primarily impacted 291 million tax benefit associated 25 billion impairments charges recognized year primarily consisted tax effects impairment charges taxed various rates offset valuation allowances deferred tax assets associated market conditions negatively impacted business year see note 2 information 2019 effective tax rate also impacted certain discrete tax adjustments related prior year taxes offset additional valuation allowances recorded deferred tax assets hal 2019 form 10k 55 item 8 notes consolidated financial statements primary components deferred tax assets liabilities follows december 31 2019 15 billion domestic foreign taxeffected net operating loss carryforwards approximately 200 million estimated utilized unrecognized tax benefits ultimate realization deferred tax assets depends ability generate sufficient taxable income appropriate taxing jurisdiction 157 million net operating loss carryforwards expire taxable years ended 2020 2024 219 million expire taxable years ended 2025 2029 755 million expire taxable years ended 2030 2040 remaining balance expire additionally 967 million foreign tax credit carryforwards expire 2025 2029 offset foreign branch deferred activity reflected table along 198 million research development tax credit carryforwards expire 2030 2040 year ended december 31 2019 increased valuation allowance deferred tax assets 169 million related 85 million associated foreign deferred tax assets 84 million associated foreign tax credits accordance tax cuts jobs act 2017 company’s foreign earnings accumulated legacy tax laws deemed repatriated united states provided federal state income tax related deemed repatriation provided incremental united states income taxes foreign withholding taxes undistributed earnings foreign subsidiaries december 31 2019 company generally provide taxes related undistributed earnings either would taxable remitted considered indefinitely reinvested hal 2019 form 10k 56 item 8 notes consolidated financial statements following table presents rollforward unrecognized tax benefits associated interest penalties includes 25 million december 31 2019 18 million december 31 2018 foreign unrecognized tax benefits would give rise united states tax credit december 31 2019 december 31 2018 net 271 million 399 million without net operating loss carryforward offset respectively unrecognized tax benefits would positively impact effective tax rate recognized additional tax benefits statement operations resolved favor b includes 30 million could resolved within next 12 months file income tax returns united states federal jurisdiction various states foreign jurisdictions cases longer subject state local nonunited states income tax examination tax authorities years 2009 tax filings subsidiaries unconsolidated affiliates related entities routinely examined normal course business tax authorities currently united states federal tax filings tax years 2016 2018 review internal revenue service irs tax years 2012 2015 closed exam approved joint committee amended tax returns filed tax years 2008 2011 review irs note 12 shareholders’ equity shares common stock following table summarizes total shares common stock outstanding board directors authorized program repurchase specified dollar amount common stock time program require specific number shares purchased program may effected solicited unsolicited transactions market privately negotiated transactions program may terminated suspended time year ended december 31 2019 repurchased approximately 45 million shares common stock total cost 100 million 105 million repurchases made program year ended december 31 2018 approximately 52 billion remained authorized repurchases december 31 2019 inception program february 2006 december 31 2019 repurchased approximately 217 million shares common stock total cost approximately 89 billion preferred stock preferred stock consists five million total authorized shares december 31 2019 none issued hal 2019 form 10k 57 item 8 notes consolidated financial statements accumulated comprehensive loss accumulated comprehensive loss consisted following included net actuarial losses international pension plans 189 million december 31 2019 184 million december 31 2018 note 13 stockbased compensation following table summarizes stockbased compensation costs years ended december 31 2019 2018 2017 stock incentive plan amended stock plan provides grant following types stockbased awards stock options including incentive stock options nonqualified stock options restricted stock awards restricted stock unit awards stock appreciation rights stock value equivalent awards currently stock appreciation rights stock value equivalent awards incentive stock options outstanding terms stock plan approximately 231 million shares common stock reserved issuance employees nonemployee directors december 31 2019 approximately 17 million shares available future grants stock plan stock offered pursuant grant award stock plan may authorized unissued common shares treasury shares addition provisions stock plan also stockbased compensation provisions restricted stock plan nonemployee directors employee stock purchase plan espp active stockbased compensation arrangements discussed stock options majority options generally issued second quarter year stock options stock plan granted fair market value common stock grant date employee stock options generally vest ratably period three years expire 10 years grant date compensation expense stock options generally recognized straight line basis entire vesting period hal 2019 form 10k 58 item 8 notes consolidated financial statements following table represents stock options activity 2019 total intrinsic value options exercised 2 million 2019 25 million 2018 21 million 2017 december 31 2019 37 million unrecognized compensation cost net estimated forfeitures related nonvested stock options expected recognized weighted average period approximately two years cash received issuance common stock 118 million 2019 195 million 2018 158 million 2017 6 million 88 million 53 million related proceeds exercises stock options 2019 2018 2017 respectively remainder relates cash proceeds issuance shares related employee stock purchase plan fair value options date grant estimated using blackscholes option pricing model expected volatility options granted blended rate based upon implied volatility calculated actively traded options common stock upon historical volatility common stock expected term options granted based upon historical observation actual time elapsed date grant exercise options employees assumptions resulting fair values options granted follows restricted stock restricted shares issued stock plan restricted sale disposition restrictions lapse periodically generally period five years restrictions may also lapse early retirement conditions accordance established policies upon termination employment shares restrictions lapsed must returned us resulting restricted stock forfeitures fair market value stock date grant amortized charged income straightline basis requisite service period entire award hal 2019 form 10k 59 item 8 notes consolidated financial statements following table represents restricted stock awards restricted stock units granted vested forfeited 2019 weighted average grantdate fair value shares granted 2475 2019 4743 2018 4599 2017 total fair value shares vested 107 million 2019 219 million 2018 204 million 2017 december 31 2019 427 million unrecognized compensation cost net estimated forfeitures related nonvested restricted stock expected recognized weighted average period three years employee stock purchase plan espp eligible employees may 10 earnings withheld subject limitations used purchase shares common stock espp contains four threemonth offering periods commencing january 1 april 1 july 1 october 1 year price common stock may purchased espp equal 85 lower fair market value common stock commencement date last trading day offering period effective january 1 2020 purchase price threshold changed 85 90 espp 74 million shares common stock reserved issuance 54 million shares sold espp since inception plan december 31 2019 20 million shares available future issuance stock offered may authorized unissued common shares treasury shares fair value espp shares estimated using blackscholes option pricing model expected volatility oneyear historical volatility common stock assumptions resulting fair values follows hal 2019 form 10k 60 item 8 notes consolidated financial statements note 14 income per share basic income loss per share based weighted average number common shares outstanding period diluted income per share includes additional common shares would outstanding potential common shares dilutive effect issued antidilutive securities represent potentially dilutive securities excluded computation diluted income loss per share impact antidilutive reconciliation number shares used basic diluted income per share computations follows note 15 financial instruments risk management carrying amount cash equivalents receivables accounts payable reflected consolidated balance sheets approximates fair value due short maturities instruments carrying amount fair value total debt including shortterm borrowings current maturities long term debt follows debt categorized within level 1 fair value hierarchy calculated using quoted prices active markets identical liabilities transactions occurring last two days periodend debt categorized within level 2 fair value hierarchy calculated using significant observable inputs similar liabilities estimated values determined observable data points bonds similarly rated corporate debt observable data points transactions occurring prior two days periodend adjusting changes market conditions differences periods presented level 1 level 2 classification longterm debt relate timing transactions executed debt categorized within level 3 fair value hierarchy based unobservable inputs exposed market risk changes foreign currency exchange rates interest rates selectively manage exposures use derivative instruments including forward foreign exchange contracts foreign exchange options interest rate swaps objective risk management strategy minimize volatility fluctuations foreign currency interest rates use derivative instruments trading purposes fair value forward contracts options interest rate swaps material december 31 2019 december 31 2018 counterparties derivatives primarily global commercial investment banks hal 2019 form 10k 61 item 8 notes consolidated financial statements foreign currency exchange risk operations many international locations involved transactions denominated currencies united states dollar functional currency exposes us foreign currency exchange rate risk techniques managing foreign currency exchange risk include limited foreign currency borrowing investing use currency exchange instruments attempt selectively manage significant exposures potential foreign currency exchange losses based current market conditions future operating activities associated cost relation perceived risk loss purpose foreign currency risk management activities minimize risk cash flows purchase sale products services foreign currencies adversely affected changes exchange rates use forward contracts options manage exposure fluctuations currencies certain countries business internationally instruments treated hedges accounting purposes generally expiration date one year less exchange traded instruments subject fluctuations value fluctuations generally offset value underlying exposures managed use instruments may limit ability benefit favorable fluctuations foreign currency exchange rates derivatives utilized manage exposures currencies due primarily lack available markets cost considerations nontraded currencies attempt manage working capital position minimize foreign currency exposure nontraded currencies recognize pricing services products offered countries account cost exchange rate devaluations historically incurred transaction losses nontraded currencies notional amounts open foreign exchange derivatives 513 million december 31 2019 591 million december 31 2018 notional amounts instruments generally represent amounts exchanged parties thus measure exposure cash requirements related contracts fair value foreign exchange derivatives december 31 2019 december 31 2018 included “other current assets” consolidated balance sheets immaterial fair value instruments categorized within level 2 fair value hierarchy determined using market approach certain inputs notional amounts hedged exchange rates terms contracts observable market derived corroborated observable data interest rate risk subject interest rate risk existing longterm debt shortterm borrowings give rise significant interest rate risk due shortterm nature fixed rate longterm debt totaling 103 billion december 31 2019 december 31 2018 maintain interest rate management strategy intended mitigate exposure changes interest rates aggregate debt portfolio use interest rate swaps effectively convert portion fixed rate debt floating liborbased rates interest rate swaps expire underlying debt matures designated fair value hedges underlying debt determined highly effective derivative instruments marked market gains losses recognized currently interest expense offset respective gains losses recognized changes fair value hedged debt december 31 2019 interest rate swap relating one debt instruments total notional amount 100 million fair value interest rate swap december 31 2019 december 31 2018 included “other assets” consolidated balance sheets immaterial fair value interest rate swap categorized within level 2 fair value hierarchy determined using market approach inputs notional amount libor rate spread settlement terms observable market derived corroborated observable data credit risk financial instruments potentially subject us concentrations credit risk primarily cash equivalents trade receivables practice place cash equivalents high quality investments various institutions trade receivables broad diverse group customers generally collateralized december 31 2019 36 net trade receivables customers united states december 31 2018 43 net trade receivables customers united states maintain allowance bad debts based upon several factors including historical collection experience current aging status customer accounts financial condition customers see note 5 information significant concentrations credit risk individual counterparty derivative contracts select counterparties contracts based belief counterparty’s profitability balance sheet capacity timely payment financial commitments unlikely materially adversely affected foreseeable events hal 2019 form 10k 62 item 8 notes consolidated financial statements note 16 retirement plans company subsidiaries various plans cover significant number employees plans include defined contribution plans defined benefit plans postretirement plans defined contribution plans provide retirement benefits return services rendered plans provide individual account participant terms specify contributions participant’s account determined rather amount pension benefits participant receive contributions plans based percentage pretax income aftertax income discretionary amounts determined annual basis expense defined contribution plans continuing operations totaled 206 million 2019 193 million 2018 173 million 2017 defined benefit plans include funded unfunded pension plans define amount pension benefit provided usually function age years service andor compensation unfunded obligations net periodic benefit cost united states defined benefit plans material periods presented postretirement plans pensions offered specific eligible employees accumulated benefit obligations net periodic benefit cost plans material periods presented funded status international pension plans december 31 2019 projected benefit obligation 11 billion fair value plan assets 10 billion resulted unfunded obligation 111 million december 31 2018 projected benefit obligation 951 million fair value plan assets 832 million resulted unfunded obligation 119 million accumulated benefit obligation international plans 10 billion december 31 2019 878 million december 31 2018 following table presents additional information international pension plans fair value measurements plan assets fair value plan assets categorized within level 1 fair value hierarchy based quoted prices active markets identical assets fair value plan assets categorized within level 2 fair value hierarchy based significant observable inputs similar assets fair value plan assets categorized within level 3 fair value hierarchy based significant unobservable inputs hal 2019 form 10k 63 item 8 notes consolidated financial statements following table sets forth fair values assets held international pension plans level within fair value hierarchy represents investments measured fair value using net asset value nav per share practical expedient thus categorized fair value hierarchy fair value amounts presented table intended permit reconciliation fair value hierarchy total value international pension plans assets b strategy equity funds invest diversified funds global common stocks c strategy bond funds invest diversified funds fixed income securities varying geographies credit quality strategy alternative funds invest fund diversifying investments including limited reinsurance commodities currencies e strategy real estate funds invest diversified funds real estate investment trusts private real estate f investments primarily includes investments insurance contracts risk management practices plans include diversification issuer industry geography well use multiple asset classes investment managers within asset class investment strategy united kingdom pension plan constituted 79 international pension plans’ projected benefit obligation december 31 2019 longer accruing service benefits aims achieve full funding benefit obligation plans assets increasingly composed investments whose cash flows match projected liabilities plan net periodic benefit cost net periodic benefit cost international pension plans 23 million 2019 32 million 2018 30 million 2017 actuarial assumptions certain weightedaverage actuarial assumptions used determine benefit obligations international pension plans december 31 follows certain weightedaverage actuarial assumptions used determine net periodic benefit cost international pension plans years ended december 31 follows hal 2019 form 10k 64 item 8 notes consolidated financial statements assumed longterm rates return plan assets discount rates estimating benefit obligations rates compensation increases vary plan according local economic conditions possible discount rates determined based prevailing market rates portfolio highquality debt instruments maturities matching expected timing payment benefit obligations expected longterm rates return plan assets determined based upon evaluation plan assets historical trends experience taking account current expected market conditions information contributions funding requirements plan determined based local laws country plan resides certain countries funding requirements mandatory countries discretionary currently expect contribute 17 million international pension plans 2020 benefit payments expected benefit payments next 10 years international pension plans follows 42 million 2020 43 million 2021 47 million 2022 49 million 2023 53 million 2024 aggregate 320 million years 2025 2029 note 17 new accounting pronouncements standards adopted 2019 leases effective january 1 2019 adopted accounting standard update issued financial accounting standards board fasb related accounting leases requires lessees record assets liabilities arise leases balance sheet expanded financial statement disclosures lessees lessors adopted standard using optional modified retrospective transition method comparative financial information restated continues reported lease standard effect periods also elected practical expedients provided new standard including package practical expedients shortterm lease recognition practical expedient leases term 12 months less recognized balance sheet practical expedient separate lease nonlease components majority leases adoption standard resulted recognition approximately 10 billion operating lease rightofuse assets operating lease liabilities balance sheet january 1 2019 additionally capital leases reclassified consolidated balance sheets december 31 2018 conform current period presentation consisted 88 million reclassified property plant equipment assets 109 million reclassified longterm debt liabilities adoption standard materially impact consolidated statements operations year ended december 31 2019 see note 6 information new lease standard expanded lease disclosures hal 2019 form 10k 65 item 8 quarterly financial data hal 2019 form 10k 66 item 9item 8 financial statements supplementary data hal 2020 form 10k 34 management’s report internal control financial reporting management halliburton company responsible establishing maintaining adequate internal control financial reporting defined securities exchange act rule 13a15f internal control financial reporting matter well designed inherent limitations therefore even systems determined effective provide reasonable assurance respect financial statement preparation presentation changes conditions effectiveness internal control financial reporting may vary time supervision participation management including chief executive officer chief financial officer conducted evaluation assess effectiveness internal control financial reporting december 31 2020 based upon criteria set forth internal control integrated framework 2013 issued committee sponsoring organizations treadway commission based assessment believe december 31 2020 internal control financial reporting effective effectiveness halliburton’s internal control financial reporting december 31 2020 audited kpmg llp independent registered public accounting firm stated report included herein halliburton company jeffrey millers lance loeffler jeffrey millerlance loeffler chairman board president executive vice president chief executive officerchief financial officer hal 2020 form 10k 35 report independent registered public accounting firm shareholders board directors halliburton company opinion consolidated financial statements audited accompanying consolidated balance sheets halliburton company subsidiaries company december 31 2020 2019 related consolidated statements operations comprehensive income loss shareholders’ equity cash flows years threeyear period ended december 31 2020 related notes collectively consolidated financial statements opinion consolidated financial statements present fairly material respects financial position company december 31 2020 2019 results operations cash flows years threeyear period ended december 31 2020 conformity us generally accepted accounting principles also audited accordance standards public company accounting oversight board united states pcaob company’s internal control financial reporting december 31 2020 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission report dated february 5 2021 expressed unqualified opinion effectiveness company’s internal control financial reporting change accounting principle discussed note 6 consolidated financial statements company changed method accounting leases january 1 2019 due adoption accounting standards codification topic 842 leases basis opinion consolidated financial statements responsibility company’s management responsibility express opinion consolidated financial statements based audits public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audits accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether consolidated financial statements free material misstatement whether due error fraud audits included performing procedures assess risks material misstatement consolidated financial statements whether due error fraud performing procedures respond risks procedures included examining test basis evidence regarding amounts disclosures consolidated financial statements audits also included evaluating accounting principles used significant estimates made management well evaluating overall presentation consolidated financial statements believe audits provide reasonable basis opinion critical audit matters critical audit matters communicated matters arising current period audit consolidated financial statements communicated required communicated audit committee 1 relate accounts disclosures material consolidated financial statements 2 involved especially challenging subjective complex judgments communication critical audit matters alter way opinion consolidated financial statements taken whole communicating critical audit matters providing separate opinions critical audit matters accounts disclosures relate evaluation realizability deferred tax assets discussed notes 1 11 consolidated financial statements company recognizes deferred tax assets liabilities expected future tax consequences events recognized financial statements valuation allowance provided deferred tax assets likely items realized dependent upon generation future taxable income december 31 2020 company gross deferred tax assets 38 billion related valuation allowance 14 billion identified evaluation realizability domestic deferred tax assets critical audit matter evaluation realizability domestic deferred tax assets specifically related domestic net operating loss hal 2020 form 10k 36 carryforwards foreign tax credits required subjective auditor judgment assess forecasts future taxable income periods temporary differences become deductible changes assumptions regarding forecasted taxable income specifically revenue growth rates could impact company’s evaluation realizability domestic deferred tax assets following primary procedures performed address critical audit matter evaluated design tested operating effectiveness certain internal controls related critical audit matter included controls related development forecasts future taxable income evaluated assumptions used development forecasts future taxable income specifically revenue growth rates comparing historical actuals considering current anticipated future commodity prices market events also evaluated company’s history realizing domestic deferred tax assets evaluating expiration domestic net operating loss carryforwards foreign tax credits assessment fair value property plant equipment discussed notes 1 2 8 consolidated financial statements gross amount property plant equipment december 31 2020 154 billion related accumulated depreciation 110 billion events changes circumstances indicate longlived assets may impaired evaluation performed company compares estimated future undiscounted cash flows expected result use eventual disposition asset group carrying amount asset groups undiscounted cash flows less carrying amount determine asset groups fair value fair value asset group determined using discounted cash flow analysis impairment recognized event fair value less carrying value company recognized impairment charge 23 billion year ended december 31 2020 identified assessment company’s estimate fair value property plant equipment critical audit matter certain asset groups high degree subjectivity evaluating significant assumptions used determining discounted cash flows used estimate fair value certain asset groups specifically revenue growth rates expected profitability margin discount rate used following primary procedures performed address critical audit matter evaluated design tested operating effectiveness certain internal controls company’s process estimate discounted cash flows certain asset groups including controls related significant assumptions evaluated company’s development revenue growth rates expected profitability margin assumptions identifying assessing sources data management used assessment evaluated revenue growth rates expected profitability margin consistency relevant historical data changes business external industry data applicable addition involved valuation professionals specialized skills knowledge assist evaluating selected discount rate comparing discount rate range independently developed using publicly available market data comparable companies kpmg llp served company’s auditor since 2002 houston texas february 5 2021 hal 2020 form 10k 37 report independent registered public accounting firm shareholders board directors halliburton company opinion internal control financial reporting audited halliburton companys subsidiaries company internal control financial reporting december 31 2020 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission opinion company maintained material respects effective internal control financial reporting december 31 2020 based criteria established internal control integrated framework 2013 issued committee sponsoring organizations treadway commission also audited accordance standards public company accounting oversight board united states pcaob consolidated balance sheets company december 31 2020 2019 related consolidated statements operations comprehensive income loss shareholders equity cash flows years threeyear period ended december 31 2020 related notes collectively consolidated financial statements report dated february 5 2021 expressed unqualified opinion consolidated financial statements basis opinion companys management responsible maintaining effective internal control financial reporting assessment effectiveness internal control financial reporting included accompanying managements report internal control financial reporting responsibility express opinion companys internal control financial reporting based audit public accounting firm registered pcaob required independent respect company accordance us federal securities laws applicable rules regulations securities exchange commission pcaob conducted audit accordance standards pcaob standards require plan perform audit obtain reasonable assurance whether effective internal control financial reporting maintained material respects audit internal control financial reporting included obtaining understanding internal control financial reporting assessing risk material weakness exists testing evaluating design operating effectiveness internal control based assessed risk audit also included performing procedures considered necessary circumstances believe audit provides reasonable basis opinion definition limitations internal control financial reporting companys internal control financial reporting process designed provide reasonable assurance regarding reliability financial reporting preparation financial statements external purposes accordance generally accepted accounting principles companys internal control financial reporting includes policies procedures 1 pertain maintenance records reasonable detail accurately fairly reflect transactions dispositions assets company 2 provide reasonable assurance transactions recorded necessary permit preparation financial statements accordance generally accepted accounting principles receipts expenditures company made accordance authorizations management directors company 3 provide reasonable assurance regarding prevention timely detection unauthorized acquisition use disposition companys assets could material effect financial statements inherent limitations internal control financial reporting may prevent detect misstatements also projections evaluation effectiveness future periods subject risk controls may become inadequate changes conditions degree compliance policies procedures may deteriorate kpmg llp houston texas february 5 2021 hal 2020 form 10k 38 hal 2020 form 10k 39 hal 2020 form 10k 40 hal 2020 form 10k 41 hal 2020 form 10k 42 hal 2020 form 10k 43 item 8 notes consolidated financial statements halliburton company notes consolidated financial statements note 1 description company significant accounting policies description company halliburton company one worlds largest providers products services energy industry predecessor established 1919 incorporated laws state delaware 1924 help customers maximize asset value throughout lifecycle reservoir locating hydrocarbons managing geological data drilling formation evaluation well construction completion optimizing production throughout life asset serve major national independent oil natural gas companies throughout world operate two divisions form basis two operating segments report completion production segment drilling evaluation segment use estimates financial statements prepared conformity united states generally accepted accounting principles requiring us make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenue expenses reporting period believe significant estimates assumptions associated forecasting income tax provision benefit valuation deferred taxes legal reserves longlived asset valuations allowance credit losses ultimate results could differ estimates basis presentation consolidated financial statements include accounts company subsidiaries control variable interest entities determined primary beneficiary material intercompany accounts transactions eliminated investments companies controlling interest exercise significant influence accounted using equity method accounting significant influence use cost method accounting addition certain reclassifications prior period balances made conform current period presentation revenue recognition services products generally sold based upon purchase orders contracts customers include fixed determinable prices include right return provisions significant postdelivery obligations vast majority service product contracts shortterm nature recognize revenue based transfer control customers ability benefit services products amount reflects consideration expect receive exchange services products also assess customers ability intention pay based variety factors including historical payment experience financial condition customers rates services typically priced per day per meter per manhour similar basis see note 4 information revenue recognition research development maintain active research development program improves products processes engineering standards practices serve changing needs customers related high pressure high temperature environments also develops new products processes research development costs expensed incurred 309 million 2020 404 million 2019 390 million 2018 cash equivalents consider highly liquid investments original maturity three months less cash equivalents inventories stated lower cost net realizable value cost represents invoice production cost new items original cost production cost includes material labor manufacturing overhead inventory recorded weighted average cost method regularly review inventory quantities hand record provisions excess obsolete inventory based primarily historical usage estimated product demand technological developments hal 2020 form 10k 44 item 8 notes consolidated financial statements allowance credit losses establish allowance credit losses review several factors including historical collection experience current aging status customer accounts current financial condition customers losses charged allowance customer accounts determined uncollectible property plant equipment assets written fair values due impairment property plant equipment reported cost less accumulated depreciation generally provided straightline method estimated useful lives assets accelerated depreciation methods often used tax purposes permitted upon sale retirement asset related costs accumulated depreciation removed accounts gain loss recognized planned major maintenance costs generally expensed incurred expenditures additions modifications conversions capitalized increase value extend useful life asset goodwill intangible assets record goodwill excess purchase price fair value tangible identifiable intangible assets acquired business acquisition changes carrying amount goodwill detailed reportable segment reported amounts goodwill reporting unit reviewed impairment annual basis third quarter frequently circumstances indicate impairment may exist result goodwill impairment assessments performed years ended december 31 2020 2019 2018 determined fair value reporting unit exceeded net book value therefore goodwill impairments deemed necessary information goodwill impairment assessments see item 7 management’s discussion analysis financial condition results operations critical accounting estimates” amortize identifiable intangible assets finite life straightline basis period asset expected contribute future cash flows ranging one year twentyeight years components intangible assets generally consist patents license agreements noncompete agreements trademarks customer lists contracts evaluating impairment longlived assets events changes circumstances indicate longlived assets goodwill may impaired evaluation performed assets classified held use first group individual assets based lowest level identifiable cash flows largely independent cash flows assets compare estimated future undiscounted cash flows expected result use eventual disposition asset group carrying amount asset groups undiscounted cash flows less carrying amount determine asset groups fair value using discounted cash flow analysis recognize resulting impairment asset classified held sale asset’s book value evaluated adjusted lower carrying amount fair value less cost sell addition depreciation amortization ceased classified held sale see note 2 information impairments charges recorded 2020 income taxes recognize amount taxes payable refundable year addition deferred tax assets liabilities recognized expected future tax consequences events recognized financial statements tax returns valuation allowance provided deferred tax assets likely items realized hal 2020 form 10k 45 item 8 notes consolidated financial statements assessing realizability deferred tax assets management considers whether likely portion deferred tax assets realized ultimate realization deferred tax assets dependent upon generation future taxable income periods temporary differences become deductible management considers scheduled reversal deferred tax liabilities projected future taxable income tax planning strategies making assessment based upon level historical taxable income projections future taxable income periods deferred tax assets deductible management believes likely realize benefits deductible differences net existing valuation allowances recognize interest penalties related unrecognized tax benefits within provision income taxes continuing operations consolidated statements operations derivative instruments times enter derivative financial transactions hedge existing projected exposures changing foreign currency exchange rates interest rates enter derivative transactions speculative trading purposes recognize derivatives balance sheet fair value derivatives hedges adjusted fair value reflected results operations derivative designated hedge depending nature hedge changes fair value derivatives either offset change fair value hedged assets liabilities firm commitments earnings recognized comprehensive income hedged item recognized earnings ineffective portion derivative’s change fair value recognized earnings recognized gains losses derivatives entered manage foreign currency exchange risk included “other net” consolidated statements operations gains losses interest rate derivatives included “interest expense net” foreign currency translation foreign entities whose functional currency united states dollar translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates revenue expense transactions translated average rates effect year except expenses associated nonmonetary balance sheet accounts translated historical rates gains losses remeasurement monetary assets liabilities due changes exchange rates recognized consolidated statements operations “other net” year occurrence stockbased compensation stockbased compensation cost measured date grant based calculated fair value award recognized expense employee’s service period generally vesting period equity grant additionally compensation cost recognized based awards ultimately expected vest therefore reduced cost estimated forfeitures based historical forfeiture rates forfeitures estimated time grant revised subsequent periods reflect actual forfeitures see note 13 additional information related stockbased compensation hal 2020 form 10k 46 item 8 notes consolidated financial statements note 2 impairments charges oil gas industry experienced unprecedented disruption 2020 result combination factors including substantial decline global demand oil caused covid19 pandemic subsequent mitigation efforts disruption created substantial surplus oil decline oil prices west texas intermediate wti oil spot prices decreased first quarter 2020 high 63 per barrel early january 2020 approximately 21 per barrel end first quarter 2020 although oil prices recovered moderately approximately 48 per barrel end december 2020 wti oil spot prices averaged approximately 43 per barrel fourth quarter 2020 39 per barrel year 2020 approximately 25 31 respectively less average price per barrel periods 2019 result oil gas activity declined significantly 2020 global rig count sinking lowest level since 1973 us international average rig counts dropped 54 25 respectively 2020 contributing global rig count decline 38 since december 31 2019 first second quarters 2020 determined events constituted triggering events required us review recoverability longlived assets perform interim goodwill impairment assessment march 31 2020 may 1 2020 determined fair value longlived assets based discounted cash flow analysis exception real estate facilities classified held sale fair value based third party sales price estimates determined fair value reporting unit goodwill impairment assessment using discounted cash flow analysis multiplesbased market approach comparable companies given current volatile market environment utilized thirdparty valuation advisors assist us valuations analyses included significant judgment including management’s shortterm longterm forecast operating performance discount rates based weighted average cost capital revenue growth rates profitability margins capital expenditures timing future cash flows based eventual recovery oil gas industry case longlived assets remaining useful life service potential asset impairment assessments incorporate inherent uncertainties including projected commodity pricing supply demand services future market conditions difficult predict volatile economic environments could result impairment charges future periods actual results materially differ estimated assumptions utilized forecasts based upon impairment assessments determined carrying amount longlived assets exceeded respective fair values result goodwill impairment assessments determined fair value reporting unit exceeded net book value therefore goodwill impairments deemed necessary result events described recorded impairments charges approximately 38 billion year ended december 31 2020 following table presents various pretax charges recorded years ended december 31 2020 2019 2018 reflected within impairments charges consolidated statements operations 38 billion impairments charges recorded year ended december 31 2020 approximately 24 billion attributable completion production segment approximately 14 billion attributable drilling evaluation segment longlived asset impairments include impairments property plant equipment intangible assets real estate facilities 26 billion longlived asset impairments 2020 consisted following 10 billion attributable hydraulic fracturing equipment majority located north america 297 million related drillingrelated services equipment 191 million related rightofuse assets primarily operating leases 131 million related intangible assets 394 million associated fixed asset impairments also included longlived asset impairments 616 million related real estate properties primarily related fair value adjustment contemplated structured transaction remaining north america real estate owned assets classified held sale approximately 50 north american facilities closed sold consolidated reduced size 2020 hal 2020 form 10k 47 item 8 notes consolidated financial statements year ended december 31 2019 16 billion longlived asset impairments consisted following 759 million attributable hydraulic fracturing equipment majority located north america 243 million related legacy drilling equipment 215 million related real estate owned classified held sale 139 million related rightofuse assets associated operating leases 98 million related intangible assets 148 million fixed asset impairments also rationalized portfolio existing joint ventures recorded resulting charges within joint ventures table inventory costs writedowns table primarily represent disposal excess inventory including drilling fluids chemicals writedowns inventory cost exceeded market value year ended december 31 2018 265 million impairment related writedown remaining investment venezuela given dynamic nature covid19 pandemic related market conditions cannot reasonably estimate period events persist full extent impact business market conditions continue deteriorate including crude oil prices declining remaining low levels sustained period may record asset impairments may include impairment carrying value goodwill note 3 business segment geographic information operate two divisions form basis two operating segments report completion production segment drilling evaluation segment equity earnings losses unconsolidated affiliates accounted using equity method accounting included within cost services cost sales statements operations part operating income applicable segment hal 2020 form 10k 48 item 8 notes consolidated financial statements operations business segment following tables present financial information business segments includes certain expenses attributable business segment costs related support functions corporate executives operating lease assets also includes amortization expense associated intangible assets recorded result acquisitions b impairments charges follows year ended december 31 2020 amount includes approximately 24 billion attributable completion production 14 billion attributable drilling evaluation 62 million attributable corporate year ended december 31 2019 amount includes approximately 16 billion attributable completion production 849 million attributable drilling evaluation 56 million attributable corporate years ended december 31 2018 recorded aggregate charges 265 million writedown investment venezuela assets associated specific segments primarily include receivables inventories property plant equipment operating lease rightofuse assets equity advances related companies goodwill b corporate primarily include cash equivalents deferred tax assets hal 2020 form 10k 49 operations geographic region following tables present information geographic area 2020 2019 2018 based location services provided products sold 38 51 58 respectively consolidated revenue united states country accounted 10 revenue property plant equipment periods presented december 31 2020 december 31 2019 49 59 property plant equipment located united states note 4 revenue recognized based transfer control customers ability benefit services products amount reflects consideration expect receive exchange services products vast majority service product contracts shortterm nature recognizing revenue services products determine transaction price purchase orders contracts customers may consist fixed variable consideration also assess customers ability intention pay based variety factors including historical payment experience financial condition customers payment terms conditions vary contract type although terms generally include requirement payment within 20 60 days judgments involved recognizing revenue include assessment progress towards completion performance obligations certain longterm contracts involve estimating total costs determine progress towards contract completion calculating corresponding amount revenue recognize disaggregation revenue disaggregate revenue contracts customers types services products consistent two reportable segments addition geographical area based location services provided products sold 38 51 58 consolidated revenue united states years ended december 31 2020 2019 2018 respectively country accounted 10 revenue following table presents information disaggregated revenue hal 2020 form 10k 50 item 8 notes consolidated financial statements contract balances perform obligations contracts customers transferring services products exchange consideration timing performance often differs timing customer’s payment results recognition receivables deferred revenue deferred revenue represents advance consideration received customers contracts revenue recognized future performance service deferred revenue well revenue recognized period relating amounts included deferred revenue beginning period material consolidated financial statements transaction price allocated remaining performance obligations remaining performance obligations represent firm contracts work performed future revenue recognition expected elected practical expedient permitting exclusion disclosing remaining performance obligations contracts original expected duration one year less longterm contracts related software integrated project management services lump sum turnkey contracts software contracts revenue generally recognized time throughout license period software considered right access intellectual property lump sum turnkey projects recognize revenue time using input method requires us exercise judgment revenue allocated remaining performance obligations longterm contracts material note 5 receivables december 31 2020 32 net trade receivables customers united states december 31 2019 36 net trade receivables customers united states country single customer accounted 10 net trade receivables dates routinely monitor financial stability customers employ extensive process evaluate collectability outstanding receivables process involves judgment utilizing significant assumptions includes analysis customers’ historical time pay financial condition various financial metrics debt structure credit agency ratings production profile well political economic factors countries operations customerspecific factors table presents rollforward global allowance credit losses 2018 2019 2020 represents increases allowance credit losses charged costs expenses net recoveries b includes writeoffs balance sheet reclassifications activity c allowance credit losses years primarily comprised full reserve accounts receivable primary customer venezuela hal 2020 form 10k 51 item 8 notes consolidated financial statements note 6 leases adopted comprehensive new lease accounting standard effective january 1 2019 details significant changes accounting policies resulting adoption new standard set adopted standard using optional modified retrospective transition method accordingly comparative information december 31 2018 year ended december 31 2018 adjusted continues reported previous lease standard new lease standard assets liabilities arise leases required recognized balance sheet lessees previously capital leases referred finance leases recorded balance sheet adoption standard resulted recognition approximately 10 billion operating lease rightofuse assets operating lease liabilities consolidated balance sheet january 1 2019 adoption standard materially impact consolidated results operations year ended december 31 2019 beginning january 1 2019 leases term excess 12 months recognized lease liability equal present value lease payments rightofuse asset representing right use underlying asset lease term operating leases lease expense lease payments recognized straightline basis lease term accretion lease liability finance leases include operating expense interest expense component leases term 12 months less elected practical expedient recognize lease assets liabilities recognize lease expense shortterm leases straightline basis lease term lessee numerous operating leases primarily related real estate transportation equipment vast majority operating leases remaining lease terms 10 years less include options extend leases include options terminate leases generally include renewal termination options assessment leases unless extension termination certain assets deemed reasonably certain accounting leases may require judgment includes determining whether contract contains lease determining incremental borrowing rates utilize net present value calculation lease payments lease agreements provide implicit rate assessing likelihood renewal termination options also lease agreements lease nonlease components generally accounted single lease component certain equipment leases offshore vessels drilling rigs account lease nonlease components separately following tables illustrate financial impact leases years ended december 31 2020 december 31 2019 along supplemental information existing leases hal 2020 form 10k 52 item 8 notes consolidated financial statements year ended december 31 2018 total rentals operating leases previous lease standard net sublease rentals 680 million years ended december 31 2020 december 31 2019 impairment charges recorded related operating finance lease rightofuse assets totaling 191 million 139 million respectively see note 2 consolidated financial statements discussion impairments charges 2019 balance primarily consists operating lease rightofuse assets exchanged lease obligations upon implementation new lease accounting standard january 1 2019 hal 2020 form 10k 53 item 8 notes consolidated financial statements following table summarizes maturity operating finance leases december 31 2020 note 7 inventories consisted following amounts table reported net obsolescence reserves 150 million december 31 2020 149 million december 31 2019 year ended december 31 2020 recorded 505 million impairment charges related inventory charges primarily consisted disposal excess inventory including drilling fluids chemicals writedowns inventory cost exceeded market value note 8 property plant equipment property plant equipment composed following year ended december 31 2020 23 billion impairment charge recorded related property plant equipment see note 2 consolidated financial statements discussion impairments charges hal 2020 form 10k 54 item 8 notes consolidated financial statements classes assets depreciated following useful lives note 9 debt total debt including shortterm borrowings current maturities longterm debt consisted following hal 2020 form 10k 55 item 8 notes consolidated financial statements 10 billion issuance march 3 2020 issued 10 billion aggregate principal amount 292 senior notes due march 2030 subsequently march 5 2020 completed tender offer purchase 15 billion aggregate principal amount senior notes using proceeds debt issuance cash hand tender offer purchased 500 million aggregate principal amount 350 senior notes due august 2023 10 billion aggregate principal amount 380 senior notes due november 2025 early debt repurchase resulted 168 million loss extinguishment included tender premium unamortized discounts costs retired notes tender fees costs included loss early extinguishment debt consolidated statements operations year ended december 31 2020 senior debt 10 billion senior notes issued march rank equally existing future senior unsecured indebtedness semiannual interest payments sinking fund requirements may redeem senior notes time notes series time applicable redemption prices plus accrued unpaid interest 675 notes due february 2027 76 senior debentures due august 2096 875 senior debentures due february 2021 may redeemed prior maturity revolving credit facilities revolving credit facility capacity 35 billion expires march 2024 facility working capital general corporate purposes full amount revolving credit facility available december 31 2020 debt maturities longterm debt matures follows 695 million 2021 9 million 2022 602 million 2023 amounts 2024 10 billion 2025 remainder thereafter note 10 commitments contingencies company subject various legal governmental proceedings claims investigations including personal injury property damage environmental taxrelated matters arising ordinary course business resolution opinion management material adverse effect consolidated results operations consolidated financial position inherent risk litigation claim investigation assurance given outcome proceedings guarantee arrangements normal course business agreements financial institutions approximately 19 billion letters credit bank guarantees surety bonds outstanding december 31 2020 outstanding letters credit triggering events would entitle bank require cash collateralization none balance sheet arrangements either likely material effect consolidated financial statements note 11 income taxes components provision benefit income taxes continuing operations hal 2020 form 10k 56 item 8 notes consolidated financial statements united states foreign components income loss continuing operations income taxes follows reconciliations actual provision benefit income taxes continuing operations computed applying united states statutory rate income loss continuing operations income taxes follows year ended december 31 2020 recorded total income tax benefit 278 million pretax loss 32 billion resulting effective tax rate 86 effective tax rate 2020 primarily impacted geographic mix earnings tax adjustments related reassessment prior year tax accruals valuation allowances deferred tax assets increase valuation allowances results decreased forecasted ability generate sufficient taxable income expiration foreign tax credits net operating losses direct result deteriorated market conditions led impairment charges 38 billion 2020 25 billion 2019 see note 2 information primary components deferred tax assets liabilities follows december 31 2020 18 billion domestic foreign taxeffected net operating loss carryforwards approximately 133 million estimated utilized unrecognized tax benefits ultimate realization hal 2020 form 10k 57 item 8 notes consolidated financial statements deferred tax assets depends ability generate sufficient taxable income appropriate taxing jurisdiction deferred tax assets net operating losses foreign tax credits research development credits expire follows year ended december 31 2020 increased valuation allowance deferred tax assets 312 million related 16 million associated foreign deferred tax assets 296 million associated foreign tax credits accordance tax cuts jobs act 2017 company’s foreign earnings accumulated legacy tax laws deemed repatriated united states provided federal state income tax related deemed repatriation provided incremental united states income taxes foreign withholding taxes undistributed earnings foreign subsidiaries december 31 2020 company generally provide taxes related undistributed earnings either would taxable remitted considered indefinitely reinvested following table presents rollforward unrecognized tax benefits associated interest penalties includes 18 million december 31 2020 25 million december 31 2019 foreign unrecognized tax benefits would give rise united states tax credit december 31 2020 december 31 2019 net 224 million 271 million without net operating loss carryforward offset respectively unrecognized tax benefits would positively impact effective tax rate recognized additional tax benefits statement operations resolved favor b includes 17 million could resolved within next 12 months tax returns subject review taxing authorities jurisdictions file tax returns cases longer subject examination tax authorities years 2009 significant operating jurisdiction tax filings review subject examination tax authorities united states united states federal income tax filings tax years 2016 2019 currently review remain open review us internal revenue service hal 2020 form 10k 58 item 8 notes consolidated financial statements note 12 shareholders’ equity shares common stock following table summarizes total shares common stock outstanding board directors authorized program repurchase specified dollar amount common stock time program require specific number shares purchased program may effected solicited unsolicited transactions market privately negotiated transactions program may terminated suspended time year ended december 31 2020 repurchased approximately 74 million shares common stock total cost 100 million 45 million repurchases made program year ended december 31 2019 approximately 51 billion remained authorized repurchases december 31 2020 inception program february 2006 december 31 2020 repurchased approximately 224 million shares common stock total cost approximately 90 billion paidin capital excess par value 2020 issued common stock treasury shares employee stock purchase plan awards restricted stock grants result additional paid capital reduced zero resulted reduction retained earnings 75 million additional issuances treasury shares could similarly impact additional paid capital retained earnings preferred stock preferred stock consists five million total authorized shares december 31 2020 none issued accumulated comprehensive loss accumulated comprehensive loss consisted following included net actuarial losses international pension plans 212 million december 31 2020 189 million december 31 2019 note 13 stockbased compensation following table summarizes stockbased compensation costs years ended december 31 2020 2019 2018 hal 2020 form 10k 59 item 8 notes consolidated financial statements stock incentive plan amended stock plan provides grant following types stockbased awards stock options including incentive stock options nonqualified stock options restricted stock awards restricted stock unit awards stock appreciation rights stock value equivalent awards currently stock appreciation rights stock value equivalent awards incentive stock options outstanding terms stock plan approximately 247 million shares common stock reserved issuance employees nonemployee directors december 31 2020 approximately 23 million shares available future grants stock plan stock offered pursuant grant award stock plan may authorized unissued common shares treasury shares addition provisions stock plan also stockbased compensation provisions restricted stock plan nonemployee directors employee stock purchase plan espp active stockbased compensation arrangements discussed stock options majority options generally issued second quarter year stock options stock plan granted fair market value common stock grant date employee stock options generally vest ratably period three years expire 10 years grant date compensation expense stock options generally recognized straight line basis entire vesting period following table represents stock options activity 2020 total intrinsic value options exercised 7 million 2020 2 million 2019 25 million 2018 december 31 2020 20 million unrecognized compensation cost net estimated forfeitures related nonvested stock options expected recognized weighted average period approximately two years cash received issuance common stock 87 million none related proceeds exercises stock option 2020 cash received issuance common stock 118 million 2019 195 million 2018 6 million 88 million related proceeds exercises stock options 2019 2018 respectively remainder relates cash proceeds issuance shares related employee stock purchase plan hal 2020 form 10k 60 item 8 notes consolidated financial statements fair value options date grant estimated using blackscholes option pricing model expected volatility options granted blended rate based upon implied volatility calculated actively traded options common stock upon historical volatility common stock expected term options granted based upon historical observation actual time elapsed date grant exercise options employees assumptions resulting fair values options granted follows restricted stock restricted shares issued stock plan restricted sale disposition restrictions lapse periodically generally period five years restrictions may also lapse early retirement conditions accordance established policies upon termination employment shares restrictions lapsed must returned us resulting restricted stock forfeitures fair market value stock date grant amortized charged income straightline basis requisite service period entire award 2020 also granted performance based restricted stock units actual number shares earned determined end three year performance period based achievement certain predefined targets based upon average return capital employed compared certain competitors modifier based upon stock performance compared oilfield services index osx monte carlo simulation uses probabilistic approach performed actuary measure grant date fair value fair value performance based restricted stock units recognized straightline basis three year performance cycle following table represents restricted stock awards restricted stock units granted vested forfeited 2020 weighted average grantdate fair value shares granted 1653 2020 2475 2019 4743 2018 total fair value shares vested 79 million 2020 107 million 2019 219 million 2018 december 31 2020 330 million unrecognized compensation cost net estimated forfeitures related nonvested restricted stock expected recognized weighted average period three years employee stock purchase plan espp eligible employees may 10 earnings withheld subject limitations used purchase shares common stock espp contains four threemonth offering periods commencing january 1 april 1 july 1 october 1 year price common stock may purchased espp equal 90 85 2019 2018 lower fair market value common stock commencement date last trading day offering period espp 74 million shares common stock reserved issuance 65 million shares sold espp since inception plan december 31 2020 9 million shares available future issuance stock offered may authorized unissued common shares treasury shares hal 2020 form 10k 61 item 8 notes consolidated financial statements fair value espp shares estimated using blackscholes option pricing model expected volatility oneyear historical volatility common stock assumptions resulting fair values follows note 14 income per share basic income loss per share based weighted average number common shares outstanding period diluted income per share includes additional common shares would outstanding potential common shares dilutive effect issued antidilutive securities represent potentially dilutive securities excluded computation diluted income loss per share impact antidilutive reconciliation number shares used basic diluted income per share computations follows note 15 financial instruments risk management carrying amount cash equivalents receivables accounts payable reflected consolidated balance sheets approximates fair value due short maturities instruments carrying amount fair value total debt including shortterm borrowings current maturities long term debt follows total fair value debt decreased 2020 primarily due early repurchase senior notes partially offset lower average yields see note 9 information debt categorized within level 1 fair value hierarchy calculated using quoted prices active markets identical liabilities transactions occurring last two days periodend debt categorized within level 2 fair value hierarchy calculated using significant observable inputs similar liabilities estimated values determined observable data points bonds similarly rated corporate debt observable data points transactions occurring prior two days periodend adjusting changes market conditions differences periods presented level 1 level 2 classification longterm debt relate timing transactions executed debt categorized within level 3 fair value hierarchy based unobservable inputs hal 2020 form 10k 62 item 8 notes consolidated financial statements exposed market risk changes foreign currency exchange rates interest rates selectively manage exposures use derivative instruments including forward foreign exchange contracts foreign exchange options interest rate swaps objective risk management strategy minimize volatility fluctuations foreign currency interest rates use derivative instruments trading purposes fair value forward contracts options interest rate swaps material december 31 2020 december 31 2019 counterparties derivatives primarily global commercial investment banks foreign currency exchange risk operations many international locations involved transactions denominated currencies united states dollar functional currency exposes us foreign currency exchange rate risk techniques managing foreign currency exchange risk include limited foreign currency borrowing investing use currency exchange instruments attempt selectively manage significant exposures potential foreign currency exchange losses based current market conditions future operating activities associated cost relation perceived risk loss purpose foreign currency risk management activities minimize risk cash flows purchase sale products services foreign currencies adversely affected changes exchange rates use forward contracts options manage exposure fluctuations currencies certain countries business internationally instruments treated hedges accounting purposes generally expiration date one year less exchange traded instruments subject fluctuations value fluctuations generally offset value underlying exposures managed use instruments may limit ability benefit favorable fluctuations foreign currency exchange rates derivatives utilized manage exposures currencies due primarily lack available markets cost considerations nontraded currencies attempt manage working capital position minimize foreign currency exposure nontraded currencies recognize pricing services products offered countries account cost exchange rate devaluations historically incurred transaction losses nontraded currencies notional amounts open foreign exchange derivatives 817 million december 31 2020 513 million december 31 2019 notional amounts instruments generally represent amounts exchanged parties thus measure exposure cash requirements related contracts fair value foreign exchange derivatives december 31 2020 december 31 2019 included “other current assets” consolidated balance sheets immaterial fair value instruments categorized within level 2 fair value hierarchy determined using market approach certain inputs notional amounts hedged exchange rates terms contracts observable market derived corroborated observable data interest rate risk subject interest rate risk existing longterm debt shortterm borrowings give rise significant interest rate risk due shortterm nature fixed rate longterm debt totaling 98 billion december 31 2020 103 billion december 31 2019 maintain interest rate management strategy intended mitigate exposure changes interest rates aggregate debt portfolio use interest rate swaps effectively convert portion fixed rate debt floating liborbased rates interest rate swaps expire underlying debt matures designated fair value hedges underlying debt determined highly effective derivative instruments marked market gains losses recognized currently interest expense offset respective gains losses recognized changes fair value hedged debt december 31 2020 interest rate swap relating one debt instruments total notional amount 100 million fair value interest rate swap december 31 2020 december 31 2019 included “other assets” consolidated balance sheets immaterial fair value interest rate swap categorized within level 2 fair value hierarchy determined using market approach inputs notional amount libor rate spread settlement terms observable market derived corroborated observable data hal 2020 form 10k 63 item 8 notes consolidated financial statements credit risk financial instruments potentially subject us concentrations credit risk primarily cash equivalents trade receivables practice place cash equivalents high quality investments various institutions trade receivables broad diverse group customers generally collateralized december 31 2020 32 net trade receivables customers united states december 31 2019 36 net trade receivables customers united states maintain allowance credit losses based upon several factors including historical collection experience current aging status customer accounts financial condition customers see note 5 information significant concentrations credit risk individual counterparty derivative contracts select counterparties contracts based belief counterparty’s profitability balance sheet capacity timely payment financial commitments unlikely materially adversely affected foreseeable events note 16 retirement plans company subsidiaries various plans cover significant number employees plans include defined contribution plans defined benefit plans postretirement plans defined contribution plans provide retirement benefits return services rendered plans provide individual account participant terms specify contributions participant’s account determined rather amount pension benefits participant receive contributions plans based percentage pretax income aftertax income discretionary amounts determined annual basis expense defined contribution plans totaled 100 million 2020 206 million 2019 193 million 2018 decrease expense 2019 2020 due significant headcount reductions year ended december 31 2020 coupled suspension discretionary contributions 2020 defined benefit plans include funded unfunded pension plans define amount pension benefit provided usually function age years service andor compensation unfunded obligations net periodic benefit cost united states defined benefit plans material periods presented postretirement plans pensions offered specific eligible employees accumulated benefit obligations net periodic benefit cost plans material periods presented funded status international pension plans december 31 2020 projected benefit obligation 12 billion fair value plan assets 11 billion resulted unfunded obligation 152 million december 31 2019 projected benefit obligation 11 billion fair value plan assets 10 billion resulted unfunded obligation 111 million accumulated benefit obligation international plans 11 billion december 31 2020 10 billion december 31 2019 following table presents additional information international pension plans fair value measurements plan assets fair value plan assets categorized within level 1 fair value hierarchy based quoted prices active markets identical assets fair value plan assets categorized within level 2 fair value hierarchy hal 2020 form 10k 64 item 8 notes consolidated financial statements based significant observable inputs similar assets fair value plan assets categorized within level 3 fair value hierarchy based significant unobservable inputs following table sets forth fair values assets held international pension plans level within fair value hierarchy represents investments measured fair value using net asset value nav per share practical expedient thus categorized fair value hierarchy fair value amounts presented table intended permit reconciliation fair value hierarchy total value international pension plans assets b strategy equity funds invest diversified funds global common stocks c strategy bond funds invest diversified funds fixed income securities varying geographies credit quality strategy alternative funds invest fund diversifying investments including limited reinsurance commodities currencies e strategy real estate funds invest diversified funds real estate investment trusts private real estate f investments primarily include investments insurance contracts balanced funds government bonds risk management practices plans include diversification issuer industry geography well use multiple asset classes investment managers within asset class investment strategy united kingdom pension plan constituted 81 international pension plans’ projected benefit obligation december 31 2020 longer accruing service benefits aims achieve full funding benefit obligation plans assets increasingly composed investments whose cash flows match projected liabilities plan net periodic benefit cost net periodic benefit cost international pension plans 30 million 2020 23 million 2019 32 million 2018 actuarial assumptions certain weightedaverage actuarial assumptions used determine benefit obligations international pension plans december 31 follows certain weightedaverage actuarial assumptions used determine net periodic benefit cost international pension plans years ended december 31 follows hal 2020 form 10k 65 item 8 notes consolidated financial statements assumed longterm rates return plan assets discount rates estimating benefit obligations rates compensation increases vary plan according local economic conditions possible discount rates determined based prevailing market rates portfolio highquality debt instruments maturities matching expected timing payment benefit obligations expected longterm rates return plan assets determined based upon evaluation plan assets historical trends experience taking account current expected market conditions information contributions funding requirements plan determined based local laws country plan resides certain countries funding requirements mandatory countries discretionary currently expect contribute 17 million international pension plans 2021 benefit payments expected benefit payments next 10 years international pension plans follows 46 million 2021 44 million 2022 45 million 2023 45 million 2024 47 million 2025 aggregate 266 million years 2026 2030 hal 2020 form 10k 66 item 8 quarterly financial data hal 2020 form 10k 67 item 9item 8 financial statements supplementary data page responsibility financial reporting 10 report arthur andersen llp independent public accountants 11 consolidated statements income years ended december 31 1995 1994 1993 12 consolidated balance sheets december 31 1995 1994 13 consolidated statements cash flows years ended december 31 1995 1994 1993 14 consolidated statements shareholders equity years ended december 31 1995 1994 1993 15 notes financial statements 16 29 quarterly data market price information 30 related financial statement schedules included part iv item 14 annual report managements discussion analysis results operations financial condition business environment outlook approximately 80 companys revenues derived services products delivered energy industry company operates 100 countries around world provide variety energy services engineering construction services operations countries may affected unsettled political conditions expropriation governmental actions exchange control currency problems company believes geographic diversification business activities reduces risk loss operations one country would material conduct operations whole energy industry energy industry experienced declining selling prices per barrel oil equivalent adjusted inflation past ten years per barrel costs finding developing producing hydrocarbons also declined result several factors energy companies restructured reduce costs technological advances horizontal drilling geosteering logging drilling multilateral completions 3d seismic coiled tubing applications decreasing costs improving well productivity optimizing ultimate recovery hydrocarbon reserves addition trend toward incentive contracts energy companies suppliers alliances contracts produce outsourcing arrangements integrated solution approaches order reduce costs share risks gains efficiencies although early stages development company expects integrated solutions approach major future growth area current outlook based upon published sources demand oil natural gas increase economic growth prices oil natural gas stable near term increase moderately longer term one major uncertainty potential negative impact oil prices iraq reenter market significant market areas increasing exploration development activities include international gulf mexico services energy industry operations company devoted energy industry impacted changes oil natural gas development activities major producing areas throughout world activities sensitive government actions major producing countries oil natural gas prices capital spending hydrocarbon exploration development production processing pipeline delivery networks response customer efforts reduce costs increase production company reorganized operations reduce overall service product delivery costs increased productivity cost efficiencies company capability provide wide range services needed operate existing oil natural gas field new field handle phases bringing energy market including drilling completing wells building pipelines means transportation building refineries company provides project management development planning well construction production enhancement production maintenance services energy industry energy services engineering construction services segments based upon outlook energy industry company expects revenue growth 1996 improvement operating margins industries served remaining 20 companys revenues derived engineering construction maintenance environmental services logistical support services governmental industrial customers worldwide according published sources markets expected grow 15 20 1996 markets sensitive changes economies world government actions major economies capital spending industries governments throughout world companys outlook companys outlook could negatively impacted factors noted including significant changes oil gas prices world economic political conditions new modified embargoes oil gas producing countries iran iraq libya nigeria results operations revenues 1995 56987 million increase 3 1994 revenues 55102 million 6 decrease 1993 revenues 60941 million excluding revenues businesses sold 1994 revenues 1995 increased 5 1994 revenues 1 1993 revenues approximately 51 companys consolidated revenues derived international activities 1995 compared 45 1994 43 1993 consolidated international revenues increased 17 1995 1994 19 1993 energy services 1995 revenues increased 4 26234 million 1995 compared 1994 declined 11 1993 revenues excluding revenues businesses sold 1994 energy services 1995 revenues increased 7 1994 6 1993 primarily due higher international activity levels partially offset decline united states energy services revenues per rotary rig excluding revenues businesses sold 1994 11 1995 1994 6 1993 increases revenues per rotary rig accomplished time rotary rig count declined 3 1995 compared 1994 1993 international revenues per rotary rig increased 15 1995 1994 10 1993 united states revenues per rotary rig increased 5 1995 1994 1 1993 engineering construction services 1995 revenues increased 3 30753 million 1995 compared 1994 decreased 2 compared 1993 operating income 3832 million 1995 compared 2361 million 1994 operating loss 915 million 1993 excluding special items businesses sold 1994 described 1995 operating income increased 54 1994 operating income 2484 million 68 1993 operating income 2277 million approximately 63 companys consolidated operating income derived international activities 1995 compared 46 1994 60 1993 consolidated international operating margins 8 1995 compared 5 1994 6 1993 energy services operating income 1995 3137 million compared 1918 million 1994 loss 1484 million 1993 excluding special items businesses sold 1994 described operating income 1995 increased 54 1994 84 1993 operating income increased geographic regions worldwide operating margins 1995 1994 1993 12 8 7 respectively increase 1995 margins due lower indirect costs international revenue growth lower margins 1994 due primarily decreased activities north sea middle east asia pacific market disturbances nigeria yemen unsettled economic political business conditions cis pricing pressures united states engineering construction services operating income 1995 increased 53 1994 31 1993 1030 million increase 1995 operating income primarily due improved performance international marine construction activities petrochemical engineering construction activities middle east operating income 1994 includes 50 million gain sale environmental remediation subsidiary businesses sold 1994 geophysical products services business natural gas compression business workover platform business special items recognized 1994 1993 follows 1994 company sold natural gas compression business recognized 1020 million gain nonoperating income 643 million net income taxes addition company recognized 426 million charge energy services operating income 277 million net income taxes recognize severance costs termination 2700 employees terminations mostly impacted middle senior management levels various product line support general administrative employees 1993 company recognized 3018 million charge energy services operating income 2638 million net income taxes reflect net realizable value companys geophysical operations disposed january 1994 company also provided 200 million charge 1993 130 million net income taxes related energy services nongeophysical employee severance costs provision income taxes 1993 reduced 404 million due settlement internal revenue service relating tax assessments 1980 1987 years also reduced 64 million due changes federal income tax laws see note 5 financial statements interest income increased 1995 278 million 161 million 1994 140 million 1993 due primarily higher levels invested cash foreign currency gains losses netted gain 15 million 1995 compared losses 160 million 1994 208 million 1993 included 1995 results gains devaluations nigerian naira venezuelan bolivar offset losses currencies particularly mexican peso losses 1994 1993 related primarily brazil venezuela losses 1993 also included losses certain african currency exposures company routinely hedges exposures currency fluctuations using simple currency derivative instruments see note 11 financial statements description exposures derivative instruments provision income taxes higher 1995 1994 1993 due increased income effective income tax rates excluding businesses sold 1994 special items outlined declined 36 1995 42 1994 47 1993 declines effective income tax rate due primarily decrease losses currently benefited increased realization available net operating losses discontinued operations consists companys insurance services group company declared dividend december 26 1995 subsequently distributed property casualty insurance subsidiary highlands insurance group inc higi shareholders taxfree spinoff january 23 1996 operations insurance services group classified discontinued operations 1995 higi increased reserves claim losses related expenses provisions certain legal matters together certain provisions associated companys complete exit insurance industry resulted 672 million charge net earnings see note 14 financial statements information liquidity capital resources company ended year 1995 cash equivalents 1749 million compared 3753 million 1994 75 million 1993 decrease cash equivalents primarily due prepayment debt 4327 million partially offset increased cash flows operating activities companys cash return gross invested capital consistent companys cash value added performance measurement adopted 1994 13 1995 compared 9 1994 5 1993 due improved operating cash flows dispositions businesses unproductive assets prepayment debt spinoff higi cash flows operating activities 6320 million 1995 compared 4154 million 1994 2696 million 1993 increases attributable primarily increased income 1995 reductions working capital cash flows investing activities used 2383 million 1995 compared 2109 million cash provided 1994 3234 million cash used 1993 capital expenditures increased 1995 24 1994 18 1993 mostly representing investments new technologies logging drilling multilateral completions companys capital expenditures expected continue increase 1996 new technologies continue developed deployed 1994 company sold substantially assets geophysical services products business 1900 million natural gas compression business 2050 million cash flows used financing activities 5913 million 1995 compared 2527 million 1994 810 million 1993 increase outflows due higher payments longterm indebtedness 1995 entire outstanding principal amounts zero coupon convertible subordinated debentures 3907 million 420 million term loan redeemed available cash resources see note 6 financial statements 1994 company redeemed remaining 238 million 102 debentures made 488 million installments 738 million note issued company buyer geophysical business 1993 company redeemed 565 million principal amount debentures total debt 11 26 27 total capitalization end 1995 1994 1993 respectively company ability borrow additional shortterm longterm funds necessary see note 6 financial statements regarding companys various shortterm lines credit 1993 connection acquisition drilling systems business company issued 6857000 shares common stock previously held treasury stock valued approximately 247 million environmental matters company involved potentially responsible party remedial activities clean various superfund sites applicable federal law imposes joint several liability harm indivisible certain persons without regard fault legality original disposal ownership site although difficult quantify potential impact compliance environmental protection laws management company believes liability company respect one sites material adverse effect results operations company see note 10 financial statements additional information one site responsibility financial reporting halliburton company responsible preparation integrity published financial statements financial statements prepared accordance accounting principles generally accepted united states include amounts based judgments estimates made management company also prepared information included annual report responsible accuracy consistency financial statements financial statements audited independent accounting firm arthur andersen llp given unrestricted access financial records related data including minutes meetings stockholders board directors committees board company maintains system internal control financial reporting intended provide reasonable assurance companys management board directors regarding preparation financial statements system includes documented organizational structure division responsibility established policies procedures including codes conduct foster strong ethical climate communicated throughout company careful selection training development people internal auditors monitor operation internal control system report findings recommendations management board directors corrective actions taken address control deficiencies opportunities improving system identified board operating audit committee composed entirely directors officers employees company provides oversight financial reporting process inherent limitations effectiveness system internal control including possibility human error circumvention overriding controls accordingly even effective internal control system provide reasonable assurance respect financial statement preparation furthermore effectiveness internal control system may change time company assessed internal control system relation criteria effective internal control financial reporting described internal controlintegrated framework issued committee sponsoring organizations treadway commission based upon assessment company believes december 31 1995 system internal control financial reporting met criteria halliburton company dick cheney david j lesar dick cheney david j lesar chairman board president executive vice president chief executive officer chief financial officer report independent public accountants shareholders board directors halliburton company audited accompanying consolidated balance sheets halliburton company delaware corporation subsidiary companies december 31 1995 1994 related consolidated statements income cash flows shareholders equity three years period ended december 31 1995 financial statements responsibility halliburton companys management responsibility express opinion financial statements based audits conducted audits accordance generally accepted auditing standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects financial position halliburton company subsidiary companies december 31 1995 1994 results operations cash flows three years period ended december 31 1995 conformity generally accepted accounting principles arthur andersen llp dallas texas january 23 1996 notes financial statements note 1 significant accounting policies company employs accounting policies accordance generally accepted accounting principles united states preparation financial statements conformity generally accepted accounting principles requires company management make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ultimate results could differ estimates principles consolidation consolidated financial statements include accounts company majorityowned subsidiaries material intercompany accounts transactions eliminated investments affiliated companies company least 20 ownership management control accounted equity method connection discontinuance companys insurance segment company adopted classified balance sheet format certain prior year amounts reclassified conform current year presentation revenues income recognition company recognizes revenues services rendered products shipped distinction services product sales based upon overall business intent particular business operation revenues construction contracts reported percentage completion method accounting using measurements progress toward completion appropriate work performed known anticipated losses contracts provided currently claims additional compensation recognized period claims resolved research development research development expenses charged income incurred charges 885 million 1995 1095 million 1994 1265 million 1993 addition company capitalized software development costs related primarily integrated information technologies project management 39 million 1995 64 million 1994 398 million 1993 income per share income per share based weighted average number common shares common share equivalents outstanding year common share equivalents included computation represent shares issuable upon assumed exercise stock options dilutive effect cash equivalents company considers highly liquid investments original maturity three months less cash equivalents receivables companys receivables generally collateralized notes accounts receivable december 31 1995 include 223 million 301 million december 31 1994 due customers accordance applicable retainage provisions engineering construction contracts become billable upon future deliveries completion contracts december 31 1995 amount approximately 178 million expected collected 1996 remainder due subsequent years unbilled work uncompleted contracts generally represents work currently billable work usually billed normal billing processes next month inventories stated cost excess market cost represents invoice production cost new items original cost less allowance condition used material returned stock production cost includes material labor manufacturing overhead onethird sales items including related work process raw materials valued lastin firstout lifo basis inventories sales items owned foreign subsidiaries inventories operating supplies parts generally valued average cost depreciation amortization maintenance depreciation amortization financial reporting purposes provided primarily straightline method estimated useful lives assets exceeding 40 years expenditures maintenance repairs expensed expenditures renewals improvements generally capitalized upon sale retirement asset related cost accumulated depreciation amortization removed accounts gain loss recognized event facts circumstances indicate assets may impaired evaluation recoverability would performed evaluation required estimated future undiscounted cash flows associated asset would compared assets carrying amount determine writedown market value discounted cash flow value required income taxes valuation allowance provided deferred tax assets likely items either expire company able realize benefit future deductibility prohibited uncertain deferred tax assets liabilities recognized expected future tax consequences events realized financial statements tax returns derivative instruments company enters derivative financial transactions hedge existing projected exposures changing foreign exchange rates interest rates security prices commodity prices company enter derivative transactions speculative purposes hedges derivative financial transactions generally carried fair value resulting gains losses reflected results operations foreign currency translation foreign entities whose functional currency us dollar translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates income expense accounts translated average rates effect year except depreciation cost product sales translated historical rates gains losses changes exchange rates recognized consolidated income year occurrence foreign entities whose functional currency local currency translate net assets yearend rates income expense accounts average exchange rates adjustments resulting translations reflected shareholders equity section titled cumulative translation adjustment note 2 inventories onethird sales items including related work process raw materials valued using lifo method average cost method use inventories lifo basis total inventories would 183 million 219 million higher reported december 31 1995 1994 respectively note 3 property plant equipment note 4 related companies company conducts operations various joint venture partnership forms principally accounted using equity method included companys revenues 1995 1994 1993 equity income related companies 884 million 930 million 763 million respectively company sells transfers assets affiliated company accounted using equity method affiliated company records assets fair value excess fair value assets companys net book value deferred amortized expected lives assets deferred gains included companys liabilities 101 million 194 million december 31 1995 1994 respectively summarized financial statements european marine contractors limited 50 owned company specializes engineering procurement construction marine pipelines remaining combined jointly owned operations consolidated follows note 5 income taxes components provision benefit income taxes included deferred income taxes foreign tax credits 316 million 1995 184 million 1994 us foreign components income loss continuing operations income taxes minority interests follows primary components companys deferred tax assets liabilities related valuation allowances follows company foreign tax credits expire 2000 115 million company net operating loss carryforwards expire follows 1996 115 million 1997 193 million 1998 270 million 1999 302 million 2000 2010 1087 million indefinite 646 million reconciliations actual benefit provision income taxes computed applying us statutory rate income loss continuing operations income taxes minority interests follows company received statutory notices deficiency 1989 1990 1991 tax years internal revenue service irs 518 million 929 million 168 million respectively excluding penalties interest company believes meritorious defenses expect liability resulting 1989 1990 1991 tax years result material adverse effect results operations financial position 1993 company reached settlement irs 19801987 taxable years result settlement well significant prepayments taxes prior years company received refund net income increased 404 million 1993 note 6 lines credit longterm debt company shortterm lines credit totaling 1250 million several us banks borrowings outstanding december 31 1995 credit facilities december 31 1995 48 million shortterm debt outstanding companys 875 debentures due february 15 2021 sinking fund requirements redeemable prior maturity september 1995 company redeemed zero coupon convertible subordinated debentures due march 13 2006 3907 million cash represents original issue price plus accrued original issue discount redemption date addition december 1995 company redeemed 420 million term loan remaining 238 million 102 sinking fund debentures redeemed 1994 longterm debt 52 million matures 1996 maturities due succeeding four years note 7 common stock companys 1993 stock longterm incentive plan 1993 plan provides grant following types awards 1 stock options including incentive stock options nonqualified stock options 2 stock appreciation rights tandem stock options freestanding 3 restricted stock 4 performance share awards 5 stock value equivalent awards terms 1993 plan 55 million shares companys common stock reserved issuance key employees december 31 1995 20 million shares available future grants stock option transactions summarized follows stock options granted fair market value common stock grant date weighted average fair value stock options granted 1995 1320 fair value stock option grant estimated date grant using blackscholes option pricing model following weighted average assumptions used grants 1995 riskfree interest rate 622 expected dividend yield 238 expected life five years expected volatility 3211 stock options generally expire ten years grant date three years date retirement earlier stock options vest three year period onethird shares becoming exercisable first three anniversaries grant date outstanding stock options december 31 1995 weighted average contractual life 892 years number stock option shares exercisable december 31 1995 745744 stock options weighted average exercise price 3431 per share company accounts 1993 plan accordance accounting principles board opinion 25 compensation cost recognized stock option awards compensation cost 1993 plan determined consistent statement financial accounting standards 123 accounting stock based compensation sfas 123 companys pro forma net income earnings per share 1995 would 1645 million 144 respectively sfas 123 method accounting applied options granted prior january 1 1995 resulting pro forma compensation cost may representative expected future years restricted shares awarded 1993 plan 1995 1994 1993 206350 80600 107000 respectively shares awarded net forfeitures 4900 5000 shares 1995 1994 respectively weighted average fair market value per share date grant shares granted 1995 4088 companys restricted stock plan nonemployee directors restricted stock plan allows nonemployee director receive annual award 200 restricted shares common stock part compensation company reserved 50000 shares common stock issuance nonemployee directors company issued 1600 restricted shares 1995 1800 restricted shares 1994 1993 plan weighted average fair market value per share date grant shares granted 1995 4075 companys employees restricted stock plan established employees officers 100000 shares common stock reserved company awarded 1750 96750 restricted shares 1995 1994 respectively 900 restricted shares forfeited 1995 weighted average fair market value per share date grant shares granted 1995 3500 terms companys career executive incentive stock plan 75 million shares companys common stock reserved issuance officers key employees purchase price exceed par value 250 per share december 31 1995 59 million shares net 10 million shares forfeited issued plan grants made career executive incentive stock plan restricted shares issued 1993 plan restricted stock plan employees restricted stock plan career executive incentive stock plan limited sale disposition restrictions lapsing periodically extended period time fair market value stock date issuance amortized charged income similar credits paidin capital excess par value generally average period restrictions lapse compensation costs recognized income 1995 70 million december 31 1995 unamortized amount 239 million note 8 series junior participating preferred stock 1986 company declared dividend one preferred stock purchase right outstanding share common stock terms subsequently modified february 15 1990 december 15 1995 amended rights agreement pursuant amended rights agreement right entitle holder thereof buy one onehundredth share companys series junior participating preferred stock without par value exercise price 150 subject certain antidilution adjustments rights voting rights entitled dividends rights become exercisable certain limited circumstances involving potential business combination following certain events rights become exercisable right entitle holder amount common stock company certain circumstances securities acquiror thencurrent market value two times exercise price right rights redeemable companys option time become exercisable rights expire december 15 2005 event 1995 made rights exercisable note 9 business segment information company operates two segments energy services engineering construction services energy services products services include drilling systems services pressure pumping equipment services logging perforating specialized completion production equipment services well control engineering construction services provides engineering construction project management facilities operation maintenance environmental services industrial governmental customers companys equity income losses related companies included revenues operating income applicable segment intersegment revenues included revenues business segments immaterial sales geographic areas export sales also immaterial general administrative expenses 1578 million 1820 million 1959 million years ended december 31 1995 1994 1993 respectively depreciation amortization expenses increased 1993 loss sale geophysical business 1994 discussed note 13 1289 million general corporate assets primarily comprised cash equivalents certain investments note 10 commitments contingencies leases december 31 1995 company obligated noncancelable operating leases expiring various dates 2108 principally use land offices equipment field facilities aggregate rentals charged operations leases totaled 704 million 1995 1053 million 1994 1308 million 1993 future aggregate rentals noncancelable operating leases follows 1996 503 million 1997 418 million 1998 317 million 1999 230 million 2000 140 million thereafter 942 million environmental company involved potentially responsible party prp remedial activities clean various superfund sites applicable federal law imposes joint several liability harm indivisible certain persons without regard fault legality original disposal ownership site although difficult quantify potential impact compliance environmental protection laws management company believes liability company respect one sites material adverse effect results operations company respect site jasper county missouri jasper county superfund site sufficient information developed permit management make determination management believes process determining nature extent remediation site total costs thereof lengthy brown root inc brown root subsidiary company named prp respect jasper county superfund site environmental protection agency epa jasper county superfund site includes areas mining activity occurred 1800s mid 1950s southwestern portion missouri site contains lead zinc mine tailings produced mining activity brown root one nine participating prps agreed perform remedial investigationfeasibility study rifs expected completed third quarter 1996 although entire jasper county superfund site comprises 237 square miles listed national priorities list rifs scope work epa identified seven areas subsites within area need studied possibly remediated prps additionally administrative order consent rifs requires brown root perform rifs work one subsites within site neckalba subsite comprises 395 square miles brown roots share cost study expected material present time brown root cannot determine extent liability remediation costs reasonably practicable basis company subsidiaries parties various legal proceedings although ultimate dispositions proceedings presently determinable opinion company liability may ensue material relation consolidated financial position results operations company note 11 financial instruments risk concentration foreign exchange risk company operates 100 countries around world exposures currency fluctuations approximately 80 foreign currencies exposures subject company risk eventual dollar net cash flows sales customers purchases suppliers could adversely affected changes exchange rates currencies established markets facilitate active exchange one currency another traded currencies widely traded actively controlled respective governments nontraded currencies companys policy hedge significant exposures potential foreign exchange losses considering current market conditions future operating activities cost hedging exposure relation perceived risk loss techniques managing foreign exchange risk include limited foreign currency borrowing investing use currency derivative instruments foreign currency transactions speculative purposes permitted market risk part companys efforts minimize market risk associated foreign currency exchange rate volatility company hedges exposure traded currencies use currency derivative instruments specifically forward exchange contracts foreign exchange option contracts generally expiration date one year less forward exchange contracts commitments buy sell specified amount foreign currency specified price time generally used hedge identifiable foreign currency commitments gains losses contracts deferred recognized offsetting gains losses recognized related hedged items foreign exchange option contracts convey right obligation sell buy specified amount foreign currency specified price generally used hedge foreign currency commitments indeterminable maturity date use contracts may limit companys ability benefit favorable fluctuations foreign exchange rates forward option contracts associated foreign currency commitments indeterminable maturity dates marked market monthly resulting gains losses included current period income hedging instruments subject fluctuations value fluctuations generally offset value underlying exposures hedged forward option contracts utilized purchased selected group highly rated banks none forward option contracts exchange traded december 31 1995 company held foreign currency forward contracts net notional amounts totaling 124 million company buyer 34 million seller 158 million foreign currencies foreign currency option contracts net notional amounts totaling 541 million company buyer 181 million seller 722 million foreign currencies december 31 1994 company held foreign currency forward contracts net notional amounts totaling 118 million company buyer 51 million seller 169 million foreign currencies foreign currency option contracts net notional amounts totaling 122 million company buyer 260 million seller 382 million foreign currencies company actively monitors foreign currency exposure net position adjusts amounts hedged appropriate table summarizes companys net assets liabilities exposed currency fluctuations december 31 1995 traded us dollar nontraded foreign currencies well net notional amounts related hedging contracts held exposures nontraded currencies generally hedged due primarily lack available markets cost considerations company attempts manage working capital position minimize foreign currency commitments nontraded currencies recognizes pricing services products offered countries cover cost exchange rate devaluations company historically incurred transaction losses nontraded currencies risk loss primarily due magnitude currency devaluations experienced currencies rather size foreign currency exposures net assets subject currency exposure resulting use functional currencies us dollar exchange movements affect shareholders equity 1430 million 1995 credit risk financial instruments potentially subject company concentrations credit risk primarily cash equivalents investments trade receivables companys practice place cash equivalents investments high quality securities various investment institutions company derives majority revenues sales services including engineering construction energy industry within energy industry trade receivables generated broad diverse group customers concentrations receivables united states united kingdom company maintains allowance losses based upon expected collectibility trade accounts receivable notional amounts companys foreign exchange contracts generally represent amounts exchanged parties thus measure exposure company cash requirements relating contracts credit exposure company foreign exchange contracts represented carrying amount contracts counterparties selected company based creditworthiness company continually monitors counterparties ability perform obligations terms transactions significant concentrations credit risk individual counterparty groups counterparties related companys derivative contracts company expect counterparties fail meet obligations contracts given high credit ratings considers credit risk associated derivative contracts minimal fair value financial instruments estimated fair value longterm debt december 31 1995 1994 2479 million 6261 million respectively compared carrying amount 2000 million 6431 million december 31 1995 1994 respectively fair value longterm debt based quoted market prices similar instruments carrying amount shortterm financial instruments cash equivalents receivables certain liabilities reflected consolidated balance sheets approximates fair value due short maturities instruments fair value currency derivative instruments generally approximates carrying amount less 25 million december 31 1995 1994 note 12 retirement plans retirement plans company various retirement plans cover significant number employees major pension plans defined contribution plans provide pension benefits return services rendered provide individual account participant terms specify contributions participants account determined rather amount pension benefits participant receive contributions plans based pretax income andor discretionary amounts determined annual basis companys expense defined contribution plans totaled 942 million 980 million 546 million 1995 1994 1993 respectively pension plans include defined benefit plans define amount pension benefit provided usually function one factors age years service compensation result sizable reduction number employees curtailment gains 13 million 89 million reflected net amortization deferral component net periodic pension cost 1995 1994 respectively plans funded operate actuarially sound basis assumed longterm rates return plan assets discount rates estimating benefit obligations rates compensation increases vary different plans according local economic conditions plan assets primarily invested equity fixed income securities entities domiciled country plans operation rates used follows net periodic pension cost defined benefit plans follows reconciliation funded status defined benefit plans assets exceed accumulated benefits follows reconciliation funded status defined benefit plans accumulated benefits exceed assets follows postretirement medical plan company offers postretirement medical plan certain employees qualify retirement last day active employment enrolled participants companys active employee medical plan companys liability limited fixed contribution amount participant dependent effective september 1993 coverage plan ceases participant reaches age 65 however participants aged 65 january 1 1994 option participate expanded prescription drug program lieu medical coverage plan participants share total cost benefits provided fixed company contribution participants contributions adjusted required cover benefit payments company made commitment adjust amount contributions therefore computed accumulated postretirement benefit obligation amount affected expected future healthcare cost inflation rate weighted average discount rate used determining accumulated postretirement benefit obligation 7 1995 8 1994 7 1993 net periodic postretirement benefit cost included following components nonpension postretirement benefits funded company incurred companys postretirement medical plans funded status reconciled amounts included companys consolidated balance sheets december 31 1995 1994 follows note 13 acquisitions dispositions see note 14 disposition companys insurance segment company sold natural gas compression business unit november 1994 2050 million cash sale resulted pretax gain 1020 million 56 cents per share tax business unit sold owns operates large natural gas compressor rental fleet united states canada compressors used assist production transportation storage natural gas january 1994 company sold substantially assets geophysical services products business western atlas international inc 1900 million cash notes subject certain adjustments notes 900 million sold cash first quarter 1994 addition company issued 738 million notes western atlas cover costs reducing certain geophysical operations including cost personnel reductions leases geophysical marine vessels closing duplicate facilities companys notes western atlas payable two years rate interest 4 initial installment 338 million made february 1994 quarterly installments 50 million made thereafter company recognized 3018 million charge 2638 million tax 1993 related sale geophysical business charge includes 1207 million writedown net realizable value equipment assets 540 million anticipated operating contract losses dates disposition completion 434 million marine vessel leases mobilization 351 million facility leases closures 344 million personnel severance 142 million transition costs related matters services products provided geophysical business include seismic data collection data processing services land marine seismic exploration activities manufacturing sales seismic equipment revenues operating loss net loss geophysical operations excluding charge 1993 4044 million 201 million 203 million respectively march 1993 company acquired assets smith international incs directional drilling systems services business 6857000 shares halliburton company common stock previously held treasury stock valued approximately 247 million company recorded 1358 million excess cost net assets acquired excess cost net assets acquired amortized 40 years note 14 discontinued operations january 23 1996 company spunoff property casualty insurance subsidiary highlands insurance group inc higi taxfree distribution holders halliburton company common stock common shareholder company received one share common stock higi every ten shares halliburton company common stock approximately 114 million common shares higi issued conjunction spinoff transaction higi issued 629 million convertible subordinated debentures due december 31 2005 detachable series b common stock purchase warrants insurance partners lp insurance partners offshore bermuda lp ip certain members higi management convertible subordinated debentures issued convertible common stock higi one year issuance option holders higi redeem debentures time december 31 2002 holders would receive approximately 39 million shares higi approximately 25 ownership interest higi debentures converted common stock higi conversion price 1616 per share interest debentures payable semiannually cash 10 per annum detachable series common stock purchase warrants series warrants enable holders purchase higi common stock exercise price 1469 per share equal additional ownership interest approximately 21 giving effect assumed conversion debentures exercise series warrants series warrants exercised ip would receive approximately 40 million shares higi exercise price number shares higi common stock series warrants exercisable subject adjustment certain circumstances warrants expire december 31 2005 detachable series b common stock purchase warrants series b warrants enable holders purchase shares higi common stock exercise price 1469 equal additional ownership interest 5 giving effect assumed conversion debentures exercise series b warrants series b warrants become exercisable holders event average closing market price higi common stock exceeds 161 times exercise price 30 consecutive trading days prior december 31 2000 december 31 1998 series b warrants exercised holders would receive approximately 10 million additional shares higi exercise price number shares higi common stock series warrants exercisable subject adjustment certain circumstances detachable series b warrants expire december 31 2005 debentures converted common stock higi series b warrants utilized holders purchase common stock higi holders approximately 44 higi following summarizes results operations consolidated balance sheets discontinued operations amounts summarized follows third quarter 1995 higi conducted extensive review loss adjustment expense reserves assess higis reserve position review process consisted gathering new information refining prior estimates primarily focused assumed reinsurance overall environmental asbestos exposure result review higi increased reserves loss adjustment expenses certain legal matters company also recognized estimated expenses related spinoff transaction additional compensation costs regulatory legal provisions directly associated discontinuing insurance services business segment follows review insurance policies reinsurance agreements based upon recent actuarial study higi managements best estimates using facts trends currently known taking consideration current legislative legal environment developed case law adequate claim history exist claims estimates liability reviewed updated continually due significant uncertainties related types claims past claim experience may representative future claim experience company also realized valuation allowance deferred tax assets primarily related higis insurance claim loss reserves company provided valuation allowance temporary differences related higi based upon intent announced 1992 pursuing sale higi taxable transaction would made likely related benefit future deductibility would realized spinoff transaction taxfree allows higi retain tax basis value deferred tax asset european marine contractors limited combined financial statements december 31 1995 financial statements presented pounds sterling exchange rate 154 us dollars pound sterling balance sheet date december 31 1995 european marine contractors limited board directors european marine contractors limited audited accompanying consolidated balance sheets european marine contractors limited december 31 1995 1994 related consolidated statements income total recognised gains losses cashflows three years period ended december 31 1995 financial statements responsibility companys management responsibility express opinion financial statements based audit conducted audits accordance united kingdom auditing standards differ significant respect united states generally accepted auditing standards require plan perform audit obtain reasonable assurances whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion consolidated financial statements referred present fairly material respects consolidated financial position european marine contractors limited december 31 1995 1994 consolidated results operations cash flows three years period ended december 31 1995 conformity accounting principles generally accepted united kingdom ernst young chartered accountants registered auditor london england 15 february 1996 european marine contractors limited group profit loss account year ended 31 december 1995 european marine contractors limited group statement total recognised gains losses year ended 31 december 1995 european marine contractors limited balance sheets 31 december 1995 european marine contractors limited group statement cash flows year ended 31 december 1995 european marine contractors limited notes financial statements 31 december 1995 1 accounting policies accounting convention financial statements prepared historical cost convention modified include revaluation certain fixed assets accordance applicable united kingdom accounting standards basis consolidation group financial statements consolidate financial statements european marine contractors limited emc nederland bv drawn 31 december year joint ventures companys share results unincorporated joint ventures proportionally consolidated group profit loss account balance sheet goodwill purchased goodwill amortised profit loss account directors original estimate useful life depreciation provided rates calculated write cost less expected residual value fixed asset expected useful life follows marine floating equipment 25 per annum reducing balance basis buildings leasehold improvements 315 years straight line basis plant machinery marine equipment 25 years straight line basis office equipment 45 years straight line basis depreciation assets construction provided assets partially brought use year appropriate rate equipment maintenance marine floating equipment drydocked major repairs accordance statutory requirements maintenance works carried yearly basis provisions towards meeting costs made year based estimate costs incurred future utilisation programmes stocks valued lower cost net realisable value foreign currency financial statements consolidated undertakings translated rate exchange prevailing balance sheet date exchange adjustments arising retranslating opening net assets taken directly reserves european marine contractors limited notes financial statements 31 december 1995 operating leases rentals paid respect operating leases charged profit loss account straight line basis term lease pensions pension scheme contributions made accordance actuarial advice charged profit loss account spread pension cost anticipated period service scheme members government grants government grants capital expenditure credited deferral account released revenue expected useful life relevant asset equal annual amounts long term contracts profit long term contracts taken work carried final outcome assessed reasonable certainty profit included calculated basis reflect proportion work carried year end recording turnover related costs contract activity progresses turnover calculated proportion total contract value costs incurred date bear total expected costs contract revenues derived variations contracts recognised accepted customer full provision made losses contracts year first foreseen deferred taxation deferred taxation provided liability method timing differences expected reverse future without replaced calculated rate estimated tax payable deferred tax assets recognised recovery reasonably certain 2 turnover comprises part contract value represented work completed balance sheet date turnover excludes applicable vat european marine contractors limited notes financial statements 31 december 1995 included turnover pound1722000 1994 pound14407000 1993 pound29346000 respect sales related undertakings constitute shareholders european marine contractors limited group undertakings turnover destination materially different net assets group substantially located north sea temporarily middle east profit analysis prior years restated basis operating profit 4 operating profit operating profit stated chargingcrediting european marine contractors limited notes financial statements 31 december 1995 4 b reconciliation operating profit net cash inflow operating activities 5 interest payable similar charges 6 tax profit ordinary activities tax charge made follows full provision made deferred taxation year taxation charge would reduced increased pound2m 1994 pound03m 1993 nil follows european marine contractors limited notes financial statements 31 december 1995 7 emoluments directors emoluments excluding pension contributions directors company detailed follows 8 staff costs average number persons employed group costs year including directors follows addition group used services average 519 1994 601 1993 568 persons directly employed shareholders european marine contractors limited group undertakings third party agencies european marine contractors limited notes financial statements 31 december 1995 9 tangible fixed assets european marine contractors limited notes financial statements 31 december 1995 9 tangible fixed assets continued assets construction mainly consist barge enhancements progress year end historical cost vessels included marine floating equipment follows vessels revalued three years time unless market conditions change extent necessitates earlier revaluation increase depreciation charge year result revaluation pound725m 1994 pound103m european marine contractors limited notes financial statements 31 december 1995 10 investments joint venture company 50 interest saipem spaemc ltd jv unincorporated joint venture based bangkok thailand remaining interest joint venture held joint venture partner saipem spa fellow group undertaking saipem uk limited shareholder company undertaking managed jointly management committees comprised representative joint venturer 11 stocks directors opinion replacement value stocks approximately pound131m pound157m 1994 european marine contractors limited notes financial statements 31 december 1995 12 debtors included prepayments accrued income deferred tax asset pound8431000 1994 pound5615000 due one year details disclosed note 16 13 cash analysis balances shown group balance sheet changes current previous years 14 creditors amounts falling due within one year amounts shown accruals deferred income 31 december 1994 restated accordance provision restatement note 15 european marine contractors limited notes financial statements 31 december 1995 15 provisions liabilities charges provision made periodic drydocking major planned maintenance expenditure marine floating equipment provision shown 31 december 1994 restated include amounts shown creditors 1994 accounts due change planned maintenance schedule 16 deferred taxation deferred tax asset included debtors represents deferred tax amounts provided follows potential tax charge pound76m 1994 pound102m would arise sale revalued vessels provided intention directors dispose assets 17 share capital european marine contractors limited notes financial statements 31 december 1995 18 reserves 19 pensions one hundred thirty eight 1994 122 1993 92 groups uk employees members pension scheme operated brown root limited controls overall administration scheme defined benefit type contributions amounting pound352461 1994 pound315524 1993 pound248698 charged profit loss account year scheme includes employee contributions percentage pensionable salaries pension cost assessed accordance advice independent qualified actuaries latest actuarial assessment scheme 1 january 1993 details brown root scheme included brown root limited accounts eight 1994 8 1993 7 uk employees members merchant navy officers pension fund set july 1992 contributions fund amounting pound24551 1994 pound15932 1993 pound12129 made year twenty three 1994 21 1993 21 groups employees members emc nederland bv pension scheme charge profit loss account pound102451 1994 pound74550 1993 pound52195 respect scheme determined accordance best local practice 20 capital commitments board directors authorised capital expenditure pound3626000 1994 pound12816000 mainly connection modification vessels approximately pound1321000 1994 pound172000 authorised expenditure already contracted 21 contingent liabilities contingent liabilities existence date financial statements approved would material impact upon financial position company disclosed performance bonds issued ordinary course business bankers supported shareholders value pound966 million 1994 pound859 million liabilities expected arise provided financial statements european marine contractors limited notes financial statements 31 december 1995 22 leasing commitments amounts payable following year operating leases expire leases relate primarily charter support vessels item 9item 8 financial statements supplementary data halliburton company managements discussion analysis financial condition results operations section discuss operating results general financial condition halliburton company subsidiaries explain factors impact business earnings expenses year 1999 differ years 1998 1997 capital expenditures factors impacted cash flows items materially affect financial condition earnings forwardlooking information private securities litigation reform act 1995 provides safe harbor provisions forwardlooking statements forwardlooking statements involve risks uncertainties may impact actual results operations statements annual report elsewhere forwardlooking provide historical information involve risks uncertainties forwardlooking information reflects best judgement based current information time may also provide oral written forwardlooking statements materials release public draw attention fact forwardlooking statements report materials release public may turn different forwardlooking statements involve number risks uncertainties addition forwardlooking statements affected inaccurate assumptions might make known unknown risks uncertainties assurance factors affect accuracy forwardlooking information result forwardlooking statement guaranteed actual results may vary materially possible identify factors continue face many risks uncertainties could cause actual results differ forwardlooking statements including geopolitical legal trade restrictions economic embargoes imposed united states countries unsettled political conditions war civil unrest currency controls governmental actions numerous countries operate operations countries significant amounts political risk example nigeria angola russia libya algeria changes foreign exchange rates changes governmental regulations numerous countries operate including example regulations encourage mandate hiring local contractors require foreign contractors employ citizens purchase supplies particular jurisdiction litigation including example asbestosis litigation environmental litigation environmental laws including require emission performance standards new existing facilities weather related effects severe weather conditions including hurricanes tornadoes operations facilities impact prolonged mild weather conditions demand price oil natural gas customers vendors magnitude governmental spending military logistical support type provide changes capital spending customers oil gas industry exploration development production processing refining pipeline delivery networks changes capital spending governments infrastructure projects sort perform changes capital spending customers wood pulp paper industries plants equipment consolidation customers oil gas industry claim negotiations engineering construction customers cost variances change orders major projects computer software hardware equipment utilizing computer technology used governmental entities service providers vendors customers halliburton company may compatible industry technological structural changes industries serve changes price oil natural gas including opecs ability set maintain production levels prices oil level oil production nonopec countries policies governments regarding exploration production development oil natural gas reserves level demand oil natural gas changes price commodity chemicals use risks result entering fixed fee engineering procurement construction projects types provide failure meet schedules cost estimates performance targets could result nonreimbursable costs cause project meet expected profit margins risk inherent use derivative instruments sort use could cause change value derivative instruments result adverse movements foreign exchange rates interest rates commodity prices value time period derivative different exposures cash flows hedged personnel mergers increased competition hiring retention employees specific areas example energy services operations accounting treasury integration acquired businesses including dresser industries inc subsidiaries halliburton including maintaining uniform standards controls procedures policies combining operations personnel acquired businesses addition future trends pricing margins revenues profitability remain difficult predict industries serve assume responsibility publicly update forwardlooking statements regardless whether factors change result new information future events reason advise review additional disclosures make 10q 8k 10k reports securities exchange commission also suggest listen quarterly earings release conference calls financial analysts may find information access calls web site wwwhalliburtoncom business environment business organized around three business segments energy services group engineering construction group dresser equipment group majority revenues derived sale services products including construction activities oil gas industry conduct business 120 countries provide variety services equipment maintenance engineering construction energy industrial governmental customers offer comprehensive range integrated discrete services products well project management oil natural gas activities throughout world services products used earliest phases exploration development oil gas reserves continue refining distribution process industries serve highly competitive many substantial competitors unsettled political conditions expropriation governmental actions exchange controls currency devaluations may result increased business risk countries operate countries include among others nigeria angola russia libya algeria however believe geographic diversification business activities helps reduce risk loss business one country would material consolidated results operations energy services group decrease demand groups oilfield services products began 1998 continued 1999 however impact business decrease demand different north america rest world united states canada oil gas activity started 1999 low levels rotary rig count indicator activity hit record lows united states second quarter drilling activity north america slowly increased second half year reaction higher oil gas prices finished year higher end 1998 however percentage increase activity substantially less increase oil prices customers north america appear waiting see whether high oil prices persistent making decisions major field developments substantially increasing overall oil drilling activity north america drilling natural gas however recovered north america 1999 part due increased use gas generation electricity demand gas also increased high oil prices makes switching oil gas power generation economically attractive thus north america demand services products associated natural gas development robust demand related oil drilling although expect see improvement oil exploration development 2000 believe increase occur second half year expect natural gas development activity continue north america current improved levels customers seek meet increased demand replace depleting reserves outside north america drilling activity continued decline throughout 1999 international rig count ended year 14 beginning year decline occurred geographic regions latin america experiencing smallest decrease 6 decline activity response low oil prices beginning 1999 continued well year large oil development projects expensive long lead times production begins thus customers reluctant begin new projects significant uncertainty future oil prices expect customers continue slow respond increases oil prices confidence future prices approximate used investment assumptions last months 1999 virtually increase drilling activity outside north america even though average price oil nearly double price beginning year decline international drilling activity reduced revenues put pressure profit margins price competition increased indications customers increase spending oil development projects 2000 progresses however expect see significant increase larger capitalintensive projects outside north america second half 2000 merger consolidation number large customers 1999 continues 2000 also affected demand products services combined oil companies sorting oil gas properties refining distribution facilities organizations combined companies general less willing commence new substantial investments oil gas projects large downstream facilities including refineries petrochemical plants reluctance begin new investments aggravated lower demand products services improvement demand oilfield services products particularly outside united states depend large part sustained price oil thus oil production levels members opec mexico norway countries coming months significant factor affecting demand products services 2000 believe oil prices remain levels support increased drilling oil many areas world 2000 particularly deepwater west africa brazil engineering construction group factors adversely affected energy services group 1999 continue 2000 also affected engineering construction group since twothirds groups revenues come customers oil gas industry thus expect sustainability higher oil prices significant impact demand groups services however since groups large projects customers tend long completion periods customers seldom stop projects progress response sudden shifts oil prices customers group also reluctant start large capital projects including refineries petrochemical plants periods uncertain oil prices 1999 groups revenues decreased fewer new projects starting 1999 older projects completed group seen number large potential projects deferred cancelled uncertain prices petroleum products also consolidation groups large customers negative effect capital spending similar experienced energy services group 1999 group bid several large liquefied natural gas projects begin construction 2000 liquefied natural gas projects rely directly price oil projects great deal natural gas flared reinjected local market gas transportation pipeline unavailable group increasing focus technologies find markets flared reinjected gas liquefaction use power generation engineering construction group continued expand services united states military group sees improving opportunities provide similar support services united states agencies government agencies countries including united kingdom demand services expected grow governments levels seek control costs improve services outsourcing various functions dresser equipment group dresser equipment groups business primarily affected demand customers energy industry although power chemical transportation industries also significant customers products services group designs manufactures markets equipment including valves natural gas fueled engines generators instruments meters fuel dispensing systems blowers power systems equipment manufactured group used energy industry find extract process deliver petroleum related products demand products directly affected global economic activities influence demand transportation fuels petrochemicals plastics fertilizers chemicals byproducts oil gas current conditions sales groups products highly competitive sales earnings affected change competitive prices overall general economic conditions sales earnings also affected fluctuations level activity capital spending independent integrated national oil companies gas distribution companies pipeline companies power generation processing plants group strives lowcost provider competitive environment activities affected stability oil gas prices ultimately produce cash flow customers downturn oil gas prices 1998 early 1999 negative effect customer spending turn severely impacted group customer mergers consolidations inhibited industry projects cancelled postponed issues factored decision sell interests dresserrand ingersolldresser pump joint ventures ingersollrand dresser industries joint ventures manufacture gas steam turbine generators centrifugal reciprocating axial compressors electric motors generators liquid centrifugal reciprocating rotary turbine pumps joint ventures represented nearly half groups revenues operating profit 1999 impact economic political conditions uncertainty many parts world 1999 group took additional steps reduce manufacturing overhead costs order improve operating performance remain low cost provider group consolidated number manufacturing distribution support facilities rationalized certain product lines channels customers furthermore group working leverage products services offered halliburton companies create greater awareness products services halliburton customers believe strong demand still exists dresser equipment groups products services although business environment highly competitive increase demand 2000 depend many industry factors affecting business segments longer term believe demand dresser equipment group products services increase expanding global industrial base rising demand natural gas halliburton company results operations negatively impacted lower activity levels oil gas industry believe longterm fundamentals oil gas industry remain sound steadily rising population greater industrialization efforts continue propel worldwide economic expansion especially developing nations factors cause increasing demand oil gas produce refined products petrochemicals fertilizers power results operations 1999 compared 1998 1997 revenues 1999 14898 million decrease 14 1998 revenues 17353 million decrease 8 1997 revenues 16272 million approximately 68 consolidated revenues derived international activities 1999 compared 65 1998 60 1997 groups lower revenues 1999 compared 1998 result lower activity oil gas industry due oil price uncertainty customer consolidation energy services group revenues 6999 million 1999 decrease 22 1998 revenues 9009 million decrease 18 1997 revenues 8505 million approximately 71 energy services groups revenues derived international activities 1999 compared 67 1998 1997 revenues group negatively impacted 1998 1999 declines worldwide average rotary rig count yearly average worldwide rotary rig count declined 21 1999 compared 1998 31 compared 1997 comparative declines significant second half 1998 first half 1999 customers reacted reduced prices products declines united states average rotary rig count reached record lows second quarter 1999 north american average rig counts began recover second half 1999 international rig counts lagged recovery north america revenues geographic areas except asia pacific declined 1999 compared 1998 particularly europeafrica middle east declined 30 north america declined 22 third quarter 1999 activity levels began improve north america although areas slower recover revenue declines 1998 compared 1997 pronounced north america including gulf mexico shelf declined 6 venezuela declined 25 revenues pressure pumping activities 24 lower 1999 compared 1998 28 lower 1997 revenues logging drilling systems drilling fluids completion product service lines declined 22 30 1999 revenues upstream oil gas engineering construction services declined 18 1999 compared 1998 level 1997 decrease 1999 reflects oil gas industry downturn caused uncertainty oil prices decisions customers delay projects reevaluating needs following merger consolidation activity reduced activity levels united kingdom sector north sea partially offset increases asia pacific revenues upstream oil gas engineering construction services continue shift north sea latin america africa asia pacific 1998 revenues upstream oil gas engineering services benefited activities subsea product lines large engineering projects revenues integrated exploration production information systems decreased nearly 11 1999 compared 1998 4 compared 1997 1999 many customers information system product lines put software purchases due customers consolidations lower activity levels internal focus year 2000 issues revenues integrated exploration production information systems reached record high levels 1998 engineering construction group revenues 5314 million 1999 decrease 3 1998 revenues 5495 million increase 6 1997 revenues 4993 million 1999 group increased logistics support services military peacekeeping efforts balkans increased activities devonport dockyard united kingdom increases partially offset lower revenues engineering construction projects particularly major projects europe africa winding new awards anticipated first half 1999 delayed customers second half year due uncertainty longterm oil prices merger activities awards received second half 1999 primarily benefit second half 2000 procurement construction phases begin revenues group 1998 reflect higher liquefied natural gas activities asia africa enhanced oil recovery project africa major ethylene project singapore 1997 revenues group included environmental services business sold december 1997 revenues asia pacific kinhill holdings limited acquired third quarter 1997 see note 2 dresser equipment group revenues 2585 million 1999 decrease 9 1998 revenues 2849 million decrease 7 1997 revenues 2774 million revenues declined product lines 1999 reflecting reduced demand compression pumping product line approximately 6 lower revenues 1999 compared 1998 due lower complete unit sales revenues even compared 1997 revenues 1999 lower volume complete unit sales partially offset increased product service volume discussed note 2 note 18 sold interests two joint ventures comprised compression pumping product service line product line contributed revenues 12 billion 13 billion year 1999 1998 1997 dresser equipment group excluding compression pumping product line 1999 revenues 10 11 compared 1998 1997 respectively measurement product lines revenues 7 lower 1999 prior year 10 lower 1997 due lower spending levels delayed maintenance spending oil companies customers revenues 1999 flow control products 10 compared 1998 7 lower 1997 due lower activity levels upstream downstream oil gas industry power systems revenues 13 lower 1999 1998 16 lower 1997 decrease power systems revenues 1999 due reductions original equipment sales related lower gas production higher gas storage levels decreased equipment utilization operating income operating income 650 million 1999 compared 397 million 1998 1399 million 1997 excluding special credits 47 million 1999 net special charges 980 million 16 million 1998 1997 respectively operating income 1999 decreased 56 1998 57 1997 see note 11 annual financial statements information special charges credits energy services group operating income 1999 222 million decrease 77 1998 operating income 971 million decrease 78 1997 operating income 1019 million operating margins 32 1999 compared 108 1998 120 1997 approximately 54 energy services groups operating income derived international activities 1999 1998 compared 59 1997 lower rig counts resulted excess capacity oilfield services sector turn placed severe pressure pricing especially united states result pricing pressures average discounts united states energy service product service lines increased five percentage points first half 1999 compared first half 1998 year 1999 average discounts united states four percentage points 1998 third quarter 1999 increased activity areas united states allowed prices stabilize instances increase slightly production enhancement completion products drilling fluids product service lines operating income pressure pumping 1999 70 lower compared 1998 1997 energy service product service lines experienced similar reductions operating income spite pricing pressures increased discounting united states product service lines except logging drilling systems able maintain positive operating income 1999 operating income 1999 upstream oil gas engineering construction activities declined 70 compared 1998 1997 due lower levels business activity particularly united kingdom sector north sea operating income 1999 negatively impacted lower utilization engineering staff underutilization vessels manufacturing facilities carry large fixed costs given number technical complexity engineering construction projects perform project losses normal occurrences however environment negotiations customers claims change orders become difficult past years environment combined performance issues large technically complex jobs contributed unusually high job losses major projects 77 million 1999 99 million 1998 operating income integrated exploration production information systems 1999 lower 1998 1997 reduction operating income 1999 due lower software sales volumes impact recent changes accounting software license agreements combined changes product mix perpetual license sales annual access licenses engineering construction group operating income 1999 203 million decreased 15 1998 7 1997 operating margins 38 1999 compared 43 1998 44 1997 operating income 1998 includes favorable settlement claim middle eastern construction project excluding settlement operating margins 1998 40 operating income 1999 benefited higher activity levels supporting united states military peacekeeping efforts balkans offset reduced engineering construction project profits due timing project awards revenue recognition new project awards latter half 1999 primarily benefit operating income latter part 2000 operating income 1998 benefited several large projects offset losses fourth quarter selected projects impacted economic downturn asia 1999 1998 negatively impacted losses united states highway paving businesses exiting dresser equipment group operating income 1999 249 million almost unchanged compared operating income 248 million 1998 1997 operating margins flow control increased 1999 1998 1997 operating margins measurement power systems decreased period although revenues group declined 1999 cost control initiatives resulted reduced cycle times capacity costs turn maintained operating income consistent level prior years compression pumping product line discontinued 2000 see note 2 note 18 operating income compression pumping 115 million 1999 compared 121 million 1998 92 million 1997 excluding compression pumping operating income group 1999 increased 5 1998 due part restructuring cost control initiatives begun late 1998 1999 addition operating income negatively impacted 1998 17 million fourth quarter mergerrelated expenses compared 1997 operating income 1999 group excluding compression pumping declined 14 due lower activity levels across product lines special credits 1999 result change estimate components 1998 special charges continuously monitor actual costs incurred reexamine estimates future costs second quarter 1999 concluded total costs particularly severance facility exit costs lower previously estimated therefore reversed 47 million 980 million special charge originally recorded see note 11 restructuring activities discussion beginning page 22 additional information special charges credits general corporate expenses 1999 71 million 1998 general corporate expenses 79 million included expenses operating dressers corporate offices well corporate offices percent consolidated revenues general corporate expenses 05 1999 1998 04 1997 nonoperating items interest expense 144 million 1999 compared 137 million 1998 111 million 1997 increase 1999 1998 1997 due increased level total borrowings outstanding year net shortterm borrowings 433 million 1999 carry lower interest rate longterm debt used proceeds borrowings working capital expenditures acquisitions repay 61 million longterm debt matured 1999 interest income increased 76 million 1999 compared 28 million 1998 22 million 1997 increase interest income 1999 primarily settlement income tax issues united states united kingdom also 1999 earned imputed interest income note receivable sale interest mi llc foreign currency gains losses netted loss 8 million 1999 compared losses 12 million 1998 1 million 1997 losses 1999 incurred second half year currency exposures russian latin american currencies losses 1998 occurred mainly asia pacific currencies nonoperating net 1999 includes 26 million charge second quarter relating impairment kellogg brown roots net investment bufete industriale sa de cv large specialty engineering procurement construction company mexico investment accounted using cost method reported equity advances related companies line consolidated balance sheets bufetes financial condition deteriorated 1999 july 13 1999 bufete announced would default 100 million eurobonds due july 15 1999 believe investment impaired consequently wrote entire amount provision income taxes 214 million 1999 effective tax rate 386 excluding reversal special charges applicable tax provision 1999 effective tax rate 393 provision income taxes 245 million 1998 includes benefit 234 million special charge items tax deductible nondeductible special charge items 109 million include merger transaction costs nondeductible goodwill determined impaired excluding special charge applicable tax benefits 1998 effective tax rate 380 effective tax rate 1997 excluding special charges related tax benefits 372 minority interest net income consolidated subsidiaries 43 million 1999 compared 49 million 1998 1997 dresserrand joint venture largest component minority interest expense minority interest net income dresserrand joint venture 26 million 1999 compared 27 million 1998 19 million 1997 joint venture sold first quarter 2000 see note 18 extraordinary gain net resulted sale 49 interest ingersolldresser pump recorded extraordinary gain 253 million tax 159 million aftertax net gain 036 per diluted share expect record extraordinary gain approximately 215 million aftertax 048 per diluted share first quarter 2000 sale 51 interest dresserrand see note 2 note 18 additional information sales joint ventures cumulative effect change accounting method 19 million aftertax 4 cents per diluted share reflects adoption statement position 985 reporting costs startup activities estimated annual expense 1999 statement position 985 recording cumulative effect change expected materially different amounts expensed prior accounting treatment see note 12 annual financial statements additional information net income 1999 438 million 099 per diluted share 1998 net loss 15 million resulted 003 diluted loss per share 1997 net income 772 million yielded 177 diluted income per share liquidity capital resources ended 1999 cash equivalents 466 million compared 203 million 1998 384 million 1997 beginning 1998 changed dressers fiscal yearend october 31 calendar yearend dressers cash flows 1998 measured december 31 1997 rather october 31 1997 balances included 1997 yearend balance sheets cash flows operating activities 233 million 1999 compared 454 million 1998 833 million 1997 working capital items include receivables inventories accounts payable working capital net used 351 million cash 1999 compared 534 million 1998 535 million 1997 working capital requirements lower 1999 prior two years due lower levels business activity included 1999 changes working capital net changes cash outflows special charges personnel reductions facility closures integration costs required approximately 217 million year 1998 used cash 112 million items associated 1998 special charges cash flows used investing activities 159 million 1999 846 million 1998 873 million 1997 capital expenditures 593 million 1999 35 lower 1998 33 lower 1997 decrease capital spending primarily reflects operating environment existed throughout 1999 although reduced believe level capital spending appropriate position us meet opportunities activity levels improve capital spending mostly equipment infrastructure energy services group also continued planned investments enterprisewide information system cash flows investing activities 1999 includes 254 million 265 million receivable sale 36 interest mi llc collected second quarter imputed interest receivable 11 million included operating cash flows 1998 net cash used investing activities includes various acquisitions businesses approximately 40 million cash used investing activities 1997 includes acquisitions ogc approximately 118 million kinhill approximately 34 million interest pes international limited approximately 34 million uses offset sale environmental business 32 million cash flows financing activities provided 184 million 1999 254 million 1998 used 21 million 1997 repaid 61 million longterm debt borrowed 433 million net repayments shortterm funds consisting commercial paper bank loans 1999 proceeds exercises stock options provided cash flows 49 million 1999 issued 150 million longterm debt mediumterm note program 1998 also 1998 net borrowings shortterm debt 370 million proceeds exercise stock options 49 million dividends shareholders used 221 million cash 1999 compared 254 million 1998 1997 cash 300 million provided proceeds debt issued mediumterm note program 3 million longterm borrowings 71 million proceeds exercise stock options offsetting inflows payments longterm debt 18 million net repayments shortterm borrowings 86 million payments reacquire common stock 44 million dividend payments 250 million combined shortterm notes payable longterm debt 35 32 24 total capitalization end 1999 1998 1997 respectively first quarter 2000 reduced shortterm debt proceeds sales ingersolldresser pump dresserrand joint ventures ability borrow additional shortterm longterm funds necessary see note 7 annual financial statements regarding shortterm lines credit notes payable longterm debt financial instrument market risk exposed market risk changes foreign currency exchange rates interest rates commodity prices mitigate market risk selectively hedged foreign currency exposure use currency derivative instruments objective hedging protect cash flows related sales purchases goods services fluctuations currency rates use derivative instruments includes following types market risk volatility currency rates time horizon derivative instruments market cycles type derivative instruments used use derivative instruments trading purposes see note 1 annual financial statements additional information accounting policies derivative instruments see note 16 annual financial statements additional disclosures related derivative instruments foreign exchange risk operate 120 countries however hedge foreign currencies highly liquid select derivative instruments combination instruments whose fluctuation value offset fluctuation value underlying exposure hedges generally expiration dates exceed two years manage foreign exchange hedging activities control system includes monitoring cash balances traded currencies uses analytical techniques including valueatrisk estimations procedures valueatrisk use statistical model estimate potential loss related derivative instruments used hedge market risk foreign exchange exposure model utilizes historical price volatility patterns estimate change value derivative instruments changes value could occur adverse movements foreign exchange rates specified time period specified confidence interval model calculation based diversified variancecovariance statistical modeling technique includes foreign exchange derivative instruments outstanding december 31 1999 resulting valueatrisk 2 million estimates 95 confidence interval potential loss could incur oneday period foreign exchange derivative instruments due adverse foreign exchange rate changes interest rate risk exposure interest rate risk shortterm commercial paper debt longterm debt british pound sterling incurred acquire royal dockyard plymouth england longterm debt interest rate risk partially offset compensating balance approximately onehalf outstanding debt amount earns interest rate use compensating balance dockyard loans restricted balance included assets consolidated balance sheets see note 7 annual financial statements additional discussion dockyard loans interest rate exposures following table represents principal amounts december 31 1999 related weighted average interest rates year maturity restricted cash longterm debt obligations weighted average variable rates based implied forward rates yield curve december 31 1999 implied forward rates viewed predictions actual future interest rates restricted cash dockyard loans earn interest libor british pound sterling plus 075 instruments denominated currencies united states dollar reporting currency subject foreign exchange rate risk well interest rate risk restructuring activities third fourth quarters 1998 incurred special charges totaling 980 million related dresser merger industry downturn second quarter 1999 reversed 47 million 1998 special charges based reassessment total costs incurred complete actions covered charges 1998 special charges incurred cost actions required efficiently meet needs customers eliminate duplicate capabilities excess capacity position us future actions also taken integrate operations three business segments supported shared services organization across entire company business segments shared services corporate offices impacted since dresser merger restructuring activities including integration two corporate offices integration operational shared services officers management teams personnel reductions necessary match new business structure industry environment integration businesses product service lines including halliburton energy services drilling operations sperrysun drilling systems dresser oil tools halliburton energy services completion products subsea rockwater wellstream within brown root energy services mw kellogg brown root engineering construction kellogg brown root integration facilities across business units entire company impairments writeoffs duplicate intangible assets software impairments writeoffs excess duplicate machinery equipment inventory integration shared service support functions time merger senior management selected senior officers dresser halliburton operational shared service managers similarly selected believe management employees remained focused needs customers transitional period although transitional demands required considerable amounts time energy resources restructuring activities accrued 1998 special charges completed expended end 1999 amounts remain expended relate severance payments yet disbursed sales facilities disposed actions may require negotiations outside parties extending past end year cumulative december 31 1999 used 328 million cash items associated 1998 special charges unutilized special charge reserve balance december 31 1999 expected result future cash outlays 69 million 2000 1998 charges included 509 million asset related writeoffs writedowns charges 235 million personnel related charges 126 million facility consolidation charges 64 million merger transaction costs 46 million related charges second quarter 1999 concluded total estimated costs items included special charges particularly severance facility exit costs lower previously estimated therefore reversed 47 million 1998 special charges 509 million asset related charges related impairments created merger dresser market conditions reviewed assets product service line determine impairments existed due major events required statements financial accounting standards 121 overall market assumptions impairment computations made assumed 1999 calendar year drilling activity measured worldwide rig count would 1900 rigs increase 1700 level third quarter 1998 rig count calendar year 2000 beyond assumed increase 3 per year based upon estimated longterm growth worldwide demand oil gas assumptions represented best estimates based market data available time merger approximately 326 million asset related charges related two product service lines drilling logging premerger drilling business consisted loggingwhiledrilling measurementwhiledrilling directional drilling services majority premerger loggingwhiledrilling business portion premerger measurementwhiledrilling business required sold united states department justice consent decree integrated remaining drilling business sperrysun operations dresser strategy focuses generally operating sperrysun name using sperrysuns superior technology tools industry reputation remaining premerger drilling assets technology deemphasized wear become obsolete tools replaced resulting significant decreases future cash flows impairment excess cost net assets related longlived assets significant forecast assumptions included revenue decline remaining premerger drilling business due measurementwhiledrilling sale first year related revenue operating income following ten years projected decline due reduced business opportunities resulting shift focus toward sperrysuns tools technologies addition 125 million impairment excess cost net assets acquired related longlived asset impairments consisted 61 million property equipment 14 million related spare parts value estimated using held use model forecast period addition impairment 3 million recorded related property equipment 18 million spare parts sold measurementwhiledrilling sale using held sale model merger halliburton dresser enabled acceleration formation evaluation strategy takes advantage sperrysuns loggingwhiledrilling competitive position reputation reliability combined magnetic resonance imaging logging technology acquired numar acquisition 1997 prior merger focused growing traditional logging business working toward development new systems maximize magnetic resonance imaging logging mrilr technology merger allows us implement new strategy place traditional logging business sustaining mode change focus strategy result shift operating cash flows away traditional logging business creating impairment excess cost net assets related longlived assets related logging business significant forecast assumptions included revenues decreasing slowly tenyear period reflecting decline traditional logging business operating income initially forecasted increase due cost cutting activity decline revenue decreased due significant fixed costs product service line addition 51 million impairment excess cost net assets acquired related longlived asset impairments consisted 22 million property equipment 32 million spare parts management estimated using held use model forecast period significant energy services group product service lines included asset related charges mono pump 43 million ackerman vasquez associates ava 37 million 1998 special charges included planned headcount reductions 10000 excluding personnel added significant project 1999 net headcount reductions 13000 achieved 1999 including reductions related 1998 special charge process program exit approximately 500 properties including service administrative manufacturing facilities accrued expenses exit approximately 400 properties 1998 special charges properties within energy services group december 31 1999 vacated 452 approximate 500 total facilities sold returned owner 343 vacated properties feel benefits dresser merger restructuring activities evidenced ability profitably operate spite depressed oil gas industry conditions existed since second half 1998 result initiatives discussed feel ultimately reduce costs estimated 500 million annual basis accomplishing reductions primarily reduced personnel facility requirements enhanced technologies efficiencies common shared services example procurement treasury legal tax accounting see note 11 annual financial statements information accrued special charges incurred 1998 environmental matters subject numerous environmental legal regulatory requirements related operations worldwide result obligations involved specific environmental litigation claims cleanup properties operated efforts meet correct compliancerelated matters except noted note 9 annual financial statements related one site none expenditures expected management material adverse effect results operations year 2000 issue year 2000 y2k issue risk systems products equipment utilizing datesensitive software computer chips twodigit date fields fail properly recognize year 2000 failures software hardware government entities service providers suppliers customers could result interruptions business could material adverse impact results operations implemented enterprisewide y2k program designed identify assess address significant y2k issues december 31 1999 assess y2k issue tasks substantially complete spent 7 1999 information technology budget y2k program expenditures funded operations expensed year incurred december 31 1999 cumulative amount spent y2k program 44 million follows amount include costs associated initiatives independent y2k program including global implementation enterprisewide business information system replacing many key finance administrative marketing software systems costs associated replacement standardization desktop computing equipment information technology infrastructure based experience filing date report believe y2k liability third parties material business results operations financial condition 20000 suppliers worldwide suffered significant supplier problems related y2k expect material impact business results operations financial condition 7000 customers 120 countries identified customer suffered significant y2k problem expect material impact business results operations financial condition conducted global business continuity planning operations believed worst case scenario y2k issues increased risk infrastructure failures less developed areas africa asia latin america identified significant y2k business continuity problems infrastructure failures expect material impact business results operations financial condition however possible full impact y2k issue fully recognized example possible y2k similar issues leap yearrelated problems may occur billing payroll financial closings month quarterly yearend believe problems likely minor correctable addition business could still negatively affected customers suppliers adversely affected y2k similar issues forwardlooking statements relating year 2000 discussion related y2k issue includes number forwardlooking statements based best assumptions estimates filing date report assumptions estimates necessarily assumptions estimates include statements concerning assessments systems significant identification potential failures related y2k issues assessments risk relationships third parties implementation business continuity plans year 2000 risk factors work done y2k program focused risk identification mitigation likely worst case analyses business continuity plans involving significant systems relationships third parties however almost infinite number additional risks simply assessable contingency plans cannot established risks failure y2k reasons one systems third party relationships judge individually significant failures could cause cascade failures could material impact results operations actual results y2k effort could differ materially estimates expressed forwardlooking statements due number factors necessarily factors could cause different results include failure accurately judge systems relationships significant ability locate correct replace computer code systems embedded equipment controls monitors operating assets inability failure identify significant y2k issues contemplated understood failure including infrastructure failures third parties achieve y2k readiness accounting pronouncements june 1998 financial accounting standards board issued statement financial accounting standards 133 accounting derivative instruments hedging activities standard requires entities recognize derivatives statement financial position assets liabilities measure instruments fair value accounting gains losses changes fair values specified standard depending intended use derivative criteria statement financial accounting standards 133 effective us beginning january 1 2001 currently evaluating statement financial accounting standards 133 identify implementation compliance methods yet determined effect results operations financial position report independent public accountants shareholders board directors halliburton company audited accompanying balance sheets halliburton company delaware corporation subsidiary companies december 31 1999 1998 related consolidated statements income cash flows shareholders equity three years period ended december 31 1999 audit related consolidated statements income cash flows shareholders equity dresser industries inc company acquired 1998 transaction accounted pooling interests december 31 1997 discussed note 2 statements included consolidated financial statements halliburton company reflect total revenue 46 year ended december 31 1997 related consolidated total statements audited auditors whose report furnished us opinion insofar relates amounts included dresser industries inc based solely upon report auditors financial statements responsibility companys management responsibility express opinion financial statements based audits conducted audits accordance auditing standards generally accepted united states standards require plan perform audit obtain reasonable assurance whether financial statements free material misstatement audit includes examining test basis evidence supporting amounts disclosures financial statements audit also includes assessing accounting principles used significant estimates made management well evaluating overall financial statement presentation believe audits provide reasonable basis opinion based upon audits report auditors consolidated financial statements referred present fairly material respects financial position halliburton company subsidiary companies december 31 1999 1998 results operations cash flows three years ended december 31 1999 conformity generally accepted accounting principles united states arthur andersen llp arthur andersen llp dallas texas january 27 2000 except respect matters discussed note 18 date february 16 2000 responsibility financial reporting responsible preparation integrity published financial statements financial statements prepared accordance accounting principles generally accepted united states accordingly include amounts based judgments estimates made management also prepared information included annual report responsible accuracy consistency financial statements financial statements audited independent accounting firm arthur andersen llp arthur andersen given unrestricted access financial records related data including minutes meetings stockholders board directors committees board maintain system internal control financial reporting intended provide reasonable assurance management board directors regarding reliability financial statements system includes documented organizational structure division responsibility established policies procedures including code conduct foster strong ethical climate communicated throughout company careful selection training development people internal auditors monitor operation internal control system report findings recommendations management board directors corrective actions taken address control deficiencies opportunities improving system identified board operating audit committee composed entirely directors current former officers employees company provides oversight financial reporting process inherent limitations effectiveness system internal control including possibility human error circumvention overriding controls accordingly even effective internal control system provide reasonable assurance respect reliability financial statements also effectiveness internal control system may change time assessed internal control system relation criteria effective internal control financial reporting described internal controlintegrated framework issued committee sponsoring organizations treadway commission based upon assessment believe december 31 1999 system internal control financial reporting met criteria halliburton company richard b cheney gary v morris richard b cheney gary v morris chairman board executive vice president chief executive officer chief financial officer halliburton company consolidated statements income millions dollars shares except per share data halliburton company consolidated balance sheets millions dollars shares except per share data halliburton company consolidated statements cash flows millions dollars halliburton company consolidated statements shareholders equity millions dollars shares halliburton company consolidated statements shareholders equity continued millions dollars shares halliburton company notes annual financial statements note 1 significant accounting policies employ accounting policies accordance generally accepted accounting principles united states preparation financial statements conformity generally accepted accounting principles requires us make estimates assumptions affect reported amounts assets liabilities disclosure contingent assets liabilities date financial statements reported amounts revenues expenses reporting period ultimate results could differ estimates principles consolidation consolidated financial statements include accounts company majorityowned subsidiaries material intercompany accounts transactions eliminated investments companies 20 50 interest accounted using equity method specific prior year amounts reclassified conform current year presentation revenues income recognition recognize revenues services rendered products shipped distinction services product sales based upon overall activity particular business operation revenues engineering construction contracts reported percentage completion method accounting using measurements progress towards completion appropriate work performed known anticipated losses contracts provided currently claims change orders process negotiated customers extra work changes scope work included revenue collection deemed probable postcontract customer support agreements recorded deferred revenues recognized revenue ratably contract period generally one years duration training consulting service revenues recognized services performed research development research development expenses charged income incurred see note 3 research development expense business segment software development costs developing software sale charged expense incurred research development technological feasibility established product technological feasibility established software development costs capitalized software ready general release customers capitalized costs related software developed resale 12 million 1999 13 million 1998 15 million 1997 amortization expense software development costs 15 million 1999 18 million 1998 15 million 1997 software ready release amortization software development costs begins capitalized software development costs amortized periods exceed three years income per share basic income per share amounts based weighted average number common shares outstanding year diluted income per share includes additional common shares would outstanding potential common shares dilutive effect issued see note 10 reconciliation basic diluted income per share continuing operations cash equivalents consider highly liquid investments original maturity three months less cash equivalents receivables generally collateralized exception claims change orders process negotiated customers unbilled work uncompleted contracts generally represents work currently billable work usually billed normal billing processes next month claims change orders included unbilled receivables amounted 98 million 89 million december 31 1999 1998 respectively generally expected collected following year included notes accounts receivable notes varying interest rates december 31 1999 notes receivable totaled 424 million including note receivable 377 million generated sale ingersolldresser pump see note 2 december 31 1998 notes receivable totaled 296 million including note receivable generated sale mi see note 2 inventories stated lower cost market cost represents invoice production cost new items original cost less allowance condition used material returned stock production cost includes material labor manufacturing overhead cost inventories determined using either firstin firstout method average cost method although cost united states manufacturing field service inventories determined using lastin firstout method inventories sales items owned foreign subsidiaries inventories operating supplies parts generally valued average cost property plant equipment property plant equipment reported cost less accumulated depreciation generally provided straightline method estimated useful lives assets depreciated accelerated methods accelerated depreciation methods also used tax purposes wherever permitted expenditures maintenance repairs expensed expenditures renewals improvements generally capitalized upon sale retirement asset related costs accumulated depreciation removed accounts gain loss recognized events changes circumstances indicate assets may impaired evaluation performed estimated future undiscounted cash flows associated asset compared assets carrying amount determine writedown market value discounted cash flow value required follow successful efforts method accounting oil gas properties implementing enterprisewide information system external direct costs materials services payrollrelated costs employees working solely development software system portion project capitalized costs project amortized periods three ten years beginning system placed service training costs reengineer business processes expensed incurred excess cost net assets acquired excess cost net assets acquired amortized straightline basis periods exceeding 40 years excess cost net assets acquired continually monitored potential impairment negative conditions significant current projected operating losses exist review performed determine projected undiscounted future cash flows indicate impairment exists impairment exists excess cost net assets acquired appropriate associated assets reduced reflect estimated discounted cash flows generated underlying business consistent methodologies statement financial accounting standards 121 accounting impairment longlived assets longlived assets disposed income taxes valuation allowance provided deferred tax assets likely items either expire able realize benefit future deductibility uncertain deferred tax assets liabilities recognized expected future tax consequences events realized financial statements tax returns derivative instruments primarily enter derivative financial transactions hedge existing projected exposures changing foreign exchange rates time enter derivatives hedge exposures interest rates commodity prices enter derivative transactions speculative trading purposes derivative financial instruments hedge exposure indeterminable maturity date generally carried fair value resulting gains losses reflected results operations gains losses hedges identifiable commitments deferred recognized offsetting gains losses related hedged items recognized deferred gains losses hedges terminated prior transaction date recognized underlying hedged transactions recognized event identifiable commitment longer expected realized deferred gains losses hedges associated commitment recognized currently costs associated entering contracts presented assets deferred gains losses included liabilities assets respectively consolidated balance sheets recognized gains losses derivatives entered manage foreign exchange risk included foreign currency gains losses consolidated statements income gains losses interest rate derivatives commodity derivatives included interest expense operating income respectively years ended december 31 1999 1998 1997 enter significant transactions hedge interest rates commodity prices foreign currency translation foreign entities whose functional currency united states dollar translate monetary assets liabilities yearend exchange rates nonmonetary items translated historical rates income expense accounts translated average rates effect year except depreciation cost product sales translated historical rates gains losses changes exchange rates recognized consolidated income year occurrence foreign entities whose functional currency local currency translate net assets yearend rates income expense accounts average exchange rates adjustments resulting translations reflected consolidated statements shareholders equity titled cumulative translation adjustment note 2 acquisitions dispositions joint venture divestitures october 1999 announced sales 49 interest ingersolldresser pump joint venture 51 interest dresserrand joint venture ingersollrand see note 18 sales triggered ingersollrands exercise option joint venture agreements cause us either buy interests sell ingersolldresser pump interest sold december 1999 approximately 515 million recorded extraordinary gain 253 million tax 159 million aftertax net gain 036 per diluted share 1999 proceeds sale payment intercompany balance received form 377 million promissory note annual interest rate 35 due january 14 2000 note collected due date cash sale used repay shortterm debt general corporate purposes interest ingersolldresser pump previously part dresser equipment group dresser merger september 29 1998 completed acquisition dresser industries inc converting outstanding dresser common stock approximately 176 million shares common stock also reserved approximately 7 million shares common stock outstanding dresser stock options employee directors plans merger qualified taxfree exchange dressers shareholders united states federal income tax purposes accounted using pooling interests method accounting business combinations financial statements restated include results dresser periods presented beginning 1998 dressers yearend october 31 conformed calendar yearend periods december 1997 contain dresser information fiscal yearend basis combined information calendar yearend basis two months ended december 31 1997 dresser revenues 1110 million operating income 53 million net income 36 million operating income twomonth period includes pretax special charge 30 million 12 million aftertax minority interest related dressers share profit improvement initiatives dresserrand ingersolldresser pump joint ventures 30 million pretax special charge comprised 23 million dresserrand 7 million ingersolldresser pump results twomonth period included retained earnings dividends 33 million paid december 1997 deducted retained earnings consolidated statements shareholders equity december 31 1998 conforming fiscal years change dressers cumulative translation adjustment account period october 31 1997 december 31 1997 15 million also included consolidated statements shareholders equity conforming fiscal years material transactions us dresser prior merger combined separate company results halliburton company dresser industries inc periods preceding merger follows lwd divestiture march 1999 connection dresser merger sold majority premerger worldwide loggingwhiledrilling portion premerger measurementwhiledrilling business sale accordance consent decree united states department justice financial impact sale reflected third quarter 1998 special charge see note 11 business previously part energy services group continue provide separate loggingwhiledrilling services sperrysun drilling systems business line acquired part merger dresser part energy services group addition continue provide sonic loggingwhiledrilling services using technologies merger dresser mi llc drilling divestiture august 1998 sold 36 interest mi llc smith international inc 265 million payment made form noninterest bearing promissory note collected april 1999 sale completed commitment united states department justice sell mi interest connection merger dresser mi previously part energy services group continue offer drilling fluid products services baroid drilling fluids business line acquired part merger dresser part energy services group acquisition devonport royal dockyard plc march 1997 devonport management limited completed acquisition devonport royal dockyard plc owns operates government united kingdoms royal dockyard plymouth england approximately 65 million concurrent acquisition royal dockyard ownership interest devonport management limited management consortium increased 30 51 devonport management limited borrowed 56 million term loans dockyard principally provides repair refitting services british royal navys fleet submarines surface ships devonport management limited part engineering construction group acquisition ogc international plc kinhill holdings limited april 1997 acquired outstanding common stock ogc international plc approximately 118 million ogc engaged providing variety engineering operations maintenance services primarily north sea oil gas production industry part energy services group july 1997 acquired outstanding common stock convertible debentures kinhill holdings limited approximately 34 million kinhill headquartered australia provides engineering mining minerals processing petroleum chemicals water wastewater transportation commercial civil infrastructure kinhill markets services primarily australia indonesia thailand singapore india philippines kinhill part engineering construction group 1997 recorded approximately 99 million excess cost net assets acquired primarily related purchase acquisitions ogc kinhill acquisition numar september 30 1997 completed acquisition numar corporation converting outstanding numar common stock approximately eight million shares common stock also reserved approximately one million shares common stock exercise outstanding numar stock options merger qualified taxfree exchange accounted using pooling interests method accounting business combinations financial statements restated include historical numar operating results material impact numars assets liabilities september 30 1997 included companys accounts date resulting increase net assets 21 million headquartered malvern pennsylvania numar designs manufactures markets magnetic resonance imaging logging mrilr tool utilizes magnetic resonance imaging technology evaluate subsurface rock formations newly drilled oil gas wells numar part energy services group subsea asset sale 1997 sold portion subsea operations assets global industries ltd 102 million recognized loss 9 million net tax 4 million sale subsea part energy services group environmental services divestiture december 31 1997 sold environmental services business tetra tech inc approximately 32 million sale prompted desire divest noncore businesses significant effect net income year environmental services business previously part engineering construction group acquired businesses 1999 1998 1997 13 million 42 million 4 million respectively businesses significant effect revenues earnings note 3 business segment information three business segments organized around products services provided customers serve see table information business segments energy services group segment provides pressure pumping equipment services logging perforating drilling systems services drilling fluids systems drill bits specialized completion production equipment services well control integrated solutions reservoir description also included energy services group upstream oil gas engineering construction maintenance services specialty pipe coating insulation underwater engineering services integrated exploration production information systems professional services petroleum industry energy services group three business units halliburton energy services brown root energy services landmark graphics longterm performance business units linked longterm demand oil gas products services group provides designed help discover develop produce oil gas customers segment major oil companies national oil companies independent oil gas companies engineering construction group segment provides engineering procurement construction project management facilities operation maintenance hydrocarbon processing industrial governmental customers engineering construction group two business units kellogg brown root brown root services business units engaged delivery engineering construction services dresser equipment group segment designs manufactures markets highly engineered products systems oil gas producers transporters processors distributors petroleum users throughout world groups products also used industries serving various sectors economy dresser equipment group operates one business unit see note 2 note 18 information sales two joint ventures within dresser equipment group equity pretax income losses related companies included revenues operating income applicable segment intersegment revenues included revenues business segments sales geographic areas immaterial general corporate assets included business segment primarily comprised receivables deferred tax assets investments including investment enterprisewide information system implementing tables present information business segments operations business segment operations geographic area note 4 inventories december 31 1999 1998 comprised following cost united states manufacturing field service inventories determined using lastin firstout method inventories lastin firstout method 136 million 168 million december 31 1999 december 31 1998 respectively lastin firstout method used cost total inventories would 108 million higher reported december 31 1999 111 million higher reported december 31 1998 note 5 property plant equipment property plant equipment december 31 1999 1998 comprised following december 31 1999 1998 machinery equipment property includes oil gas investments approximately 309 million 224 million respectively software developed enterprisewide information system 197 million 133 million respectively note 6 related companies conduct operations various joint ventures partnership corporate business forms principally accounted using equity method larger unconsolidated entities include european marine contractors limited brederoshaw ingersolldresser pump european marine contractors limited 50 owned part energy services group specializes engineering procurement construction marine pipelines brederoshaw 50 owned part energy services group specializes pipe coating formation brederoshaw joint venture 1996 fourth quarter 1997 fully consolidated brederoshaw ownership interest joint venture exceeded 50 fourth quarter 1997 signed agreement longterm extension joint venture shaw industries ltd decreased interest 50 connection new agreement shaw agreed pay us 50 million fouryear period transaction resulted fourth quarter 1997 pretax gain 42 million reported consolidated statements income caption special charges credits balance sheet purposes yearend 1997 deconsolidated brederoshaw accounted 50 interest joint venture equity investment include share equity earnings results operations beginning january 1 1998 using equity method ingersolldresser pump 49owned part dresser equipment group manufactures broad range pump products services sold interest ingersolldresser pump december 30 1999 see note 2 annual financial statements information sale ingersolldresser pump sold 36 ownership interest mi smith international inc august 31 1998 transaction completed commitment united states department justice sell mi interest connection merger dresser industries inc see note 2 annual financial statements information sale mi prior sale interest accounted interest ingersolldresser pump mi equity method summarized financial statements combined jointlyowned operations consolidated follows note 7 lines credit notes payable longterm debt december 31 1999 committed shortterm lines credit totaling 650 million available unused shortterm lines credit totaling 215 million borrowings outstanding facilities shortterm debt consists primarily 926 million commercial paper effective interest rate 661 23 million foreign bank loans overdraft facilities varying rates interest longterm debt end 1999 1998 consists following december 31 1999 outstanding notes mediumterm note program follows 625 notes due 2000 76 debentures due 2096 875 debentures due 2021 8 senior notes due 2003 may redeemed prior maturity sinking fund requirements holder 675 mediumterm notes right require us repay holders notes whole part february 1 2007 may redeem 563 mediumterm notes whole part time notes issued mediumterm note program may redeemed prior maturity mediumterm notes sinking fund requirements 1999 redeemed 50 million 627 mediumterm notes matured term loans libor gbp plus 075 denominated british pound sterling payable semiannual installments march 2002 connection term loans required maintain compensating balance decreases proportion outstanding loans december 31 1999 compensating balance 10 million included assets consolidated balance sheets longterm debt matures follows note 8 dresser financial information since becoming whollyowned subsidiary dresser industries inc ceased filing periodic reports securities exchange commission dressers 8 guaranteed senior notes initially issued baroid corporation remain outstanding fully unconditionally guaranteed halliburton long notes remain outstanding summarized financial information dresser presented periodic reports filed form 10k form 10q presented separate financial statements disclosures concerning dresser determined information material holders notes january 1999 part legal reorganization associated merger halliburton delaware inc first tier holding company subsidiary merged dresser majority operating assets activities included within dresser subsidiaries note 9 commitments contingencies leases year end 1999 obligated noncancelable operating leases expiring various dates 2021 principally use land offices equipment field facilities warehouses total rentals charged operations leases totaled 150 million 1999 207 million 1998 203 million 1997 future total rentals noncancelable operating leases follows 2000 133 million 2001 114 million 2002 94 million 2003 66 million 2004 39 million thereafter 114 million asbestosis litigation since 1976 dresser industries inc former divisions subsidiaries involved litigation resulting allegations third parties sustained injuries damage inhalation asbestos fibers contained products manufactured dresser former divisions subsidiaries companies acquired dresser addition engineering construction group involved litigation resulting allegations third parties sustained injuries damage inhalation asbestos fibers contained materials used various construction renovation projects past dresser former divisions subsidiaries entered agreements insurance carriers cover whole part indemnity payments legal fees expenses specific categories claims dresser former divisions subsidiaries negotiation insurance carriers coverage remaining categories claims agreements governed exposure dates payment type product involved covered amount varies individual claim addition lawsuits pending several carriers seeking recover additional amounts related claims engineering construction group also involved negotiations insurance carriers concerning scope coverage asbestos claims since 1976 approximately 237300 claims filed various current former divisions subsidiaries claims relate dresser former divisions subsidiaries approximately 129650 claims settled disposed gross cost approximately 99 million insurance carriers responsible approximately 23 million claims continue filed 46400 new claims filed 1999 established reserve estimating liability asbestos claims estimate based historical litigation experience settlements expected recoveries insurance carriers expected insurance recoveries based agreements insurance carriers agreements still negotiation estimated recoveries believe insurance carriers able meet share future obligations agreements end 1999 107650 open claims including 19000 settlements pending compares 70500 open claims end 1998 accrued liabilities claims corresponding receivables carriers follows recognize uncertainties litigation possibility series adverse court rulings could materially impact expected resolution asbestos related claims however based upon historical experience similar claims time elapsed since dresser former divisions subsidiaries discontinued sale products containing asbestos understanding facts circumstances gave rise claims believe pending asbestos claims resolved without material effect financial position results operations dispute global industrial technologies inc agreement entered time spinoff global industrial technologies inc formerly indresco inc dresser industries inc global assumed liability asbestos related claims filed dresser july 31 1992 relating refractory products manufactured marketed former harbisonwalker refractories division dresser business operations transferred global spinoff asbestos claims subject agreements dresser insurance carriers cover expense indemnity payments however insurance coverage incomplete global date paid uncovered portion asbestos claims funds global disputes assumed liability asbestos claims based upon dressers negligence acts harbisonwalker prior merger dresser 1967 punitive damages order resolve dispute global invoked dispute resolution provisions 1992 agreement require binding arbitration global claimed specific amount damages expect globals claim reimbursement excess 40 million addition global seeking relief responsibility pending claims based upon dressers negligence pre1967 acts harbisonwalker punitive damages similar future claims february 25 2000 arbitrator ruled global assume responsibility claims based dressers negligence punitive damages arbitrator decide whether global also assumed responsibility pre1967 acts harbisonwalker reserved decision pending proceedings although timetable set proceedings 1999 dresser brought suit global enjoin suing dressers insurance carrier continental insurance company specific asbestos claims although texas court dallas entered temporary injunction texas appellate court reversed decision matter remains pending trial court since late 1999 global sued continental federal court pennsylvania seeking coverage dresser insurance policies claims believe covered pending arbitration dresser named lawsuit continental responded global moving dismiss lawsuit dresser included believe issues involving continental resolved pending arbitration believe globals claims assertions without merit intend vigorously defend environmental subject numerous environmental legal regulatory requirements related operations worldwide result obligations involved specific environmental litigation claims cleanup properties operated efforts meet correct compliancerelated matters subsidiaries former operating entities involved potentially responsible party prp remedial activities cleanup several superfund sites federal law comparable state laws kellogg brown root inc one subsidiaries one nine prps named tristate mining district superfund site also known jasper county superfund site contains lead zinc mine tailings produced mining activities occurred 1800s mid1950s southwestern portion missouri prps agreed perform remedial investigationfeasibility study site kellogg brown roots share cost study expected material addition superfund issues state missouri indicated may pursue natural resource damage claims prps present kellogg brown root cannot determine extent liability remediation costs natural resource damages take proactive approach evaluating addressing environmental impact sites operating maintained operations result spend money year assessing remediating contaminated properties avoid future liabilities comply legal regulatory requirements respond claims third parties finally incur costs related compliance everchanging environmental legal regulatory requirements jurisdictions operate difficult quantify potential liabilities except potential liability site described expect expenditures material adverse effect consolidated financial position results operations accrued liabilities environmental matters 30 million december 31 1999 29 million december 31 1998 amounts accrued 1999 6 million amounts paid 5 million party various legal proceedings however believe liabilities may arising proceedings material consolidated financial position results operations note 10 income per share basic income per share amounts based weighted average number common shares outstanding period diluted income per share includes additional common shares would outstanding potential common shares dilutive effect issued excluded computation diluted earnings per share options purchase 2 million shares common stock 1999 1 million shares 1998 1 million shares 1997 options outstanding respective years excluded option exercise price greater average market price common shares also diluted earnings per share 1998 excludes 3 million potential common shares antidilutive earnings per share purposes note 11 special charges credits special charges credits consist various nonrecurring transactions resulting acquisitions profit initiatives industry downturns set forth 1998 special charges 1999 credits table summarizes 1998 pretax expenses special charges accrued amounts utilized adjusted december 31 1999 1998 results operations reflect special charges totaling 980 million provide costs associated dresser industries inc merger industry downturn due declining oil gas prices charges reflected following captions consolidated statements income restructuring activities accrued 1998 special charges completed expended end 1999 amounts remain expended relate severance payments yet disbursed sales facilities disposed actions may require negotiations outside parties extending 2000 inception december 31 1999 used 328 million cash items associated 1998 special charges unutilized special charge reserve balance december 31 1999 expected result future cash outlays 69 million 2000 december 31 1999 adjustments reversals remaining accrued special charges planned second quarter 1999 reversed 47 million 1998 special charge based reassessment total costs incurred complete actions covered special charges components reversal follows 30 million personnel charges primarily due reduction estimated legal costs associated employee layoffs lower anticipated average severance per person fewer expected terminations due voluntary employee resignations 16 million facility consolidation charges due fewer initially estimated facility exits resulting estimated 7 million reduction facilities consolidation costs combined factors including favorable exit costs anticipated 1 million estimated merger transaction costs primarily result lower previously estimated legal professional costs asset related charges asset related charges include impairments writeoffs intangible assets excess andor duplicate machinery equipment inventory capitalized software charges also include writeoffs lease cancellation costs related acquired information technology equipment replaced standard common office equipment exit costs leased assets result merger halliburton companys dresser industries incs completion products operations formation evaluation businesses combined excluded halliburtons loggingwhiledrilling business portion measurementwhiledrilling business required disposed connection united states department justice consent decree see note 2 recorded impairments based upon anticipated future cash flows accordance statement financial accounting standards 121 based change strategic direction outlook industry decision standardize equipment product offerings expected loss disposition loggingwhiledrilling business resulting writedowns excess cost net assets acquired longlived assets associated directional drilling formation evaluation businesses acquired 1993 smith international inc formation evaluation business acquired 1988 acquisition gearhart industries inc mono pumps ava acquired 1990 1992 follows discussed merger caused management reevaluate realizability excess cost net assets acquired related longlived assets product service lines business considered impaired sfas 121 guidance overall market assumptions impairment computations made assumed 1999 calendar year drilling activity measured worldwide rig count would 1900 rigs 1700 level third quarter 1998 rig count calendar year 2000 beyond assumed increase 3 per year based upon estimated longterm growth worldwide demand oil gas assumptions based market data available time merger addition assumptions management utilized 10 year timeframe future projected cash flows discount rate approximates average cost capital specific assumptions future performance product service line significant assumptions discussed case analyses represented managements best estimate future results product service lines drilling operations premerger halliburton energy services premerger drilling business consisted loggingwhiledrilling measurementwhiledrilling directional drilling services majority premerger loggingwhiledrilling business portion premerger measurementwhiledrilling business required sold united states department justice consent decree integrated remaining drilling business sperrysun operations dresser strategy focuses generally operating sperrysun name using sperrysuns superior technology tools industry reputation remaining premerger drilling assets technology deemphasized wear become obsolete tools replaced resulting significant decreases future cash flows impairment excess cost net assets related longlived assets significant forecast assumptions included revenue decline remaining premerger drilling business due measurementwhiledrilling sale first year related revenue operating income following ten years projected decline due reduced business opportunities resulting shift focus toward sperrysuns tools technologies determined 125 million impairment excess cost net assets acquired addition related longlived asset impairments consisted 61 million property equipment 14 million related spare parts value estimated using held use model forecast period impairment 3 million recorded related property equipment 18 million spare parts using held sale model sold accordance consent decree united states department justice see note 2 logging operations premerger halliburton energy services merger halliburton company dresser industries inc enabled acceleration formation evaluation strategy takes advantage sperrysuns loggingwhiledrilling competitive position reputation reliability combined magnetic resonance imaging logging technology acquired numar acquisition 1997 prior merger focused growing traditional logging business working toward development new systems maximize magnetic resonance imaging logging technology merger allows us implement new strategy place traditional logging business sustaining mode change focus strategy result shift operating cash flows away traditional logging business creates impairment excess cost net assets related longlived assets related logging business significant forecast assumptions included revenues decreasing slowly tenyear period reflecting decline traditional logging markets operating income initially forecasted increase due cost cutting activity decline revenue decreased due significant fixed costs product service line calculated 51 million impairment excess cost net assets acquired addition related longlived asset impairments consisted 22 million property equipment 32 million spare parts management estimated using held use model forecast period mono pump operations premerger dresser amount impairment 43 million represents excess cost net assets acquired associated business strategy mono pump focus primarily oilfield business including manufacturing power sections drilling motors prior strategy included emphasis nonoilfield related applications pumping technology majority mono pump revenues related nonoilfield sales change strategy result reduced future cash flows resulting impairment excess costs net assets acquired significant forecast assumptions included stable revenue several years slowly declining due decreasing emphasis industrial market applications operating income forecasted initially even current levels decline period revenues declined fixed costs per unit increased ava operations dresser oil tools amount impairment 37 million 34 million relates excess costs net assets acquired plan dressers ava business line supplies subsurface safety valves completion equipment rationalize product lines overlap preexisting completion equipment business line vast majority ava product lines deemphasized except supporting installed base ava equipment specific special order requests customers ava products generally aimed highend custom completion products market strategy focus standardized highend products based upon premerger halliburton designs thus reducing future ava cash flows impairing assets related excess costs net assets acquired additional asset related charges additional asset related charges include 37 million various excess fixed assets result merging similar product lines future use assets scrapped 33 million assets related capitalized software became redundant merger major components included redundant computer aided design systems capitalized costs related portion enterprisewide information system abandoned due changed requirements post merger company redundant computer aided design systems energy services group engineering construction group immediately abandoned replaced superior systems required meet needs merged company 26 million inventory charge relates excess inventory result merging similar product lines andor industry downturn included approximately 17 million related overlapping product lines excess inventory completion products business 9 million related various dresser equipment group divisions due excess inventory related industry downturn inventory overlapping due merger segregated scrapped inventory reserves increased cover estimated writedown market inventory determined excess result industry downturn inventory used future sales expected approximate new lower carrying value inventory 5 million impairment excess cost net assets acquired related well construction technology became redundant merger complete due similar superior technology offered sperrysun technology longer used part integrated service offerings thus reducing future cash flows however continue market technology individually third parties impairment based held use model calculated using tenyear discounted cash flow model discount rate approximates average cost capital 1 million writeoff excess cost net assets acquired related steamford product line dresser equipment group valve control division management made strategic decision exit product line asset related charges reflected direct reductions associated asset balances personnel charges personnel charges include severance related costs incurred announced employee reductions 10850 affecting business segments corporate shared service functions personnel charges also include personnel costs related change control june 1999 management revised planned employee reductions 10100 due large part higher anticipated voluntary employee resignations december 31 1999 terminations employees consultants contract personnel related 1998 special charge substantially completed remaining severance payments occur affected projects completed facilities closed facility consolidation charges facility consolidation charges include costs dispose owned properties exit leased facilities result merger dresser industry downturn recorded charge costs vacate sell close excess redundant service manufacturing administrative facilities throughout world majority facilities within energy services group expenses 126 million included 85 million writedown owned facilities anticipated losses planned disposals based upon difference assets net book values anticipated future net realizable value based upon disposed method 37 million lease buyout costs early lease termination cost including estimated costs buy leases facility refurbishmentrestoration expenses required lease order exit property sublease differentials applicable related brokeragent fees negotiate close buyouts 4 million facility maintenance costs maintain vacated facilities abandonment date expected disposition date maintenance costs include lease expense depreciation maintenance utilities third party administrative costs december 31 1999 vacated 88 sold returned owner 63 service manufacturing administrative facilities related 1998 special charge majority sold returned vacated properties located north america eliminated energy services group remaining expenditures made remaining properties vacated sold merger transaction charges merger transaction costs include investment banking filing fees legal professional fees merger related costs estimated merger transaction costs 64 million charges 46 million include estimated contract exit costs associated elimination duplicate agents suppliers various countries throughout world 1999 utilized 15 million special charge costs balance utilized 2000 connection renegotiations agency agreements supplier contracts elimination duplicate capabilities 1997 special charges credits 1997 results operations reflect various nonrecurring transactions resulting acquisitions restructuring activities incurred dresser industries inc numar corporation landmark graphics corporation us follows charges reflected following captions consolidated statements income net special charges 1997 16 million related various acquisition restructuring activities consisted following credits include 42 million pretax gain paid dresser shaw industries consideration terminate call option provision held dresser brederoshaw pipecoating joint venture agreement 13 million restructuring activities dresserrand close european manufacturing facility discontinue product line along associated support locations total includes 7 million asset related charges 6 million facility related charges facility charges include 5 million 49 share facility restructuring ingersolldresser pump joint venture accounted equity basis asset charges including 6 million writeoff investment oil gas field former soviet union deemed worthless 6 million writeoff excess cost net assets acquired associated united kingdom manufacturing operation substantially reduced scope 13 million loss sale specific assets dressers subsea operation global industries ltd merger transaction costs include 9 million professional fees associated acquisition numar personnel charges include 6 million charge negotiated early retirement incentives two dresser executives additionally recorded share personnel reduction charges 30 million twomonth period ended december 31 1997 reduce employment levels approximately 1000 dresserrand ingersolldresser pump 30 million personnel reduction charges comprised 23 million dresserrand 7 million ingersolldresser pump costs recorded consolidated statements shareholders equity part conforming fiscal year dresser calendar year see note 2 note 12 change accounting method april 1998 american institute certified public accountants issued statement position 985 reporting costs startup activities statement requires costs startup activities organization costs expensed incurred adopted statement position 985 effective january 1 1999 recorded expense 30 million pretax 19 million aftertax 004 per diluted share components 30 million pretax cost contained within energy services group previously deferred include 23 million mobilization costs associated specific contracts installation offshore cementing equipment onto third party marine drilling rigs vessels 7 million costs incurred opening new manufacturing facility united kingdom note 13 income taxes components provision benefit income taxes included federal income taxes foreign tax credits 80 million 1999 182 million 1998 154 million 1997 united states foreign components income loss income taxes minority interests follows primary components deferred tax assets liabilities related valuation allowances follows accrued potential repatriation undistributed earnings foreign subsidiaries consider earnings amounts tax provided permanently reinvested additional earnings could become subject additional tax repatriated repatriation anticipated additional amount tax practicable estimate net operating loss carryforwards expire follows 2000 2004 34 million 2004 2009 4 million also net operating loss carryforwards 54 million indefinite expiration dates reconciliations actual provision income taxes computed applying united states statutory rate income continuing operations income taxes minority interest follows note 14 common stock june 25 1998 shareholders voted increase number authorized shares 4000 million 6000 million may 20 1997 shareholders voted increase number authorized shares 2000 million shares 4000 million shares june 9 1997 board directors approved twoforone stock split effected form stock dividend distributed july 21 1997 shareholders record june 26 1997 par value common stock 250 per share remained unchanged result stock split 556 million transferred paidin capital excess par value common stock historical share per share amounts prior 1997 presented annual report restated reflect stock split 1993 stock longterm incentive plan provides grant following types awards stock options including incentive stock options nonqualified stock options stock appreciation rights tandem stock options freestanding restricted stock performance share awards stock value equivalent awards terms 1993 stock longterm incentive plan amended 270 million shares common stock reserved issuance key employees december 31 1999 69 million shares available future grants 1993 stock longterm incentive plan connection acquisitions dresser 1998 numar 1997 see note 2 assumed outstanding stock options stock option plans maintained dresser numar stock option transactions summarized include amounts 1993 stock longterm incentive plan dresser plans using acquisition exchange rate 1 share dresser share numar plans using acquisition exchange rate 09664 shares numar share period december 1997 december 1998 includes dresser activities fiscal yearend october 1997 december 1997 order conform dressers fiscal yearend calendar yearend options outstanding december 31 1999 composed following 78 million options exercisable weighted average exercise price 2572 december 31 1998 69 million options exercisable weighted average exercise price 2117 december 31 1997 stock options 1993 stock longterm incentive plan including options granted employees dresser numar since acquisition companies granted fair market value common stock grant date fair value options date grant estimated using blackscholes option pricing model weighted average assumptions resulting fair values options granted follows stock options generally expire ten years grant date stock options vest threeyear period onethird shares becoming exercisable first second third anniversaries grant date account option plans accordance accounting principles board opinion 25 compensation cost recognized stock option awards compensation cost stock option programs calculated consistent statement financial accounting standards 123 accounting stockbased compensation set forth pro forma basis restricted shares awarded 1993 stock longterm incentive plan 1999 1998 1997 352267 414510 515650 respectively shares awarded net forfeitures 72483 136540 34900 shares 1999 1998 1997 respectively weighted average fair market value per share date grant shares granted 1999 1998 1997 4341 3477 4529 respectively restricted stock plan nonemployee directors allows nonemployee director receive annual award 400 restricted shares common stock part compensation reserved 100000 shares common stock issuance nonemployee directors issued 4800 3200 restricted shares 1999 1998 1997 respectively plan december 31 1999 25200 shares issued nonemployee directors plan weighted average fair market value per share date grant shares granted 1999 1998 1997 4333 3631 4606 respectively employees restricted stock plan established employees officers 200000 shares common stock reserved december 31 1999 160300 shares net 36700 shares forfeited issued forfeitures 8400 1900 14600 1999 1998 1997 respectively grants made plan terms career executive incentive stock plan 150 million shares common stock reserved issuance officers key employees purchase price exceed par value 250 per share december 31 1999 117 million shares net 22 million shares forfeited issued plan grants made career executive incentive stock plan restricted shares issued 1993 stock longterm incentive plan restricted stock plan nonemployee directors employees restricted stock plan career executive incentive stock plan limited sale disposition restrictions lapse periodically extended period time exceeding ten years fair market value stock date issuance amortized charged income similar credits paidin capital excess par value generally average period restrictions lapse december 31 1999 unamortized amount 51 million compensation costs recognized income 1999 1998 1997 11 million 8 million 7 million respectively note 15 series junior participating preferred stock previously declared dividend one preferred stock purchase right outstanding share common stock dividend also applicable share common stock issued subsequent adoption rights agreement entered chasemellon shareholder services llc preferred stock purchase right entitles holder buy one twohundredth share series junior participating preferred stock without par value exercise price 75 preferred stock purchase rights subject antidilution adjustments described rights agreement entered chasemellon preferred stock purchase rights voting rights entitled dividends preferred stock purchase rights become exercisable limited circumstances involving potential business combination preferred stock purchase rights become exercisable preferred stock purchase right entitle holder amount common stock circumstances securities acquirer total market value equal two times exercise price preferred stock purchase right preferred stock purchase rights redeemable option time become exercisable preferred stock purchase rights expire december 15 2005 event 1999 made preferred stock purchase rights exercisable note 16 financial instruments risk management foreign exchange risk techniques managing foreign exchange risk include limited foreign currency borrowing investing use currency derivative instruments selectively hedge significant exposures potential foreign exchange losses considering current market conditions future operating activities cost hedging exposure relation perceived risk loss purpose foreign currency hedging activities protect us risk eventual dollar cash flows resulting sale purchase products services foreign currencies adversely affected changes exchange rates hold issue derivative financial instruments trading speculative purposes hedge currency exposure use currency derivative instruments contracts generally expiration date two years less forward exchange contracts commitments buy sell specified amount foreign currency specified price time generally used hedge identifiable foreign currency commitments losses 6 million identifiable foreign currency commitments deferred december 31 1999 forward exchange contracts foreign exchange option contracts convey right obligation sell buy specified amount foreign currency specified price generally used hedge foreign currency commitments indeterminable maturity date none forward option contracts exchange traded hedging instruments subject fluctuations value fluctuations generally offset value underlying exposures hedged use contracts may limit ability benefit favorable fluctuations foreign exchange rates notional amounts open forward contracts options 393 million 596 million yearend 1999 1998 respectively notional amounts foreign exchange contracts generally represent amounts exchanged parties thus measure exposure cash requirements relating contracts amounts exchanged calculated reference notional amounts terms derivatives exchange rates actively monitor foreign currency exposure adjust amounts hedged appropriate exposures currencies generally hedged due primarily lack available markets cost considerations nontraded currencies attempt manage working capital position minimize foreign currency commitments nontraded currencies recognize pricing services products offered countries cover cost exchange rate devaluations historically incurred transaction losses nontraded currencies credit risk financial instruments potentially subject us concentrations credit risk primarily cash equivalents investments trade receivables practice place cash equivalents investments high quality securities various investment institutions derive majority revenues sales services including engineering construction energy industry within energy industry trade receivables generated broad diverse group customers concentrations receivables united states united kingdom maintain allowance losses based upon expected collectibility trade accounts receivable significant concentrations credit risk individual counterparty groups counterparties related derivative contracts select counterparties based creditworthiness continually monitor counterparties ability perform obligations terms transactions expect counterparties fail meet obligations contracts given high credit ratings therefore consider credit risk associated derivative contracts minimal fair value financial instruments estimated fair value longterm debt yearend 1999 1998 1352 million 1578 million respectively compared carrying amount 1364 million yearend 1999 1429 million yearend 1998 fair value fixed rate longterm debt based quoted market prices similar instruments carrying amount variable rate longterm debt restricted cash see note 7 approximates fair value instruments reflect market changes interest rates carrying amount shortterm financial instruments cash equivalents receivables shortterm notes payable accounts payable reflected consolidated balance sheets approximates fair value due short maturities instruments fair value currency derivative instruments generally approximates carrying amount based upon third party quotes 6 million receivable 5 million payable december 31 1999 note 17 retirement plans company subsidiaries various plans cover significant number employees plans include defined contribution plans provide retirement contributions return services rendered provide individual account participant terms specify contributions participants account determined rather amount pension benefits participant receive contributions plans based pretax income andor discretionary amounts determined annual basis expense defined contribution plans totaled 146 million 152 million 213 million 1999 1998 1997 respectively retirement plans include defined benefit plans define amount pension benefit provided usually function age years service compensation plans funded operate actuarially sound basis plan assets primarily invested cash shortterm investments real estate equity fixed income securities entities domiciled country plans operation recognized additional minimum pension liability underfunded defined benefit plans additional minimum liability equal excess accumulated benefit obligation plan assets accrued liabilities corresponding amount recognized either intangible asset reduction shareholders equity assumed longterm rates return plan assets discount rates estimating benefit obligations rates compensation increases vary different plans according local economic conditions rates used follows projected benefit obligation accumulated benefit obligation fair value plan assets pension plans accumulated benefit obligations excess plan assets 205 million 199 million 183 million respectively december 31 1999 201 million 193 million 123 million respectively december 31 1998 postretirement medical plan offer postretirement medical plans specific eligible employees plans liability limited fixed contribution amount participant dependent plan participants share total cost benefits provided fixed contribution participants contributions adjusted required cover benefit payments made commitment adjust amount contributions therefore computed accumulated postretirement benefit obligation amount affected expected future health care cost inflation rate postretirement medical plans contributory generally absorb majority costs may elect adjust amount contributions plans result expected future health care cost inflation rate affects accumulated postretirement benefit obligation amount plans assumed health care trend rates weighted based current year benefit obligation 1999 70 expected decline 55 2002 1997 adopted amendments eliminate postretirement medical benefit programs amendments resulted curtailment gain 11 million assumed health care cost trend rates significant effect amounts reported total health care plans onepercentagepoint change assumed health care cost trend rates would following effects note 18 subsequent events february 2 2000 completed sale 51 interest dresserrand joint venture partner ingersollrand company price approximately 579 million sale made based upon elections triggered ingersollrand proceeds sale net intercompany amounts payable joint venture 536 million resulting estimated aftertax extraordinary gain 215 million 048 per diluted share first quarter 2000 proceeds sale along 378 million collected january 14 2000 note related december 30 1999 sale ingersolldresser pump used reduce shortterm borrowings general corporate purposes see note 2 february 2000 offer acquire approximately 74 shares pes international ltd already accepted pes shareholders pes based aberdeen scotland developed technology complements halliburton energy services realtime reservoir solutions buy remaining 74 shares pes issue 12 million shares halliburton common stock rights additional consideration 850000 21 million shares halliburton common stock next 30 36 months expect record estimated 120 million goodwill amortized 20 years pes part energy services group halliburton company selected financial data restated prior year information merger dresser industries inc beginning 1998 changed dressers yearend october 31 calendar yearend periods december 1997 contain dressers information fiscal yearend basis combined information calendar yearend basis halliburton company selected financial data restated prior year information merger dresser industries inc beginning 1998 changed dressers yearend october 31 calendar yearend periods december 1997 contain dressers information fiscal yearend basis combined information calendar yearend basis part iii item 10item 8 financial statements supplementary data related financial statement schedules included part iv item 15 annual report item 9item 8 financial statements supplementary data related financial statement schedules included part iv item 14 annual report item 9item 8 financial statements supplementary data item 9item 8 financial statements supplementary data item 9 nannannannannannanitem 15 exhibits financial statement schedules reports form 8k 1 financial statements reports independent public accountants financial statements company required part ii item 8 included pages 47 95 pages 99 100 annual report see index page 14 2 financial statement schedules page report supplemental schedule kpmg llp 112 schedule ii valuation qualifying accounts three years ended december 31 2002 113 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware july 23 1998 incorporated reference exhibit 3a halliburtons form 10q quarter ended june 30 1998 file 13492 32 bylaws halliburton revised effective february 12 2003 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a predecessors form 8k dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburtons registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 file 13492 44 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburtons form 8k dated february 11 1997 file 13492 45 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburtons registration statement form 8b dated december 12 1996 file 13492 46 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburtons form 10k year ended december 31 1998 file 13492 47 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburtons form 10k year ended december 31 1998 file 13492 48 resolutions halliburtons board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburtons form 10k year ended december 31 1996 file 13492 49 resolutions halliburtons board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburtons form 10k year ended december 31 1998 file 13492 410 restated rights agreement dated december 1 1996 halliburton mellon investor services llc formerly chasemellon shareholder services llc incorporated reference exhibit 44 halliburtons registration statement form 8b dated december 12 1996 file 13492 411 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 8 million aggregate december 31 2002 filed commission halliburton agrees furnish copies instruments upon request 412 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburtons form 10q quarter ended march 31 1997 file 13492 413 form debt security 630 notes due august 5 2002 incorporated reference exhibit 41 halliburtons form 8k dated august 5 1997 file 13492 414 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburtons form 8k dated november 24 1998 file 13492 415 form indenture baroid corporation texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 401 registration statement form s3 filed baroid corporation registration 3360174 supplemented amended form supplemental indenture dresser baroid corporation texas commerce bank na trustee 8 guaranteed senior notes due 2003 incorporated reference exhibit 43 registration statement form s4 filed baroid corporation dresser industries inc registration 3353077 416 second supplemental indenture dated october 30 1997 dresser texas commerce bank national association trustee 8 senior notes due 2003 incorporated reference exhibit 419 halliburtons form 10k year ended december 31 1998 file 13492 417 third supplemental indenture dated september 29 1998 dresser halliburton guarantor chase bank texas national association trustee 8 senior notes due 2003 incorporated reference exhibit 420 halliburtons form 10k year ended december 31 1998 file 13492 418 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dressers form 8k filed august 9 1996 file 14003 419 form debt security floating rate notes due july 16 2003 incorporated reference exhibit 41 halliburtons form 8k dated january 8 2002 file 13492 420 form debt security 6 notes due august 1 2006 incorporated reference exhibit 42 halliburtons form 8k dated january 8 2002 file 13492 421 fourth supplemental indenture dated december 20 2002 dii industries llc formerly dresser industries inc halliburton jpmorgan chase bank new york banking corporation formerly chase bank texas national association texas commerce bank national association trustee 8 senior notes due 2003 422 credit facility amount ofpound80 million dated november 29 2002 devonport royal dockyard limited devonport management limited governor company bank scotland hsbc bank plc royal bank scotland plc 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors form 10k year ended december 31 1992 file 13492 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2000 file 13492 103 halliburton company directors deferred compensation plan amended restated effective february 1 2001 incorporated reference exhibit 103 halliburtons form 10k year ended december 31 2000 file 13492 104 halliburton company 1993 stock longterm incentive plan amended restated effective may 16 2000 incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2000 file 13492 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 file 13492 106 employment agreement david j lesar incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 file 13492 107 employment agreement lester l coleman incorporated reference exhibit 1016 halliburtons form 10k year ended december 31 1998 file 13492 108 employment agreement gary v morris incorporated reference exhibit 1019 halliburtons form 10k year ended december 31 1998 file 13492 109 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburtons form 10k year ended december 31 2000 file 13492 1010 dresser industries inc 1982 stock option plan incorporated reference exhibit dressers proxy statement dated february 12 1982 file 14003 1011 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dressers form 10k year ended october 31 1995 file 14003 1012 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dressers form 10k year ended october 31 1995 file 14003 1013 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dressers form 10k year ended october 31 1997 file 14003 1014 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dressers registration statement form s8 registration 33340829 1015 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dressers registration statement form s8 registration 33340829 1016 longterm performance plan selected employees w kellogg company amended restated effective september 1 1999 incorporated reference exhibit 1023 halliburtons form 10k year ended december 31 2000 file 13492 1017 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 7 1992 file 14003 1018 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 6 1995 file 14003 1019 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dressers form 10k year ended october 31 1997 file 14003 1020 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dressers form 10q quarter ended april 30 1998 file 14003 1021 employment agreement robert f heineman incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2000 file 13492 1022 employment agreement arthur huffman incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2000 file 13492 1023 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburtons form 10q quarter ended september 30 2000 file 13492 1024 employment agreement margaret e carriere incorporated reference exhibit 1039 halliburtons form 10k year ended december 31 2000 file 13492 1025 agreement plan recapitalization amended restated effective april 10 2001 incorporated reference halliburtons form 8ka dated may 10 2001 file 13492 1026 halliburton company supplemental executive retirement plan formerly part halliburton company senior executives deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2001 file 13492 1027 halliburton company benefit restoration plan formerly part halliburton company senior executives deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2001 file 13492 1028 employment agreement douglas l foshee incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2001 file 13492 1029 halliburton annual performance pay plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2001 file 13492 1030 halliburton company performance unit program incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2001 file 13492 1031 employment agreement r randall harl incorporated reference exhibit 1032 halliburtons form 10k year ended december 31 2002 file 13492 1032 employment agreement edgar ortiz incorporated reference exhibit 1033 halliburtons form 10k year ended december 31 2002 file 13492 1033 halliburton elective deferral plan amended restated effective january 1 2002 incorporated reference exhibit 41 halliburtons registration statement form s8 registration 33373046 1034 halliburton elective deferral plan amended restated effective may 1 2002 incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2002 file 13492 1035 halliburton company 2002 employee stock purchase plan incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2002 file 13492 1036 halliburton company directors deferred compensation plan amended restated effective october 22 2002 incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2002 file 13492 1037 employment agreement albert cornelison incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2002 file 13492 1038 employment agreement weldon j mire incorporated reference exhibit 104 halliburtons form 10q quarter ended june 30 2002 file 13492 1039 employment agreement david r smith 1040 employment agreement john w gibson 21 subsidiaries registrant 231 consent kpmg llp 232 notice regarding consent arthur andersen llp 241 powers attorney following directors signed february 1997 incorporated reference exhibit 24 halliburtons form 10k year ended december 31 1996 file 13492 robert l crandall w r howell c j silas 242 power attorney signed december 1997 charles j dibona incorporated reference exhibit 24b halliburtons form 10k year ended december 31 1997 file 13492 243 powers attorney following directors signed october 1998 incorporated reference exhibit 243 halliburtons form 10k year ended december 31 1998 file 13492 lawrence eagleburger ray l hunt j landis martin jay precourt 244 powers attorney following directors signed may 2001 incorporated reference exhibit 241 halliburtons form 10q quarter ended june 30 2001 file 13492 kenneth derr aylwin b lewis debra l reed filed form 10k b reports form 8k report copy previously issued report predecessor auditor reissued report previously issued report refers financial statements physically included document report independent public accountants supplemental schedule shareholders board directors halliburton company audited accordance auditing standards generally accepted united states america consolidated financial statements included form 10k issued report thereon dated january 23 2002 audits made purpose forming opinion statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly stated material respects relation basic financial statements taken whole arthur andersen llp dallas texas january 23 2002 except respect certain matters discussed note 9 date february 21 2002 report independent public accountants supplemental schedule board directors stockholders halliburton company date march 13 2003 reported consolidated balance sheets halliburton company subsidiaries december 31 2002 related consolidated statements operations shareholders equity cash flows year ended december 31 2002 included form 10k connection audit aforementioned consolidated financial statements also audited related consolidated financial statement schedules included form 10k financial statement schedules responsibility companys management responsibility express opinion consolidated financial statement schedules based audit accompanying 2001 2000 consolidated financial statement schedules halliburton company subsidiaries audited auditors ceased operations auditors expressed unqualified opinion consolidated financial statements schedules restatement described note 4 consolidated financial statements revision described note 22 consolidated financial statements report dated january 23 2002 except respect certain matters discussed note 9 financial statements date february 21 2002 opinion financial statement schedules considered relation basic consolidated financial statements taken whole present fairly material respects information set forth therein kpmg llp kpmg llp houston texas march 13 2003 signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 28th day march 2003 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 28th day march 2003 signature title david j lesar chairman board president chief executive officer david j lesar douglas l foshee executive vice president chief financial officer douglas l foshee r charles muchmore jr vice president controller principal accounting officer r charles muchmore jr signature title robert l crandall director robert l crandall kenneth derr director kenneth derr charles j dibona director charles j dibona lawrence eagleburger director lawrence eagleburger w r howell director w r howell ray l hunt director ray l hunt aylwin b lewis director aylwin b lewis j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed c j silas director c j silas margaret e carriere margaret e carriere attorneyinfact certifications david j lesar certify 1 reviewed annual report form 10k halliburton company 2 based knowledge annual report contain untrue statement material fact omit state material fact necessary make statements made light circumstances statements made misleading respect period covered annual report 3 based knowledge financial statements financial information included annual report fairly present material respects financial condition results operations cash flows registrant periods presented annual report 4 registrants certifying officers responsible establishing maintaining disclosure controls procedures defined exchange act rules 13a14 15d14 registrant designed disclosure controls procedures ensure material information relating registrant including consolidated subsidiaries made known us others within entities particularly period annual report prepared b evaluated effectiveness registrants disclosure controls procedures date within 90 days prior filing date annual report evaluation date c presented annual report conclusions effectiveness disclosure controls procedures based evaluation date 5 registrants certifying officers disclosed based recent evaluation registrants auditors audit committee registrants board directors persons performing equivalent functions significant deficiencies design operation internal controls could adversely affect registrants ability record process summarize report financial data identified registrants auditors material weaknesses internal controls b fraud whether material involves management employees significant role registrants internal controls 6 registrants certifying officers indicated annual report whether significant changes internal controls factors could significantly affect internal controls subsequent date recent evaluation including corrective actions regard significant deficiencies material weaknesses date march 25 2003 david j lesar david j lesar chief executive officer douglas l foshee certify 1 reviewed annual report form 10k halliburton company 2 based knowledge annual report contain untrue statement material fact omit state material fact necessary make statements made light circumstances statements made misleading respect period covered annual report 3 based knowledge financial statements financial information included annual report fairly present material respects financial condition results operations cash flows registrant periods presented annual report 4 registrants certifying officers responsible establishing maintaining disclosure controls procedures defined exchange act rules 13a14 15d14 registrant designed disclosure controls procedures ensure material information relating registrant including consolidated subsidiaries made known us others within entities particularly period annual report prepared b evaluated effectiveness registrants disclosure controls procedures date within 90 days prior filing date annual report evaluation date c presented annual report conclusions effectiveness disclosure controls procedures based evaluation date 5 registrants certifying officers disclosed based recent evaluation registrants auditors audit committee registrants board directors persons performing equivalent function significant deficiencies design operation internal controls could adversely affect registrants ability record process summarize report financial data identified registrants auditors material weaknesses internal controls b fraud whether material involves management employees significant role registrants internal controls 6 registrants certifying officers indicated annual report whether significant changes internal controls factors could significantly affect internal controls subsequent date recent evaluation including corrective actions regard significant deficiencies material weaknesses date march 25 2003 douglas l foshee douglas l foshee executive vice president chief financial officeritem 15 exhibits financial statement schedules 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 63 64 pages 65 119 annual report see index page 14 2 financial statement schedules page report supplemental schedule kpmg llp 133 schedule ii valuation qualifying accounts three years ended december 31 2004 134 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 21 disclosure statement proposed joint prepackaged plan reorganization midvalley inc dii industries llc kellogg brown root inc kbr technical services inc kellogg brown root engineering corporation kellogg brown root international inc delaware corporation kellogg brown root international inc panamanian corporation bpm minerals llc chapter 11 united states bankruptcy code dated september 18 2003 incorporated reference exhibit 99 halliburton’s form 8k dated september 22 2003 file 13492 22 supplemental disclosure statement first amended joint prepackaged plan reorganization midvalley inc dii industries llc kellogg brown root inc kbr technical services inc kellogg brown root engineering corporation kellogg brown root international inc delaware corporation kellogg brown root international inc panamanian corporation bpm minerals llc chapter 11 united states bankruptcy code dated november 14 2003 incorporated reference exhibit 99 halliburton’s form 8k dated november 19 2003 file 13492 31 restated certificate incorporation halliburton company filed secretary state delaware may 21 2004 incorporated reference exhibit 31 halliburton’s registration statement form s4 filed july 19 2004 registration 333112977 32 bylaws halliburton revised effective february 12 2003 incorporated reference exhibit 32 halliburton’s form 10k year ended december 31 2002 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 restated rights agreement dated december 1 1996 halliburton mellon investor services llc formerly chasemellon shareholder services llc incorporated reference exhibit 44 halliburton’s registration statement form 8b dated december 12 1996 file 13492 411 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 12 million aggregate december 31 2004 filed commission halliburton agrees furnish copies instruments upon request 412 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 413 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburton’s form 8k dated november 24 1998 file 13492 414 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 415 second supplemental indenture dated october 27 2003 dii industries llc jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 416 third supplemental indenture dated december 12 2003 among dii industries llc halliburton jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 417 form debt security 6 notes due august 1 2006 incorporated reference exhibit 42 halliburton’s form 8k dated january 8 2002 file 13492 418 credit facility amount £80 million dated november 29 2002 devonport royal dockyard limited devonport management limited governor company bank scotland hsbc bank plc royal bank scotland plc incorporated reference exhibit 422 halliburton’s form 10k year ended december 31 2002 file 13492 419 senior indenture dated june 30 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended june 30 2003 file 13492 420 form note 3125 convertible senior notes due july 15 2023 included exhibit 419 421 registration rights agreement dated june 30 2003 among halliburton citigroup global markets inc goldman sachs co jp morgan securities inc representatives several purchasers named schedule purchase agreement dated june 24 2003 incorporated reference exhibit 43 halliburton’s registration statement form s3 registration 333110035 422 first supplemental indenture dated december 17 2004 halliburton jpmorgan chase bank national association formerly jpmorgan chase bank trustee indenture dated june 30 2003 halliburton jpmorgan chase bank national association formerly jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 8k filed december 21 2004 file 13492 423 senior indenture dated october 17 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 424 first supplemental indenture dated october 17 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 10q quarter ended september 30 2003 file 13492 425 form note floatingrate senior notes due october 17 2005 included exhibit 424 426 form note 55 senior notes due october 15 2010 included exhibit b exhibit 424 427 registration rights agreement dated october 17 2003 among halliburton jp morgan securities inc citigroup global markets inc goldman sachs co representatives several purchasers named schedule purchase agreement dated october 14 2003 incorporated reference exhibit 45 halliburton’s registration statement form s4 registration 333110420 428 second supplemental indenture dated december 15 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 429 form note 76 debentures due 2096 included exhibit 428 430 third supplemental indenture dated january 26 2004 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 second supplemental indenture dated december 15 2003 incorporated reference exhibit 42 halliburton’s registration statement form s4 registration 333112977 431 form senior notes due 2007 included exhibit 430 432 registration rights agreement dated january 26 2004 among halliburton jp morgan securities inc citigroup global markets inc goldman sachs co representatives several purchasers named schedule purchase agreement dated january 21 2004 incorporated reference exhibit 44 halliburton’s registration statement form s4 registration 333112977 433 stockholder agreement halliburton dii industries llc asbestos pi trust dated january 20 2005 incorporated reference exhibit 101 halliburton’s form 8k filed january 25 2005 file 13492 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessor’s form 10k year ended december 31 1992 file 13492 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2000 file 13492 103 halliburton company directors’ deferred compensation plan amended restated effective february 1 2001 incorporated reference exhibit 103 halliburton’s form 10k year ended december 31 2000 file 13492 104 halliburton company 1993 stock incentive plan amended restated effective may 18 2004 incorporated reference exhibit 105 halliburton’s form 10q quarter ended june 30 2004 file 13492 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 106 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 107 dresser industries inc 1982 stock option plan incorporated reference exhibit dresser’s proxy statement dated february 12 1982 file 14003 108 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 109 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 1010 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dresser’s form 10k year ended october 31 1997 file 14003 1011 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dresser’s form 10q quarter ended april 30 1998 file 14003 1012 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dresser’s registration statement form s8 registration 33340829 1013 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dresser’s registration statement form s8 registration 33340829 1014 longterm performance plan selected employees w kellogg company amended restated effective september 1 1999 incorporated reference exhibit 1023 halliburton’s form 10k year ended december 31 2000 file 13492 1015 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 7 1992 file 14003 1016 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 6 1995 file 14003 1017 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dresser’s form 10k year ended october 31 1997 file 14003 1018 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 1019 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 1020 halliburton company supplemental executive retirement plan formerly part halliburton company senior executives’ deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburton’s form 10q quarter ended june 30 2001 file 13492 1021 halliburton company benefit restoration plan amended restated effective january 1 2004 incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2004 file 13492 1022 halliburton annual performance pay plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2001 file 13492 1023 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 1024 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2000 file 13492 1025 halliburton elective deferral plan amended restated effective may 1 2002 incorporated reference exhibit 101 halliburton’s form 10q quarter ended june 30 2002 file 13492 1026 halliburton company 2002 employee stock purchase plan amended restated september 9 2004 incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2004 file 13492 1027 halliburton company directors’ deferred compensation plan amended restated effective october 22 2002 incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2002 file 13492 1028 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 1029 employment agreement weldon j mire incorporated reference exhibit 104 halliburton’s form 10q quarter ended june 30 2002 file 13492 1030 employment agreement david r smith incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2002 file 13492 1031 employment agreement john w gibson incorporated reference exhibit 1040 halliburton’s form 10k year ended december 31 2002 file 13492 1032 employment agreement c christopher gaut incorporated reference exhibit 101 halliburton’s form 10q quarter ended march 31 2003 file 13492 1033 3year revolving credit agreement dated october 31 2003 among halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2003 file 13492 1034 amendment 1 dated july 14 2004 3year revolving credit agreement dated october 31 2003 among halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 101a halliburton’s registration statement form s4 filed july 19 2004 registration 333112977 1035 amendment 2 3year revolving credit agreement dated october 31 2003 amended among halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 102 halliburton’s form 8k filed december 30 2004 file 13492 1036 master letter credit facility agreement dated october 31 2003 among halliburton kellogg brown root inc dii industries llc account parties banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2003 file 13492 1037 amendment 1 dated may 10 2004 master letter credit facility agreement dated october 31 2003 among halliburton kellogg brown root inc dii industries llc account parties banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent amended incorporated reference exhibit 104 halliburton’s registration statement form s4 filed june 3 2004 registration 333112977 1038 amendment 2 dated july 14 2004 master letter credit facility agreement dated october 31 2003 among halliburton kellogg brown root inc dii industries llc account parties banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent amended incorporated reference exhibit 102a halliburton’s registration statement form s4 filed july 19 2004 registration 333112977 1039 amendment 3 master letter credit facility agreement dated october 31 2003 among halliburton certain subsidiaries halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 101 halliburton’s form 8k filed december 15 2004 file 13492 1040 amendment 4 master letter credit facility agreement dated october 31 2003 amended among halliburton certain subsidiaries halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 101 halliburton’s form 8k filed december 30 2004 file 13492 1041 senior unsecured credit facility agreement dated november 4 2003 among halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2003 file 13492 1042 364day revolving credit agreement dated july 14 2004 among halliburton issuing banks party thereto citicorp north america inc paying agent coadministrative agent jpmorgan chase bank coadministrative agent abn amro bank nv syndication agent hsbc bank usa national association royal bank scotland plc codocumentation agents incorporated reference exhibit 103 halliburton’s registration statement form s4 filed july 19 2004 registration 333112977 1043 amendment 1 364day revolving credit agreement dated july 14 2004 among halliburton banks party thereto citicorp north america inc paying agent jpmorgan chase bank coadministrative agent abn amro bank nv sydication agent hsbc bank usa national association royal bank scotland plc codocumentation agents incorporated reference exhibit 103 halliburton’s form 8k filed december 30 2004 file 13492 1044 employment agreement andrew r laneincorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2004 file 13492 12 statement computation ratio earnings fixed charges 21 subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors signed january 2004 incorporated reference exhibit 241 halliburton’s form 10k year ended december 31 2003 file 13492 robert l crandall kenneth derr charles j dibona w r howell ray l hunt aylwin b lewis j landis martin jay precourt debra l reed c j silas 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 filed form 10k furnished form 10k report independent registered public accounting firm supplemental schedule board directors shareholders halliburton company date february 25 2005 reported consolidated balance sheets halliburton company subsidiaries december 31 2004 december 31 2003 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended december 31 2004 included annual report form 10k connection audits aforementioned consolidated financial statements also audited related consolidated financial statement schedule ii included annual report form 10k financial statement schedule responsibility company’s management responsibility express opinion consolidated financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein kpmg llp houston texas february 25 2005 halliburton company schedule ii valuation qualifying accounts millions dollars table presents valuation qualifying accounts continuing operations receivable writeoffs reclassifications net recoveries b see note 21 consolidated financial statements information signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 1st day march 2005 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 1st day march 2005 signature title david j lesar chairman board president david j lesar chief executive officer director c christopher gaut executive vice president c christopher gaut chief financial officer mark mccollum senior vice president mark mccollum chief accounting officer signature title robert l crandall director robert l crandall kenneth derr director kenneth derr charles j dibona director charles j dibona w r howell director w r howell ray l hunt director ray l hunt aylwin b lewis director aylwin b lewis j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed c j silas director c j silas margaret e carriere margaret e carriere attorneyinfactitem 15 exhibits financial statement schedules 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 62 63 pages 64 113 annual report see index page 13 2 financial statement schedules page report supplemental schedule kpmg llp schedule ii valuation qualifying accounts three years ended december 31 2005 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware may 21 2004 incorporated reference exhibit 31 halliburton’s registration statement form s4 filed july 19 2004 registration 333112977 32 bylaws halliburton revised effective february 12 2003 incorporated reference exhibit 32 halliburton’s form 10k year ended december 31 2002 file 13492 33 certificate elimination respect series junior participating preferred stock incorporated reference exhibit 41 halliburton’s form 8k filed december 19 2005 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 10 million aggregate december 31 2005 filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 412 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburton’s form 8k dated november 24 1998 file 13492 413 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 414 second supplemental indenture dated october 27 2003 dii industries llc jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 415 third supplemental indenture dated december 12 2003 among dii industries llc halliburton jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 416 form debt security 6 notes due august 1 2006 incorporated reference exhibit 42 halliburton’s form 8k dated january 8 2002 file 13492 417 credit facility amount £80 million dated november 29 2002 devonport royal dockyard limited devonport management limited governor company bank scotland hsbc bank plc royal bank scotland plc incorporated reference exhibit 422 halliburton’s form 10k year ended december 31 2002 file 13492 418 senior indenture dated june 30 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended june 30 2003 file 13492 419 form note 3125 convertible senior notes due july 15 2023 included exhibit 418 420 first supplemental indenture dated december 17 2004 halliburton jpmorgan chase bank national association formerly jpmorgan chase bank trustee indenture dated june 30 2003 halliburton jpmorgan chase bank national association formerly jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 8k filed december 21 2004 file 13492 421 senior indenture dated october 17 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 422 first supplemental indenture dated october 17 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 10q quarter ended september 30 2003 file 13492 423 form note 55 senior notes due october 15 2010 included exhibit b exhibit 422 424 second supplemental indenture dated december 15 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 425 form note 76 debentures due 2096 included exhibit 424 426 stockholder agreement halliburton dii industries llc asbestos pi trust dated january 20 2005 incorporated reference exhibit 101 halliburton’s form 8k filed january 25 2005 file 13492 427 amendment stockholder agreement dated march 17 2005 halliburton company dii industries llc asbestos pi trust incorporated reference exhibit 101 halliburton’s form 8k filed march 18 2005 file 13492 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessor’s form 10k year ended december 31 1992 file 13492 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2000 file 13492 103 halliburton company 1993 stock incentive plan amended restated effective february 16 2006 104 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 105 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 106 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 107 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 108 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dresser’s form 10k year ended october 31 1997 file 14003 109 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dresser’s form 10q quarter ended april 30 1998 file 14003 1010 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dresser’s registration statement form s8 registration 33340829 1011 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 7 1992 file 14003 1012 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 6 1995 file 14003 1013 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dresser’s form 10k year ended october 31 1997 file 14003 1014 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 1015 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 1016 halliburton company benefit restoration plan amended restated effective january 1 2004 incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2004 file 13492 1017 halliburton annual performance pay plan amended restated effective january 26 2006 1018 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 1019 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2000 file 13492 1020 halliburton elective deferral plan amended restated effective may 1 2002 incorporated reference exhibit 101 halliburton’s form 10q quarter ended june 30 2002 file 13492 1021 halliburton company 2002 employee stock purchase plan amended restated may 17 2005 1022 halliburton company directors’ deferred compensation plan amended restated effective october 22 2002 incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2002 file 13492 1023 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 1024 employment agreement david r smith incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2002 file 13492 1025 employment agreement c christopher gaut incorporated reference exhibit 101 halliburton’s form 10q quarter ended march 31 2003 file 13492 1026 employment agreement andrew r lane incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2004 file 13492 1027 five year revolving credit agreement dated march 10 2005 among halliburton borrower banks issuing banks party thereto citicorp north america inc “cnai” paying agent cnai jpmorgan chase bank na coadministrative agents incorporated reference exhibit 101 halliburton’s form 8k filed march 10 2005 file 13492 1028 underwriting agreement dated march 17 2005 among halliburton company dii industries llc asbestos pi trust jp morgan securities inc goldman sachs co citigroup global markets inc incorporated reference exhibit 102 halliburton’s form 8k filed march 18 2005 file 13492 1029 halliburton company supplemental executive retirement plan amended restated effective december 7 2005 1030 five year revolving credit agreement dated december 16 2005 among kbr holdings llc delaware limited liability company borrower banks issuing banks party thereto citibank na “citibank” paying agent citibank hsbc bank usa national association coadministrative agents 12 statement computation ratio earnings fixed charges 21 subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors signed january 2004 incorporated reference exhibit 241 halliburton’s form 10k year ended december 31 2003 file 13492 robert l crandall kenneth derr w r howell ray l hunt j landis martin jay precourt debra l reed 242 power attorney malcolm gillis signed july 2005 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 filed form 10k furnished form 10k report independent registered public accounting firm supplemental schedule board directors shareholders halliburton company date march 3 2006 reported consolidated balance sheets halliburton company subsidiaries december 31 2005 2004 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended december 31 2005 included company’s annual report form 10k connection audits aforementioned consolidated financial statements also audited related consolidated financial statement schedule ii included company’s annual report form 10k financial statement schedule responsibility company’s management responsibility express opinion consolidated financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein kpmg llp houston texas march 3 halliburton company schedule ii valuation qualifying accounts millions dollars table presents valuation qualifying accounts continuing operations receivable writeoffs net recoveries reclassifications b reserves recorded reductions revenue net reserves longer required signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 10th day march 2006 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 10th day march 2006 signature title david j lesar chairman board president david j lesar chief executive officer director c christopher gaut executive vice president c christopher gaut chief financial officer mark mccollum senior vice president mark mccollum chief accounting officer signature title robert l crandall director robert l crandall kenneth derr director kenneth derr malcolm gillis director malcolm gillis w r howell director w r howell ray l hunt director ray l hunt j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed margaret e carriere margaret e carriere attorneyinfactitem 15 exhibits financial statement schedules 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 70 71 pages 72 126 annual report see index page 2 financial statement schedules page report supplemental schedule kpmg llp schedule ii valuation qualifying accounts three years ended december 31 2006 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware may 30 2006 incorporated reference exhibit 31 halliburton’s form 8k filed june 5 2006 file 13492 32 bylaws halliburton revised effective october 19 2006 incorporated reference exhibit 31 halliburton’s form 8k filed october 19 2006 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 9 million aggregate december 31 2006 filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 412 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburton’s form 8k dated november 24 1998 file 13492 413 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 414 second supplemental indenture dated october 27 2003 dii industries llc jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 415 third supplemental indenture dated december 12 2003 among dii industries llc halliburton jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 416 credit facility amount £80 million dated november 29 2002 devonport royal dockyard limited devonport management limited governor company bank scotland hsbc bank plc royal bank scotland plc incorporated reference exhibit 422 halliburton’s form 10k year ended december 31 2002 file 13492 417 senior indenture dated june 30 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended june 30 2003 file 13492 418 form note 3125 convertible senior notes due july 15 2023 included exhibit 417 419 first supplemental indenture dated december 17 2004 halliburton jpmorgan chase bank national association formerly jpmorgan chase bank trustee indenture dated june 30 2003 halliburton jpmorgan chase bank national association formerly jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 8k filed december 21 2004 file 13492 420 senior indenture dated october 17 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 421 first supplemental indenture dated october 17 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 10q quarter ended september 30 2003 file 13492 422 form note 55 senior notes due october 15 2010 included exhibit b exhibit 421 423 second supplemental indenture dated december 15 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 424 form note 76 debentures due 2096 included exhibit 423 425 stockholder agreement halliburton dii industries llc asbestos pi trust dated january 20 2005 incorporated reference exhibit 101 halliburton’s form 8k filed january 25 2005 file 13492 426 amendment stockholder agreement dated march 17 2005 halliburton company dii industries llc asbestos pi trust incorporated reference exhibit 101 halliburton’s form 8k filed march 18 2005 file 13492 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessor’s form 10k year ended december 31 1992 file 13492 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2000 file 13492 103 halliburton company 1993 stock incentive plan amended restated effective february 16 2006 incorporated reference exhibit 103 halliburton’s form 10k year ended december 31 2005 file 13492 104 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 105 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 106 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 107 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 108 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dresser’s form 10k year ended october 31 1997 file 14003 109 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dresser’s form 10q quarter ended april 30 1998 file 14003 1010 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 7 1992 file 14003 1011 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 6 1995 file 14003 1012 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dresser’s form 10k year ended october 31 1997 file 14003 1013 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 1014 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 1015 halliburton company benefit restoration plan amended restated effective january 1 2004 incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2004 file 13492 1016 halliburton annual performance pay plan amended restated effective january 26 incorporated reference exhibit 1017 halliburton’s form 10k year ended december 31 2005 file 13492 1017 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 1018 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2000 file 13492 1019 halliburton elective deferral plan amended restated effective may 1 2002 incorporated reference exhibit 101 halliburton’s form 10q quarter ended june 30 2002 file 13492 1020 halliburton company 2002 employee stock purchase plan amended restated may 17 incorporated reference exhibit 1021 halliburton’s form 10k year ended december 31 2005 file 13492 1021 halliburton company directors’ deferred compensation plan amended restated effective october 22 2002 incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2002 file 13492 1022 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 1023 employment agreement david r smith incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2002 file 13492 1024 employment agreement c christopher gaut incorporated reference exhibit 101 halliburton’s form 10q quarter ended march 31 2003 file 13492 1025 employment agreement andrew r lane incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2004 file 13492 1026 five year revolving credit agreement dated march 10 2005 among halliburton borrower banks issuing banks party thereto citicorp north america inc “cnai” paying agent cnai jpmorgan chase bank na coadministrative agents incorporated reference exhibit 101 halliburton’s form 8k filed march 10 2005 file 13492 1027 underwriting agreement dated march 17 2005 among halliburton company dii industries llc asbestos pi trust jp morgan securities inc goldman sachs co citigroup global markets inc incorporated reference exhibit 102 halliburton’s form 8k filed march 18 2005 file 13492 1028 halliburton company supplemental executive retirement plan amended restated effective december 7 2005 incorporated reference exhibit 1029 halliburton’s form 10k year ended december 31 2005 file 13492 1029 master separation agreement halliburton company kbr inc dated november 20 2006 incorporated reference exhibit 101 halliburton’s form 8k filed november 27 2006 file 13492 1030 tax sharing agreement dated january 1 2006 halliburton company kbr holdings llc kbr inc incorporated reference exhibit 102 halliburton’s form 8k filed november 27 2006 file 13492 1031 employment agreement william p utt statement computation ratio earnings fixed charges subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors signed january 2007 alan bennett james r boyd milton carroll robert l crandall kenneth derr malcolm gillis w r howell ray l hunt j landis martin jay precourt debra l reed 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 filed form 10k furnished form 10k report independent registered public accounting firm supplemental schedule board directors shareholders halliburton company date february 26 2007 reported consolidated balance sheets halliburton company subsidiaries december 31 2006 2005 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended december 31 2006 included company’s annual report form 10k connection audits aforementioned consolidated financial statements also audited related consolidated financial statement schedule ii included company’s annual report form 10k financial statement schedule responsibility company’s management responsibility express opinion consolidated financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein discussed notes 1 18 respectively consolidated financial statements company changed method accounting stockbased compensation plans january 1 2006 method accounting defined benefit postretirement plans december 31 2006 kpmg llp houston texas february 26 2007 halliburton company schedule ii valuation qualifying accounts millions dollars table presents valuation qualifying accounts continuing operations receivable writeoffs net recoveries reclassifications b reserves recorded reductions revenue net reserves longer required signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 27th day february 2007 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 27th day february 2007 signature title david j lesar chairman board president david j lesar chief executive officer director c christopher gaut executive vice president c christopher gaut chief financial officer mark mccollum senior vice president mark mccollum chief accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll robert l crandall director robert l crandall kenneth derr director kenneth derr malcolm gillis director malcolm gillis w r howell director w r howell ray l hunt director ray l hunt j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed sherry williams sherry williams attorneyinfactitem 15 exhibits financial statement schedules 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 46 47 pages 48 85 annual report see index page 2 financial statement schedules page report supplemental schedule kpmg llp schedule ii valuation qualifying accounts three years ended december 31 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware may 30 2006 incorporated reference exhibit 31 halliburton’s form 8k filed june 5 2006 file 00103492 32 bylaws halliburton revised effective october 19 2006 incorporated reference exhibit 31 halliburton’s form 8k filed october 19 2006 file 00103492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 00103492 42 senior indenture dated january 2 1991 predecessor bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 00103492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 00103492 44 second senior indenture dated december 1 1996 predecessor bank new york trust company na successor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 00103492 45 third supplemental indenture dated august 1 1997 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 00103492 46 fourth supplemental indenture dated september 29 1998 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 00103492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 00103492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 00103492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 00103492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 9 million aggregate december 31 2007 filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 00103492 412 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburton’s form 8k dated november 24 1998 file 00103492 413 form indenture dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 414 second supplemental indenture dated october 27 2003 dii industries llc bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 00103492 415 third supplemental indenture dated december 12 2003 among dii industries llc halliburton bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 00103492 416 indenture dated june 30 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended june 30 2003 file 00103492 417 form note 3125 convertible senior notes due july 15 2023 included exhibit 416 418 first supplemental indenture dated december 17 2004 halliburton bank new york trust company na successor jpmorgan chase bank trustee indenture dated june 30 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 8k filed december 21 2004 file 00103492 419 indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 00103492 420 first supplemental indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 10q quarter ended september 30 2003 file 00103492 421 form note 55 senior notes due october 15 2010 included exhibit b exhibit 420 422 second supplemental indenture dated december 15 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 00103492 423 form note 76 debentures due 2096 included exhibit 422 424 stockholder agreement halliburton dii industries llc asbestos pi trust dated january 20 2005 incorporated reference exhibit 101 halliburton’s form 8k filed january 25 2005 file 00103492 425 amendment stockholder agreement dated march 17 2005 halliburton company dii industries llc asbestos pi trust incorporated reference exhibit 101 halliburton’s form 8k filed march 18 2005 file 00103492 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessor’s form 10k year ended december 31 1992 file 00103492 102 halliburton company 1993 stock incentive plan amended restated effective february 16 2006 incorporated reference exhibit 103 halliburton’s form 10k year ended december 31 2005 file 00103492 103 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 00103492 104 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 00103492 105 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 106 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 107 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dresser’s form 10k year ended october 31 1997 file 14003 108 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dresser’s form 10q quarter ended april 30 1998 file 14003 109 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 7 1992 file 14003 1010 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dresser’s proxy statement dated february 6 1995 file 14003 1011 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dresser’s form 10k year ended october 31 1997 file 14003 1012 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 00103492 1013 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 00103492 1014 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 00103492 1015 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2000 file 00103492 1016 halliburton company 2002 employee stock purchase plan amended restated may 17 2005 incorporated reference exhibit 1021 halliburton’s form 10k year ended december 31 2005 file 00103492 1017 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 00103492 1018 employment agreement david r smith incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2002 file 00103492 1019 employment agreement c christopher gaut incorporated reference exhibit 101 halliburton’s form 10q quarter ended march 31 2003 file 00103492 1020 employment agreement andrew r lane incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2004 file 00103492 1021 master separation agreement halliburton company kbr inc dated november 20 2006 incorporated reference exhibit 101 halliburton’s form 8k filed november 27 2006 file 00103492 1022 tax sharing agreement effective january 1 2006 halliburton company kbr holdings llc kbr inc amended effective february 26 2007 incorporated reference exhibit 102 kbr’s annual report form 10k year ended december 31 2006 file 00133146 1023 five year revolving credit agreement among halliburton borrower banks party thereto citicorp north america inc administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed july 13 2007 file 00103492 1024 form indemnification agreement officers incorporated reference exhibit 101 halliburton’s form 8k filed august 3 2007 file 00103492 1025 form indemnification agreement directors incorporated reference exhibit 102 halliburton’s form 8k filed august 3 2007 file 00103492 1026 halliburton elective deferral plan amended restated effective january 1 2008 incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1027 halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1028 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1029 halliburton annual performance pay plan amended restated effective january 1 2007 incorporated reference exhibit 106 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1030 halliburton management performance plan amended restated effective january 1 2007 incorporated reference exhibit 107 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1031 halliburton company pension equalizer plan amended restated effective march 1 2007 incorporated reference exhibit 108 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1032 halliburton company directors’ deferred compensation plan amended restated effective january 1 2007 incorporated reference exhibit 109 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1033 retirement plan directors halliburton company amended restated effective july 1 2007 incorporated reference exhibit 1010 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1034 first amendment retirement plan directors halliburton company effective september 1 2007 incorporated reference exhibit 1011 halliburton’s form 10q quarter ended september 30 2007 file 00103492 1035 resignation general release settlement agreement andrew r lane 1036 employment agreement james brown 1037 employment agreement david king statement computation ratio earnings fixed charges subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors signed january 2007 incorporated reference exhibit 241 halliburton’s form 10k year ended december 31 2006 file 00103492 alan bennett james r boyd milton carroll robert l crandall kenneth derr malcolm gillis w r howell j landis martin jay precourt debra l reed 242 power attorney kathleen bader signed february 2008 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 filed form 10k furnished form 10k report independent registered public accounting firm supplemental schedule board directors shareholders halliburton company date february 20 2008 reported consolidated balance sheets halliburton company subsidiaries december 31 2007 2006 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended december 31 2007 included company’s annual report form 10k connection audits aforementioned consolidated financial statements also audited related consolidated financial statement schedule ii company’s annual report form 10k financial statement schedule responsibility company’s management responsibility express opinion financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein report financial statements referred refers change methods accounting uncertainty income taxes january 1 2007 accounting stockbased compensation plans january 1 2006 accounting defined benefit postretirement plans december 31 2006 kpmg llp houston texas february 20 2008 halliburton company schedule ii valuation qualifying accounts millions dollars table presents valuation qualifying accounts continuing operations amount represents releases excess reserves b includes writeoff allowance doubtful accounts related asbestos receivables signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 22nd day february 2008 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 22nd day february 2008 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer evelyn angelle vice president corporate controller evelyn angelle principal accounting officer signature title kathleen bader director kathleen bader alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll robert l crandall director robert l crandall kenneth derr director kenneth derr malcolm gillis director malcolm gillis w r howell director w r howell j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed sherry williams sherry williams attorneyinfactitem 15 exhibits financial statement schedules 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 53 54 pages 55 92 annual report see index page 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware may 30 2006 incorporated reference exhibit 31 halliburton’s form 8k filed june 5 2006 file 13492 32 bylaws halliburton revised effective december 3 2008 incorporated reference exhibit 31 halliburton’s form 8k filed december 5 2008 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor bank new york trust company na successor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 9 million aggregate december 31 2008 filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 412 form indenture dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 413 second supplemental indenture dated october 27 2003 dii industries llc bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 414 third supplemental indenture dated december 12 2003 among dii industries llc halliburton bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 415 indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 416 first supplemental indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 10q quarter ended september 30 2003 file 13492 417 form note 55 senior notes due october 15 2010 included exhibit b exhibit 416 418 second supplemental indenture dated december 15 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 419 form note 76 debentures due 2096 included exhibit 418 420 stockholder agreement halliburton dii industries llc asbestos pi trust dated january 20 2005 incorporated reference exhibit 101 halliburton’s form 8k filed january 25 2005 file 13492 421 amendment stockholder agreement dated march 17 2005 halliburton company dii industries llc asbestos pi trust incorporated reference exhibit 101 halliburton’s form 8k filed march 18 2005 file 13492 422 fourth supplemental indenture dated september 12 2008 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed september 12 2008 file 13492 423 form global note halliburton’s 590 senior notes due 2018 included part exhibit 422 424 form global note halliburton’s 670 senior notes due 2038 included part exhibit 422 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessor’s form 10k year ended december 31 1992 file 13492 102 halliburton company 1993 stock incentive plan amended restated effective february 16 2006 incorporated reference exhibit 103 halliburton’s form 10k year ended december 31 2005 file 13492 103 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 104 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 105 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 106 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 107 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 108 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 109 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 1010 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2000 file 13492 1011 halliburton company 2002 employee stock purchase plan amended restated may 17 2005 incorporated reference exhibit 1021 halliburton’s form 10k year ended december 31 2005 file 13492 1012 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 1013 employment agreement c christopher gaut incorporated reference exhibit 101 halliburton’s form 10q quarter ended march 31 2003 file 13492 1014 master separation agreement halliburton company kbr inc dated november 20 2006 incorporated reference exhibit 101 halliburton’s form 8k filed november 27 2006 file 13492 1015 tax sharing agreement effective january 1 2006 halliburton company kbr holdings llc kbr inc amended effective february 26 2007 incorporated reference exhibit 102 kbr’s annual report form 10k year ended december 31 2006 file 133146 1016 five year revolving credit agreement among halliburton borrower banks party thereto citicorp north america inc administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed july 13 2007 file 13492 1017 form indemnification agreement officers incorporated reference exhibit 101 halliburton’s form 8k filed august 3 2007 file 13492 1018 form indemnification agreement directors incorporated reference exhibit 102 halliburton’s form 8k filed august 3 2007 file 13492 1019 halliburton elective deferral plan amended restated effective january 1 2008 incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2007 file 13492 1020 halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2007 file 13492 1021 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2007 file 13492 1022 halliburton annual performance pay plan amended restated effective january 1 2007 incorporated reference exhibit 106 halliburton’s form 10q quarter ended september 30 2007 file 13492 1023 halliburton management performance plan amended restated effective january 1 2007 incorporated reference exhibit 107 halliburton’s form 10q quarter ended september 30 2007 file 13492 1024 halliburton company pension equalizer plan amended restated effective march 1 2007 incorporated reference exhibit 108 halliburton’s form 10q quarter ended september 30 2007 file 13492 1025 halliburton company directors’ deferred compensation plan amended restated effective january 1 2007 incorporated reference exhibit 109 halliburton’s form 10q quarter ended september 30 2007 file 13492 1026 retirement plan directors halliburton company amended restated effective july 1 2007 incorporated reference exhibit 1010 halliburton’s form 10q quarter ended september 30 2007 file 13492 1027 first amendment retirement plan directors halliburton company effective september 1 2007 incorporated reference exhibit 1011 halliburton’s form 10q quarter ended september 30 2007 file 13492 1028 revolving bridge facility credit agreement among halliburton borrower banks party thereto citibank na agent incorporated reference exhibit 101 halliburton’s form 10q quarter ended june 30 2008 file 13492 1029 underwriting agreement dated september 9 2008 among halliburton citigroup global markets inc greenwich capital markets inc hsbc securities usa inc representatives several underwriters identified therein incorporated reference exhibit 11 halliburton’s form 8k filed september 12 2008 file 13492 1030 six month revolving credit agreement among halliburton borrower banks party thereto hsbc bank usa na administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed october 16 2008 file 13492 1031 employment agreement james brown incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2007 file 13492 1032 employment agreement david king incorporated reference exhibit 1037 halliburton’s form 10k year ended december 31 2007 file 13492 1033 executive agreement lawrence j pope incorporated reference exhibit 101 halliburton’s form 8k filed december 12 2008 file 13492 1034 executive agreement evelyn angelle 1035 executive agreement ahmed h lotfy 1036 executive agreement timothy j probert 1037 executive agreement craig w nunez 1038 amendment executive employment agreement david king 1039 amendment executive employment agreement james brown 1040 amendment executive employment agreement albert cornelison 1041 amendment executive employment agreement c christopher gaut 1042 amendment executive employment agreement david king 1043 amendment executive employment agreement mark mccollum 121 statement computation ratio earnings fixed charges 211 subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors signed january 2007 incorporated reference exhibit 241 halliburton’s form 10k year ended december 31 2006 file 13492 alan bennett james r boyd milton carroll kenneth derr malcolm gillis j landis martin jay precourt debra l reed 242 power attorney james hackett signed january 2009 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 filed form 10k furnished form 10k report independent registered public accounting firm supplemental schedule board directors shareholders halliburton company date february 16 2009 reported consolidated balance sheets halliburton company subsidiaries december 31 2008 2007 related consolidated statements operations shareholders’ equity cash flows years threeyear period ended december 31 2008 included company’s annual report form 10k connection audits aforementioned consolidated financial statements also audited related consolidated financial statement schedule ii company’s annual report form 10k financial statement schedule responsibility company’s management responsibility express opinion financial statement schedule based audits opinion financial statement schedule considered relation basic consolidated financial statements taken whole presents fairly material respects information set forth therein report financial statements referred refers change methods accounting uncertainty income taxes january 1 2007 accounting defined benefit postretirement plans december 31 2006 kpmg llp houston texas february 16 2009 halliburton company schedule ii valuation qualifying accounts millions dollars table presents valuation qualifying accounts signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 18th day february 2009 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 18th day february 2009 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer evelyn angelle vice president corporate controller evelyn angelle principal accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll kenneth derr director kenneth derr malcolm gillis director malcolm gillis james hackett director james hackett j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed sherry williams sherry williams attorneyinfactitem 15 exhibits 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 47 48 pages 49 85 annual report see index page 2 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware may 30 2006 incorporated reference exhibit 31 halliburton’s form 8k filed june 5 2006 file 13492 32 bylaws halliburton revised effective february 10 2010 incorporated reference exhibit 31 halliburton’s form 8k filed february 10 2010 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor bank new york trust company na successor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 412 form indenture dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 413 second supplemental indenture dated october 27 2003 dii industries llc bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 414 third supplemental indenture dated december 12 2003 among dii industries llc halliburton bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 415 indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 416 first supplemental indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 10q quarter ended september 30 2003 file 13492 417 form note 55 senior notes due october 15 2010 included exhibit b exhibit 416 418 second supplemental indenture dated december 15 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 419 form note 76 debentures due 2096 included exhibit 418 420 fourth supplemental indenture dated september 12 2008 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed september 12 2008 file 13492 421 form global note halliburton’s 590 senior notes due 2018 included part exhibit 420 422 form global note halliburton’s 670 senior notes due 2038 included part exhibit 420 423 fifth supplemental indenture dated march 13 2009 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed march 13 2009 file 13492 424 form global note halliburton’s 615 senior notes due 2019 included part exhibit 423 425 form global note halliburton’s 745 senior notes due 2039 included part exhibit 423 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessor’s form 10k year ended december 31 1992 file 13492 102 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 103 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 104 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 105 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 106 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 107 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 108 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 109 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 1010 master separation agreement halliburton company kbr inc dated november 20 2006 incorporated reference exhibit 101 halliburton’s form 8k filed november 27 2006 file 13492 1011 tax sharing agreement effective january 1 2006 halliburton company kbr holdings llc kbr inc amended effective february 26 2007 incorporated reference exhibit 102 kbr’s annual report form 10k year ended december 31 2006 file 133146 1012 five year revolving credit agreement among halliburton borrower banks party thereto citicorp north america inc administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed july 13 2007 file 13492 1013 form indemnification agreement officers incorporated reference exhibit 101 halliburton’s form 8k filed august 3 2007 file 13492 1014 form indemnification agreement directors incorporated reference exhibit 102 halliburton’s form 8k filed august 3 2007 file 13492 1015 halliburton elective deferral plan amended restated effective january 1 2008 incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2007 file 13492 1016 halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2007 file 13492 1017 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2007 file 13492 1018 halliburton company pension equalizer plan amended restated effective march 1 2007 incorporated reference exhibit 108 halliburton’s form 10q quarter ended september 30 2007 file 13492 1019 halliburton company directors’ deferred compensation plan amended restated effective january 1 2007 incorporated reference exhibit 109 halliburton’s form 10q quarter ended september 30 2007 file 13492 1020 retirement plan directors halliburton company amended restated effective july 1 2007 incorporated reference exhibit 1010 halliburton’s form 10q quarter ended september 30 2007 file 13492 1021 first amendment retirement plan directors halliburton company effective september 1 2007 incorporated reference exhibit 1011 halliburton’s form 10q quarter ended september 30 2007 file 13492 1022 revolving bridge facility credit agreement among halliburton borrower banks party thereto citibank na agent incorporated reference exhibit 101 halliburton’s form 10q quarter ended june 30 2008 file 13492 1023 underwriting agreement dated september 9 2008 among halliburton citigroup global markets inc greenwich capital markets inc hsbc securities usa inc representatives several underwriters identified therein incorporated reference exhibit 11 halliburton’s form 8k filed september 12 2008 file 13492 1024 six month revolving credit agreement among halliburton borrower banks party thereto hsbc bank usa na administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed october 16 2008 file 13492 1025 employment agreement james brown incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2007 file 13492 1026 employment agreement david king incorporated reference exhibit 1037 halliburton’s form 10k year ended december 31 2007 file 13492 1027 executive agreement lawrence j pope incorporated reference exhibit 101 halliburton’s form 8k filed december 12 2008 file 13492 1028 underwriting agreement dated march 10 2009 among halliburton citigroup global markets inc deutsche bank securities inc hsbc securities usa inc greenwich capital markets inc representatives several underwriters identified therein incorporated reference exhibit 11 halliburton’s form 8k filed march 13 2009 file 13492 1029 halliburton company stock incentive plan amended restated effective february 11 2009 incorporated reference appendix b halliburton’s proxy statement filed april 6 2009 file 13492 1030 halliburton company employee stock purchase plan amended restated effective february 11 2009 incorporated reference appendix c halliburton’s proxy statement filed april 6 2009 file 13492 1031 form nonstatutory stock option agreement incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2009 file 13492 1032 form restricted stock agreement incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2009 file 13492 1033 form restricted stock unit agreement incorporated reference exhibit 106 halliburton’s form 10q quarter ended september 30 2009 file 13492 1034 form nonemployee director restricted stock agreement incorporated reference exhibit 995 halliburton’s form s8 filed may 21 2009 registration 333159394 1035 first amendment halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 101 halliburton’s form 8k filed september 21 2009 file 13492 1036 amendment 1 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 102 halliburton’s form 8k filed september 21 2009 file 13492 1037 halliburton annual performance pay plan amended restated effective january 1 2010 incorporated reference exhibit 103 halliburton’s form 8k filed september 21 2009 file 13492 1038 executive agreement evelyn angelle incorporated reference exhibit 1034 halliburton’s form 10k year ended december 31 2008 file 13492 1039 executive agreement ahmed h lotfy incorporated reference exhibit 1035 halliburton’s form 10k year ended december 31 2008 file 13492 1040 executive agreement timothy j probert incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2008 file 13492 1041 executive agreement craig w nunez incorporated reference exhibit 1037 halliburton’s form 10k year ended december 31 2008 file 13492 1042 amendment executive employment agreement david king incorporated reference exhibit 1038 halliburton’s form 10k year ended december 31 2008 file 13492 1043 amendment executive employment agreement james brown incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2008 file 13492 1044 amendment executive employment agreement albert cornelison incorporated reference exhibit 1040 halliburton’s form 10k year ended december 31 2008 file 13492 1045 amendment executive employment agreement c christopher gaut incorporated reference exhibit 1041 halliburton’s form 10k year ended december 31 2008 file 13492 1046 amendment executive employment agreement david king incorporated reference exhibit 1042 halliburton’s form 10k year ended december 31 2008 file 13492 1047 121 211 231 amendment executive employment agreement mark mccollum incorporated reference exhibit 1043 halliburton’s form 10k year ended december 31 2008 file 13492 statement computation ratio earnings fixed charges subsidiaries registrant consent kpmg llp 241 242 243 244 311 312 321 322 101ins 101sch 101cal 101lab 101pre powers attorney following directors signed january 2007 incorporated reference exhibit 241 halliburton’s form 10k year ended december 31 2006 file 13492 alan bennett james r boyd milton carroll malcolm gillis j landis martin jay precourt debra l reed power attorney james hackett signed january 2009 incorporated reference exhibit 242 halliburton’s form 10k year ended december 31 2008 file 13492 power attorney nance k dicciani signed july 2009 power attorney robert malone signed june 2009 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 xbrl instance document xbrl taxonomy extension schema document xbrl taxonomy extension calculation linkbase document xbrl taxonomy extension label linkbase document xbrl taxonomy extension presentation linkbase document filed form 10k furnished form 10k signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 17th day february 2010 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 17th day february 2010 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer evelyn angelle vice president corporate controller evelyn angelle principal accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani malcolm gillis director malcolm gillis james hackett director james hackett robert malone director robert malone j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed sherry williams sherry williams attorneyinfactitem 15 exhibits 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 60 61 pages 62 103 annual report see index page 2 exhibits exhibit number exhibits 21 agreement plan merger dated april 9 2010 among halliburton company gradient llc boots coots inc incorporated reference exhibit 21 halliburton’s form 8k filed april 12 2010 file 13492 31 restated certificate incorporation halliburton company filed secretary state delaware may 30 2006 incorporated reference exhibit 31 halliburton’s form 8k filed june 5 2006 file 13492 32 bylaws halliburton revised effective february 10 2010 incorporated reference exhibit 31 halliburton’s form 8k filed february 10 2010 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor bank new york trust company na successor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 412 form indenture dated april 18 1996 dresser bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4 dresser’s registration statement form s3a filed april 19 1996 registration 33301303 supplemented amended form first supplemental indenture dated august 6 1996 dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 413 second supplemental indenture dated october 27 2003 dii industries llc bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 414 third supplemental indenture dated december 12 2003 among dii industries llc halliburton bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 415 indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 416 second supplemental indenture dated december 15 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 417 form note 76 debentures due 2096 included exhibit 416 418 fourth supplemental indenture dated september 12 2008 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed september 12 2008 file 13492 419 form global note halliburton’s 590 senior notes due 2018 included part exhibit 418 420 form global note halliburton’s 670 senior notes due 2038 included part exhibit 418 421 fifth supplemental indenture dated march 13 2009 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed march 13 2009 file 13492 422 form global note halliburton’s 615 senior notes due 2019 included part exhibit 421 423 form global note halliburton’s 745 senior notes due 2039 included part exhibit 421 101 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 102 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 103 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 104 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 105 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 106 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 107 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 108 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 109 master separation agreement halliburton company kbr inc dated november 20 2006 incorporated reference exhibit 101 halliburton’s form 8k filed november 27 2006 file 13492 1010 tax sharing agreement effective january 1 2006 halliburton company kbr holdings llc kbr inc amended effective february 26 2007 incorporated reference exhibit 102 kbr’s annual report form 10k year ended december 31 2006 file 133146 1011 five year revolving credit agreement among halliburton borrower banks party thereto citicorp north america inc administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed july 13 2007 file 13492 1012 form indemnification agreement officers incorporated reference exhibit 101 halliburton’s form 8k filed august 3 2007 file 13492 1013 form indemnification agreement directors incorporated reference exhibit 102 halliburton’s form 8k filed august 3 2007 file 13492 1014 2008 halliburton elective deferral plan amended restated effective january 1 2008 incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2007 file 13492 1015 halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2007 file 13492 1016 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2007 file 13492 1017 halliburton company pension equalizer plan amended restated effective march 1 2007 incorporated reference exhibit 108 halliburton’s form 10q quarter ended september 30 2007 file 13492 1018 halliburton company directors’ deferred compensation plan amended restated effective january 1 2007 incorporated reference exhibit 109 halliburton’s form 10q quarter ended september 30 2007 file 13492 1019 retirement plan directors halliburton company amended restated effective july 1 2007 incorporated reference exhibit 1010 halliburton’s form 10q quarter ended september 30 2007 file 13492 1020 first amendment retirement plan directors halliburton company effective september 1 2007 incorporated reference exhibit 1011 halliburton’s form 10q quarter ended september 30 2007 file 13492 1021 underwriting agreement dated september 9 2008 among halliburton citigroup global markets inc greenwich capital markets inc hsbc securities usa inc representatives several underwriters identified therein incorporated reference exhibit 11 halliburton’s form 8k filed september 12 2008 file 13492 1022 six month revolving credit agreement among halliburton borrower banks party thereto hsbc bank usa na administrative agent incorporated reference exhibit 101 halliburton’s form 8k filed october 16 2008 file 13492 1023 employment agreement james brown incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2007 file 13492 1024 executive agreement lawrence j pope incorporated reference exhibit 101 halliburton’s form 8k filed december 12 2008 file 13492 1025 underwriting agreement dated march 10 2009 among halliburton citigroup global markets inc deutsche bank securities inc hsbc securities usa inc greenwich capital markets inc representatives several underwriters identified therein incorporated reference exhibit 11 halliburton’s form 8k filed march 13 2009 file 13492 1026 halliburton company stock incentive plan amended restated effective february 11 2009 incorporated reference appendix b halliburton’s proxy statement filed april 6 2009 file 13492 1027 halliburton company employee stock purchase plan amended restated effective february 11 2009 incorporated reference appendix c halliburton’s proxy statement filed april 6 2009 file 13492 1028 form nonstatutory stock option agreement incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2009 file 13492 1029 form restricted stock agreement incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2009 file 13492 1030 form restricted stock unit agreement incorporated reference exhibit 106 halliburton’s form 10q quarter ended september 30 2009 file 13492 1031 form nonemployee director restricted stock agreement incorporated reference exhibit 995 halliburton’s form s8 filed may 21 2009 registration 333159394 1032 first amendment halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 101 halliburton’s form 8k filed september 21 2009 file 13492 1033 amendment 1 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 102 halliburton’s form 8k filed september 21 2009 file 13492 1034 halliburton annual performance pay plan amended restated effective january 1 2010 incorporated reference exhibit 103 halliburton’s form 8k filed september 21 2009 file 13492 1035 executive agreement evelyn angelle incorporated reference exhibit 1034 halliburton’s form 10k year ended december 31 2008 file 13492 1036 executive agreement timothy j probert incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2008 file 13492 1037 executive agreement craig w nunez incorporated reference exhibit 1037 halliburton’s form 10k year ended december 31 2008 file 13492 1038 amendment executive employment agreement james brown incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2008 file 13492 1039 amendment executive employment agreement albert cornelison incorporated reference exhibit 1040 halliburton’s form 10k year ended december 31 2008 file 13492 1040 amendment executive employment agreement mark mccollum incorporated reference exhibit 1043 halliburton’s form 10k year ended december 31 2008 file 13492 1041 amendment 1 2008 halliburton elective deferral plan amended restated effective january 1 2008 1042 executive agreement joseph f andolino 1043 executive agreement joe rainey 121 statement computation ratio earnings fixed charges 211 subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors alan bennett james r boyd milton carroll nance k dicciani malcolm gillis james hackett abdallah jumah robert malone j landis martin debra l reed 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 17th day february 2011 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 17th day february 2011 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer evelyn angelle senior vice president evelyn angelle chief accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani malcolm gillis director malcolm gillis james hackett director james hackett abdallah jum’ah director abdallah jum’ah robert malone director robert malone j landis martin director j landis martin debra l reed director debra l reed christina ibrahim christina ibrahim attorneyinfactitem 15 exhibits 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 70 71 pages 72 116 annual report see index page 2 financial statement schedules listed regulation 210504 omitted applicable required information shown consolidated financial statements notes thereto 3 exhibits exhibit number exhibits 31 restated certificate incorporation halliburton company filed secretary state delaware may 30 2006 incorporated reference exhibit 31 halliburton’s form 8k filed june 5 2006 file 13492 32 bylaws halliburton revised effective february 10 2010 incorporated reference exhibit 31 halliburton’s form 8k filed february 10 2010 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4b predecessor’s registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburton’s registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessor’s board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committee’s consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessor’s form 8k dated february 20 1991 file 13492 44 second senior indenture dated december 1 1996 predecessor bank new york trust company na successor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburton’s registration statement form 8b dated december 12 1996 file 13492 45 third supplemental indenture dated august 1 1997 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburton’s form 10k year ended december 31 1998 file 13492 46 fourth supplemental indenture dated september 29 1998 halliburton bank new york trust company na successor texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburton’s form 10k year ended december 31 1998 file 13492 47 resolutions halliburton’s board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburton’s form 10k year ended december 31 1996 file 13492 48 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburton’s form 8k dated february 11 1997 file 13492 49 resolutions halliburton’s board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburton’s form 10k year ended december 31 1998 file 13492 410 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries filed commission halliburton agrees furnish copies instruments upon request 411 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburton’s form 10q quarter ended march 31 1997 file 13492 412 form indenture dated april 18 1996 dresser bank new york trust company na successor texas commerce bank national association trustee incorporated reference exhibit 4 dresser’s registration statement form s3a filed april 19 1996 registration 33301303 supplemented amended form first supplemental indenture dated august 6 1996 dresser bank new york trust company na successor texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dresser’s form 8k filed august 9 1996 file 14003 413 second supplemental indenture dated october 27 2003 dii industries llc bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 incorporated reference exhibit 415 halliburton’s form 10k year ended december 31 2003 file 13492 414 third supplemental indenture dated december 12 2003 among dii industries llc halliburton bank new york trust company na successor jpmorgan chase bank trustee indenture dated april 18 1996 incorporated reference exhibit 416 halliburton’s form 10k year ended december 31 2003 file 13492 415 indenture dated october 17 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee incorporated reference exhibit 41 halliburton’s form 10q quarter ended september 30 2003 file 13492 416 second supplemental indenture dated december 15 2003 halliburton bank new york trust company na successor jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 427 halliburton’s form 10k year ended december 31 2003 file 13492 417 form note 76 debentures due 2096 included exhibit 416 418 fourth supplemental indenture dated september 12 2008 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed september 12 2008 file 13492 419 form global note halliburton’s 590 senior notes due 2018 included part exhibit 418 420 form global note halliburton’s 670 senior notes due 2038 included part exhibit 418 421 fifth supplemental indenture dated march 13 2009 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed march 13 2009 file 13492 422 form global note halliburton’s 615 senior notes due 2019 included part exhibit 421 423 form global note halliburton’s 745 senior notes due 2039 included part exhibit 421 424 sixth supplemental indenture dated november 14 2011 halliburton bank new york mellon trust company na successor trustee jpmorgan chase bank senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburton’s form 8k filed november 14 2011 file 13492 425 form global note halliburton’s 325 senior notes due 2021 included part exhibit 424 426 form global note halliburton’s 450 senior notes due 2041 included part exhibit 424 101 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessor’s proxy statement dated march 23 1993 file 13492 102 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburton’s form 10k year ended december 31 2000 file 13492 103 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dresser’s form 10k year ended october 31 1995 file 14003 104 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dresser’s form 10k year ended october 31 1995 file 14003 105 employment agreement david j lesar incorporated reference exhibit 10n predecessor’s form 10k year ended december 31 1995 file 13492 106 employment agreement mark mccollum incorporated reference exhibit 101 halliburton’s form 10q quarter ended september 30 2003 file 13492 107 halliburton company performance unit program incorporated reference exhibit 102 halliburton’s form 10q quarter ended september 30 2001 file 13492 108 employment agreement albert cornelison incorporated reference exhibit 103 halliburton’s form 10q quarter ended june 30 2002 file 13492 109 form indemnification agreement officers incorporated reference exhibit 101 halliburton’s form 8k filed august 3 2007 file 13492 1010 form indemnification agreement directors incorporated reference exhibit 102 halliburton’s form 8k filed august 3 2007 file 13492 1011 2008 halliburton elective deferral plan amended restated effective january 1 2008 incorporated reference exhibit 103 halliburton’s form 10q quarter ended september 30 2007 file 13492 1012 halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2007 file 13492 1013 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2007 file 13492 1014 halliburton company pension equalizer plan amended restated effective march 1 2007 incorporated reference exhibit 108 halliburton’s form 10q quarter ended september 30 2007 file 13492 1015 halliburton company directors’ deferred compensation plan amended restated effective january 1 2007 incorporated reference exhibit 109 halliburton’s form 10q quarter ended september 30 2007 file 13492 1016 retirement plan directors halliburton company amended restated effective july 1 2007 incorporated reference exhibit 1010 halliburton’s form 10q quarter ended september 30 2007 file 13492 1017 employment agreement james brown incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2007 file 13492 1018 executive agreement lawrence j pope incorporated reference exhibit 101 halliburton’s form 8k filed december 12 2008 file 13492 1019 halliburton company stock incentive plan amended restated effective february 11 2009 incorporated reference appendix b halliburton’s proxy statement filed april 6 2009 file 13492 1020 halliburton company employee stock purchase plan amended restated effective february 11 2009 incorporated reference appendix c halliburton’s proxy statement filed april 6 2009 file 13492 1021 form nonstatutory stock option agreement incorporated reference exhibit 104 halliburton’s form 10q quarter ended september 30 2009 file 13492 1022 form restricted stock agreement incorporated reference exhibit 105 halliburton’s form 10q quarter ended september 30 2009 file 13492 1023 form restricted stock unit agreement incorporated reference exhibit 106 halliburton’s form 10q quarter ended september 30 2009 file 13492 1024 form nonemployee director restricted stock agreement incorporated reference exhibit 995 halliburton’s form s8 filed may 21 2009 registration 333159394 1025 first amendment halliburton company supplemental executive retirement plan amended restated effective january 1 2008 incorporated reference exhibit 101 halliburton’s form 8k filed september 21 2009 file 13492 1026 amendment 1 halliburton company benefit restoration plan amended restated effective january 1 2008 incorporated reference exhibit 102 halliburton’s form 8k filed september 21 2009 file 13492 1027 halliburton annual performance pay plan amended restated effective january 1 2010 incorporated reference exhibit 103 halliburton’s form 8k filed september 21 2009 file 13492 1028 executive agreement evelyn angelle incorporated reference exhibit 1034 halliburton’s form 10k year ended december 31 2008 file 13492 1029 executive agreement timothy j probert incorporated reference exhibit 1036 halliburton’s form 10k year ended december 31 2008 file 13492 1030 amendment executive employment agreement james brown incorporated reference exhibit 1039 halliburton’s form 10k year ended december 31 2008 file 13492 1031 amendment executive employment agreement albert cornelison incorporated reference exhibit 1040 halliburton’s form 10k year ended december 31 2008 file 13492 1032 amendment executive employment agreement mark mccollum incorporated reference exhibit 1043 halliburton’s form 10k year ended december 31 2008 file 13492 1033 amendment 1 2008 halliburton elective deferral plan amended restated effective january 1 2008 incorporated reference exhibit 1041 halliburton’s form 10k year ended december 31 2010 file 13492 1034 executive agreement joseph f andolino incorporated reference exhibit 1042 halliburton’s form 10k year ended december 31 2010 file 13492 1035 executive agreement joe rainey incorporated reference exhibit 1043 halliburton’s form 10k year ended december 31 2010 file 13492 1036 us 2000000000 five year revolving credit agreement among halliburton borrower banks party thereto citibank na agent incorporated reference exhibit 101 halliburton’s form 8k filed february 23 2011 file 13492 1037 first amendment dated february 10 2011 halliburton company employee stock purchase plan amended restated effective february 11 2009 incorporated reference exhibit 102 halliburton’s form 10q quarter ended march 31 2011 file 13492 1038 first amendment retirement plan directors halliburton company effective september 1 2007 incorporated reference exhibit 103 halliburton’s form 10q quarter ended march 31 2011 file 13492 1039 underwriting agreement dated november 8 2011 among halliburton citigroup global markets inc deutsche bank securities inc hsbc securities usa inc rbs securities inc credit suisse securities usa llc morgan stanley co llc several underwriters identified therein incorporated reference exhibit 11 halliburton’s form 8k filed november 14 2011 file 13492 1040 executive agreement christian garcia 1041 first amendment halliburton company restricted stock plan nonemployee directors 1042 form restricted stock agreement section 16 officers 1043 form nonemployee director restricted stock agreement stock incentive plan 121 statement computation ratio earnings fixed charges 211 subsidiaries registrant 231 consent kpmg llp 241 powers attorney following directors signed february 2012 alan bennett james r boyd milton carroll nance k dicciani murry gerber malcolm gillis abdallah jum’ah robert malone j landis martin debra l reed 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 mine safety disclosures 101ins xbrl instance document 101sch xbrl taxonomy extension schema document 101cal xbrl taxonomy extension calculation linkbase document 101lab xbrl taxonomy extension label linkbase document 101pre xbrl taxonomy extension presentation linkbase document 101def xbrl taxonomy extension definition linkbase document filed form 10k furnished form 10k signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 16th day february 2012 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 16th day february 2012 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer evelyn angelle senior vice president evelyn angelle chief accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber malcolm gillis director malcolm gillis abdallah jum’ah director abdallah jum’ah robert malone director robert malone j landis martin director j landis martin debra l reed director debra l reed christina ibrahim christina ibrahim attorneyinfactitem 15 exhibits 1 financial statements reports independent registered public accounting firm financial statements company required part ii item 8 included pages 51 52 pages 53 85 annual report see index page 2 financial statement schedules listed regulation 210504 omitted applicable required information shown consolidated financial statements notes thereto 3 exhibits signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 11th day february 2013 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 11th day february 2013 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer evelyn angelle senior vice president evelyn angelle chief accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber malcolm gillis director malcolm gillis abdallah jum’ah director abdallah jum’ah robert malone director robert malone j landis martin director j landis martin debra l reed director debra l reed christina ibrahim christina ibrahim attorneyinfactitem 15 exhibits signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 7th day february 2014 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 7th day february 2014 signature title david j lesar chairman board president david j lesar chief executive officer director mark mccollum executive vice president mark mccollum chief financial officer christian garcia senior vice president christian garcia chief accounting officer signature title alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber josé c grubisich director josé c grubisich abdallah jum’ah director abdallah jum’ah robert malone director robert malone j landis martin director j landis martin debra l reed director debra l reed christina ibrahim christina ibrahim attorneyinfactitem 15 exhibits 101lab xbrl taxonomy extension label linkbase document 101pre xbrl taxonomy extension presentation linkbase document 101def xbrl taxonomy extension definition linkbase document filed form 10k furnished form 10k † management contracts compensatory plans arrangements signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 24th day february 2015 halliburton company david j lesar david j lesar chairman board chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 24th day february 2015 signature title david j lesar chairman board director david j lesar chief executive officer christian garcia senior vice president finance christian garcia acting chief financial officer charles e geer jr vice president charles e geer jr corporate controller signature title abdulaziz f al khayyal director abdulaziz f al khayyal alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber josé c grubisich director josé c grubisich abdallah jum’ah director abdallah jum’ah robert malone director robert malone j landis martin director j landis martin jeffrey miller president director jeffrey miller debra l reed director debra l reed christina ibrahim christina ibrahim attorneyinfactitem 15 exhibits signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 5th day february 2016 halliburton company david j lesar david j lesar chairman board chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 5th day february 2016 signature title david j lesar chairman board director david j lesar chief executive officer christian garcia senior vice president finance christian garcia acting chief financial officer charles e geer jr vice president charles e geer jr corporate controller signature title abdulaziz f al khayyal director abdulaziz f al khayyal alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber josé c grubisich director josé c grubisich robert malone director robert malone j landis martin director j landis martin jeffrey miller president director jeffrey miller debra l reed director debra l reed robb l voyles robb l voyles attorneyinfactitem 15 exhibits item 16 form 10k summary none signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 13th day february 2019 halliburton company jeffrey miller jeffrey miller chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 13th day february 2019 signature title jeffrey miller chairman board director president jeffrey miller chief executive officer lance loeffler executive vice president lance loeffler chief financial officer charles e geer jr vice president charles e geer jr corporate controller signature title abdulaziz f al khayyal director abdulaziz f al khayyal william e albrecht director william e albrecht alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber robert malone director robert malone robb l voyles robb l voyles attorneyinfactitem 15 exhibits 1 financial statements reports independent registered public accounting firm financial statements halliburton company included within part ii item 8 annual report form 10k 2 financial statement schedules listed rule 504 regulation sx 17 cfr 210504 omitted applicable required information shown consolidated financial statements notes thereto 3 exhibits hal 2019 form 10k 69 hal 2019 form 10k 70 hal 2019 form 10k 71 hal 2019 form 10k 72 hal 2019 form 10k 73 hal 2019 form 10k 74 101ins xbrl instance document instance document appear interactive data file xbrl tags embedded within inline xbrl document 101sch xbrl taxonomy extension schema document 101cal xbrl taxonomy extension calculation linkbase document 101lab xbrl taxonomy extension label linkbase document 101pre xbrl taxonomy extension presentation linkbase document 101def xbrl taxonomy extension definition linkbase document cover page interactive data file cover page interactive data file appear interactive data file xbrl tags embedded within inline xbrl document filed form 10k furnished form 10k † management contracts compensatory plans arrangements item 16 form 10k summary none hal 2019 form 10k 75 signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 11th day february 2020 halliburton company jeffrey miller jeffrey miller chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 11th day february 2020 signature title jeffrey miller chairman board director president jeffrey miller chief executive officer lance loeffler executive vice president lance loeffler chief financial officer charles e geer jr senior vice president charles e geer jr chief accounting officer hal 2019 form 10k 76 signature title abdulaziz f al khayyal director abdulaziz f al khayyal william e albrecht director william e albrecht katherine banks director katherine banks alan bennett director alan bennett milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber patricia hemingway hall director patricia hemingway hall robert malone director robert malone robb l voyles robb l voyles attorneyinfact hal 2019 form 10k 77item 15 exhibits 1financial statements reports independent registered public accounting firm financial statements halliburton company included within part ii item 8 annual report form 10k 2financial statement schedules listed rule 504 regulation sx 17 cfr 210504 omitted applicable required information shown consolidated financial statements notes thereto 3exhibits hal 2020 form 10k 70 hal 2020 form 10k 71 hal 2020 form 10k 72 hal 2020 form 10k 73 hal 2020 form 10k 74 hal 2020 form 10k 75 95mine safety disclosures 101insxbrl instance document instance document appear interactive data file xbrl tags embedded within inline xbrl document 101schxbrl taxonomy extension schema document 101calxbrl taxonomy extension calculation linkbase document 101labxbrl taxonomy extension label linkbase document 101prexbrl taxonomy extension presentation linkbase document 101defxbrl taxonomy extension definition linkbase document 104cover page interactive data file cover page interactive data file appear interactive data file xbrl tags embedded within inline xbrl document filed form 10k furnished form 10k † management contracts compensatory plans arrangements item 16 form 10k summary none hal 2020 form 10k 76 signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 5th day february 2021 halliburton company bys jeffrey miller jeffrey miller chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 5th day february 2021 signaturetitle jeffrey millerchairman board director president jeffrey millerchief executive officer lance loefflerexecutive vice president lance loefflerchief financial officer charles e geer jrsenior vice president charles e geer jrchief accounting officer hal 2020 form 10k 77 signaturetitle abdulaziz f al khayyaldirector abdulaziz f al khayyal william e albrechtdirector william e albrecht katherine banksdirector katherine banks alan bennettdirector alan bennett milton carrolldirector milton carroll nance k diccianidirector nance k dicciani murry gerberdirector murry gerber patricia hemingway halldirector patricia hemingway hall robert malonedirector robert malone van h beckwith van h beckwith attorneyinfact hal 2020 form 10k 78nannanitem 15 exhibits financial statement schedules reports form 8k 1 financial statements reports independent public accountants financial statements company required part ii item 8 included pages 63 64 pages 65 121 annual report see index page 14 2 financial statement schedules page report supplemental schedule kpmg llp 139 schedule ii valuation qualifying accounts three years ended december 31 2003 140 note schedules filed report required regulation sx omitted applicable required information required included notes financial statements 3 exhibits exhibit number exhibits 21 disclosure statement proposed joint prepackaged plan reorganization midvalley inc dii industries llc kellogg brown root inc kbr technical services inc kellogg brown root engineering corporation kellogg brown root international inc delaware corporation kellogg brown root international inc panamanian corporation bpm minerals llc chapter 11 united states bankruptcy code dated september 18 2003 incorporated reference exhibit 99 halliburtons form 8k dated september 22 2003 file 13492 22 supplemental disclosure statement first amended joint prepackaged plan reorganization midvalley inc dii industries llc kellogg brown root inc kbr technical services inc kellogg brown root engineering corporation kellogg brown root international inc delaware corporation kellogg brown root international inc panamanian corporation bpm minerals llc chapter 11 united states bankruptcy code dated november 14 2003 incorporated reference exhibit 99 halliburtons form 8k dated november 19 2003 file 13492 31 restated certificate incorporation halliburton company filed secretary state delaware july 23 1998 incorporated reference exhibit 3a halliburtons form 10q quarter ended june 30 1998 file 13492 32 bylaws halliburton revised effective february 12 2003 incorporated reference exhibit 32 halliburtons form 10k year ended december 31 2002 file 13492 41 form debt security 875 debentures due february 12 2021 incorporated reference exhibit 4a form 8k halliburton company known halliburton energy services inc predecessor dated february 20 1991 file 13492 42 senior indenture dated january 2 1991 predecessor texas commerce bank national association trustee incorporated reference exhibit 4b predecessors registration statement form s3 registration 3338394 originally filed securities exchange commission december 21 1990 supplemented amended first supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 41 halliburtons registration statement form 8b dated december 12 1996 file 13492 43 resolutions predecessors board directors adopted meeting held february 11 1991 special pricing committee board directors predecessor adopted meeting held february 11 1991 special pricing committees consent lieu meeting dated february 12 1991 incorporated reference exhibit 4c predecessors form 8k dated february 20 1991 file 13492 44 form debt security 675 notes due february 1 2027 incorporated reference exhibit 41 halliburtons form 8k dated february 11 1997 file 13492 45 second senior indenture dated december 1 1996 predecessor texas commerce bank national association trustee supplemented amended first supplemental indenture dated december 5 1996 predecessor trustee second supplemental indenture dated december 12 1996 among predecessor halliburton trustee incorporated reference exhibit 42 halliburtons registration statement form 8b dated december 12 1996 file 13492 46 third supplemental indenture dated august 1 1997 halliburton texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 47 halliburtons form 10k year ended december 31 1998 file 13492 47 fourth supplemental indenture dated september 29 1998 halliburton chase bank texas national association formerly texas commerce bank national association trustee second senior indenture dated december 1 1996 incorporated reference exhibit 48 halliburtons form 10k year ended december 31 1998 file 13492 48 resolutions halliburtons board directors adopted unanimous consent dated december 5 1996 incorporated reference exhibit 4g halliburtons form 10k year ended december 31 1996 file 13492 49 resolutions halliburtons board directors adopted special meeting held september 28 1998 incorporated reference exhibit 410 halliburtons form 10k year ended december 31 1998 file 13492 410 restated rights agreement dated december 1 1996 halliburton mellon investor services llc formerly chasemellon shareholder services llc incorporated reference exhibit 44 halliburtons registration statement form 8b dated december 12 1996 file 13492 411 copies instruments define rights holders miscellaneous longterm notes halliburton subsidiaries totaling 11 million aggregate december 31 2003 filed commission halliburton agrees furnish copies instruments upon request 412 form debt security 753 notes due may 12 2017 incorporated reference exhibit 44 halliburtons form 10q quarter ended march 31 1997 file 13492 413 form debt security 563 notes due december 1 2008 incorporated reference exhibit 41 halliburtons form 8k dated november 24 1998 file 13492 414 form indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 4 registration statement form s3 filed dresser amended registration 33301303 supplemented amended form supplemental indenture dresser texas commerce bank national association trustee 760 debentures due 2096 incorporated reference exhibit 41 dressers form 8k filed august 9 1996 file 14003 415 second supplemental indenture dated october 27 2003 dii industries llc jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 416 third supplemental indenture dated december 12 2003 among dii industries llc halliburton jpmorgan chase bank trustee indenture dated april 18 1996 supplemented first supplemental indenture dated august 6 1996 second supplemental indenture dated october 27 2003 417 form debt security 6 notes due august 1 2006 incorporated reference exhibit 42 halliburtons form 8k dated january 8 2002 file 13492 418 credit facility amount pound80 million dated november 29 2002 devonport royal dockyard limited devonport management limited governor company bank scotland hsbc bank plc royal bank scotland plc incorporated reference exhibit 422 halliburtons form 10k year ended december 31 2002 file 13492 419 senior indenture dated june 30 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburtons form 10q quarter ended june 30 2003 file 13492 420 form note 3125 convertible senior notes due july 15 2023 included exhibit 419 421 registration rights agreement dated june 30 2003 among halliburton citigroup global markets inc goldman sachs co jp morgan securities inc representatives several purchasers named schedule purchase agreement dated june 24 2003 incorporated reference exhibit 43 halliburtons registration statement form s3 registration 333110035 422 senior indenture dated october 17 2003 halliburton jpmorgan chase bank trustee incorporated reference exhibit 41 halliburtons form 10q quarter ended september 30 2003 file 13492 423 first supplemental indenture dated october 17 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 incorporated reference exhibit 42 halliburtons form 10q quarter ended september 30 2003 file 13492 424 form note floating rate senior notes due october 17 2005 included exhibit 423 425 form note 55 senior notes due october 15 2010 included exhibit b exhibit 423 426 registration rights agreement dated october 17 2003 among halliburton jp morgan securities inc citigroup global markets inc goldman sachs co representatives several purchasers named schedule purchase agreement dated october 14 2003 incorporated reference exhibit 45 halliburtons registration statement form s4 registration 333110420 427 second supplemental indenture dated december 15 2003 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 428 form note 76 debentures due 2096 included exhibit 427 429 third supplemental indenture dated january 26 2004 halliburton jpmorgan chase bank trustee senior indenture dated october 17 2003 supplemented first supplemental indenture dated october 17 2003 second supplemental indenture dated december 15 2003 incorporated reference exhibit 42 halliburtons registration statement form s4 registration 333112977 430 form senior notes due 2007 included exhibit 429 431 registration rights agreement dated january 26 2004 among halliburton jp morgan securities inc citigroup global markets inc goldman sachs co representatives several purchasers named schedule purchase agreement dated january 21 2004 incorporated reference exhibit 44 halliburtons registration statement form s4 registration 333112977 101 halliburton company career executive incentive stock plan amended november 15 1990 incorporated reference exhibit 10a predecessors form 10k year ended december 31 1992 file 13492 102 retirement plan directors halliburton company amended restated effective may 16 2000 incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2000 file 13492 103 halliburton company directors deferred compensation plan amended restated effective february 1 2001 incorporated reference exhibit 103 halliburtons form 10k year ended december 31 2000 file 13492 104 halliburton company 1993 stock incentive plan amended restated effective may 21 2003 incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2003 file 13492 105 halliburton company restricted stock plan nonemployee directors incorporated reference appendix b predecessors proxy statement dated march 23 1993 file 13492 106 dresser industries inc deferred compensation plan amended restated effective january 1 2000 incorporated reference exhibit 1016 halliburtons form 10k year ended december 31 2000 file 13492 107 dresser industries inc 1982 stock option plan incorporated reference exhibit dressers proxy statement dated february 12 1982 file 14003 108 erisa excess benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 107 dressers form 10k year ended october 31 1995 file 14003 109 erisa compensation limit benefit plan dresser industries inc amended restated effective june 1 1995 incorporated reference exhibit 108 dressers form 10k year ended october 31 1995 file 14003 1010 supplemental executive retirement plan dresser industries inc amended restated effective january 1 1998 incorporated reference exhibit 109 dressers form 10k year ended october 31 1997 file 14003 1011 stock based compensation arrangement nonemployee directors incorporated reference exhibit 44 dressers registration statement form s8 registration 33340829 1012 dresser industries inc deferred compensation plan nonemployee directors restated amended effective november 1 1997 incorporated reference exhibit 45 dressers registration statement form s8 registration 33340829 1013 longterm performance plan selected employees w kellogg company amended restated effective september 1 1999 incorporated reference exhibit 1023 halliburtons form 10k year ended december 31 2000 file 13492 1014 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 7 1992 file 14003 1015 amendments 1 2 dresser industries inc 1992 stock compensation plan incorporated reference exhibit dressers proxy statement dated february 6 1995 file 14003 1016 amendment 3 dresser industries inc 1992 stock compensation plan incorporated reference exhibit 1025 dressers form 10k year ended october 31 1997 file 14003 1017 amendment 1 supplemental executive retirement plan dresser industries inc incorporated reference exhibit 101 dressers form 10q quarter ended april 30 1998 file 14003 1018 employment agreement david j lesar incorporated reference exhibit 10n predecessors form 10k year ended december 31 1995 file 13492 1019 employment agreement r randall harl incorporated reference exhibit 1032 halliburtons form 10k year ended december 31 2002 file 13492 1020 employment agreement mark mccollum incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2003 file 13492 1021 halliburton company supplemental executive retirement plan formerly part halliburton company senior executives deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2001 file 13492 1022 halliburton company benefit restoration plan formerly part halliburton company senior executives deferred compensation plan amended restated effective january 1 2001 incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2001 file 13492 1023 halliburton annual performance pay plan amended restated effective january 1 2001 incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2001 file 13492 1024 halliburton company performance unit program incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2001 file 13492 1025 form nonstatutory stock option agreement nonemployee directors incorporated reference exhibit 103 halliburtons form 10q quarter ended september 30 2000 file 13492 1026 halliburton elective deferral plan amended restated effective may 1 2002 incorporated reference exhibit 101 halliburtons form 10q quarter ended june 30 2002 file 13492 1027 halliburton company 2002 employee stock purchase plan incorporated reference exhibit 102 halliburtons form 10q quarter ended june 30 2002 file 13492 1028 halliburton company directors deferred compensation plan amended restated effective october 22 2002 incorporated reference exhibit 101 halliburtons form 10q quarter ended september 30 2002 file 13492 1029 employment agreement albert cornelison incorporated reference exhibit 103 halliburtons form 10q quarter ended june 30 2002 file 13492 1030 employment agreement weldon j mire incorporated reference exhibit 104 halliburtons form 10q quarter ended june 30 2002 file 13492 1031 employment agreement david r smith incorporated reference exhibit 1039 halliburtons form 10k year ended december 31 2002 file 13492 1032 employment agreement john w gibson incorporated reference exhibit 1040 halliburtons form 10k year ended december 31 2002 file 13492 1033 employment agreement c christopher gaut incorporated reference exhibit 101 halliburtons form 10q quarter ended march 31 2003 file 13492 1034 3year revolving credit agreement dated october 31 2003 among halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 102 halliburtons form 10q quarter ended september 30 2003 file 13492 1035 master letter credit facility agreement dated october 31 2003 among halliburton kellogg brown root inc dii industries llc account parties banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 103 halliburtons form 10q quarter ended september 30 2003 file 13492 1036 senior unsecured credit facility agreement dated november 4 2003 among halliburton banks party thereto citicorp north america inc administrative agent jpmorgan chase bank syndication agent abn amro bank nv documentation agent incorporated reference exhibit 104 halliburtons form 10q quarter ended september 30 2003 file 13492 12 statement computation ratio earnings fixed charges 21 subsidiaries registrant 231 consent kpmg llp 232 notice regarding consent arthur andersen llp 241 powers attorney following directors signed january 2004 robert l crandall kenneth derr charles j dibona w r howell ray l hunt aylwin b lewis j landis martin jay precourt debra l reed c j silas 311 certification chief executive officer pursuant section 302 sarbanesoxley act 2002 312 certification chief financial officer pursuant section 302 sarbanesoxley act 2002 321 certification chief executive officer pursuant section 906 sarbanesoxley act 2002 322 certification chief financial officer pursuant section 906 sarbanesoxley act 2002 filed form 10k furnished form 10k b reports form 8k report copy previously issued report predecessor auditor reissued report previously issued report refers financial statements physically included document report independent public accountants supplemental schedule shareholders board directors halliburton company audited accordance auditing standards generally accepted united states america consolidated financial statements included form 10k issued report thereon dated january 23 2002 audits made purpose forming opinion statements taken whole supplemental schedule ii responsibility halliburton companys management presented purposes complying securities exchange commissions rules part basic financial statements schedule subjected auditing procedures applied audits basic financial statements opinion fairly stated material respects relation basic financial statements taken whole arthur andersen llp dallas texas january 23 2002 except respect certain matters discussed note 9 date february 21 2002 report independent public accountants supplemental schedule board directors stockholders halliburton company date february 18 2004 reported consolidated balance sheets halliburton company subsidiaries december 31 2003 december 31 2002 related consolidated statements operations shareholders equity cash flows years ended included form 10k connection audits aforementioned consolidated financial statements also audited related consolidated financial statement schedule ii included form 10k financial statement schedule responsibility companys management responsibility express opinion consolidated financial statement schedule based audits accompanying 2001 consolidated financial statement schedule halliburton company subsidiaries audited auditors ceased operations auditors expressed unqualified opinion consolidated financial statements schedule restatement described note 5 consolidated financial statements revision related goodwill intangibles described note 1 consolidated financial statements report dated january 23 2002 except respect certain matters discussed note 9 financial statements date february 21 2002 opinion financial statement schedules considered relation basic consolidated financial statements taken whole present fairly material respects information set forth therein kpmg llp kpmg llp houston texas february 18 2004 signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 8th day march 2004 halliburton company david j lesar david j lesar chairman board president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 8th day march 2004 signature title david j lesar chairman board president chief executive officer director david j lesar c christopher gaut executive vice president chief financial officer c christopher gaut mark mccollum senior vice president chief accounting officer mark mccollum signature title robert l crandall director robert l crandall kenneth derr director kenneth derr charles j dibona director charles j dibona w r howell director w r howell ray l hunt director ray l hunt aylwin b lewis director aylwin b lewis j landis martin director j landis martin jay precourt director jay precourt debra l reed director debra l reed c j silas director c j silas margaret e carriere margaret e carriere attorneyinfactnanitem 15 exhibits 101pre xbrl taxonomy extension presentation linkbase document 101def xbrl taxonomy extension definition linkbase document filed form 10k furnished form 10k † management contracts compensatory plans arrangements signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 7th day february 2017 halliburton company david j lesar david j lesar chairman board chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 7th day february 2017 signature title david j lesar chairman board director david j lesar chief executive officer mark mccollum executive vice president mark mccollum chief financial officer charles e geer jr vice president charles e geer jr corporate controller signature title abdulaziz f al khayyal director abdulaziz f al khayyal william e albrecht director william e albrecht alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber josé c grubisich director josé c grubisich robert malone director robert malone j landis martin director j landis martin jeffrey miller president director jeffrey miller debra l reed director debra l reed robb l voyles robb l voyles attorneyinfactitem 15 exhibits item 16 form 10k summary none signatures required section 13 15d securities exchange act 1934 registrant authorized report signed behalf undersigned authorized individuals 9th day february 2018 halliburton company jeffrey miller jeffrey miller president chief executive officer required securities exchange act 1934 report signed following persons capacities indicated 9th day february 2018 signature title jeffrey miller president director jeffrey miller chief executive officer christopher weber executive vice president christopher weber chief financial officer charles e geer jr vice president charles e geer jr corporate controller signature title abdulaziz f al khayyal director abdulaziz f al khayyal william e albrecht director william e albrecht alan bennett director alan bennett james r boyd director james r boyd milton carroll director milton carroll nance k dicciani director nance k dicciani murry gerber director murry gerber josé c grubisich director josé c grubisich david j lesar executive chairman board director david j lesar robert malone director robert malone j landis martin director j landis martin debra l reed director debra l reed robb l voyles robb l voyles attorneyinfact