FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1998
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from _____ to _____
Commission File Number 1-3492
HALLIBURTON COMPANY
(a Delaware Corporation)
75-2677995
3600 Lincoln Plaza
500 N. Akard
Dallas, Texas 75201
Telephone Number - Area Code (214) 978-2600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, par value $2.50 per share:
Outstanding at July 31, 1998 - 263,194,766
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<CAPTION>
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1998 and
December 31, 1997 2
Condensed Consolidated Statements of Income for the three and six
months ended June 30, 1998 and 1997 3
Condensed Consolidated Statements of Cash Flows for the six months
ended June 30, 1998 and 1997 4
Notes to Condensed Consolidated Financial Statements 5-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Listing of Exhibits and Reports on Form 8-K 17-18
Signatures 19
Exhibits: Restated Certificate of Incorporation of Halliburton
Company filed with the Secretary of State of Delaware
on July 23, 1998.
Halliburton Elective Deferral Plan, as amended and
restated effective January 1, 1998.
Halliburton Company Senior Executives' Deferred
Compensation Plan, as amended and restated effective
January 1, 1998.
Financial data schedule for the six months ended June 30, 1998
(included only in the copy of this report filed electronically
with the Commission).
1
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In millions of dollars and shares except per share)
June 30 December 31
1998 1997
--------------- ----------------
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents $ 145.4 $ 221.3
Receivables:
Notes and accounts receivable 2,039.4 1,815.8
Unbilled work on uncompleted contracts 503.5 390.0
--------------- ----------------
Total receivables 2,542.9 2,205.8
Inventories 394.1 326.9
Deferred income taxes, current 129.1 106.6
Other current assets 121.8 111.0
--------------- ----------------
Total current assets 3,333.3 2,971.6
Property, plant and equipment,
less accumulated depreciation of $2,372.5 and $2,325.3 1,814.2 1,662.7
Equity in and advances to related companies 415.9 338.7
Excess of cost over net assets acquired 312.2 323.1
Deferred income taxes, noncurrent 77.0 91.3
Other assets 233.4 215.6
--------------- ----------------
Total assets $ 6,186.0 $ 5,603.0
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term notes payable $ 319.1 $ 2.7
Current maturities of long-term debt 8.1 7.1
Accounts payable 694.8 586.5
Accrued employee compensation and benefits 212.3 262.3
Advance billings on uncompleted contracts 298.1 303.7
Income taxes payable 198.2 213.1
Deferred revenues 44.9 38.4
Other current liabilities 369.8 359.1
--------------- ----------------
Total current liabilities 2,145.3 1,772.9
Long-term debt 525.4 538.9
Reserve for employee compensation and benefits 329.9 323.6
Other liabilities 370.0 363.2
Minority interest in consolidated subsidiaries 19.3 19.7
--------------- ----------------
Total liabilities and minority interest 3,389.9 3,018.3
--------------- ----------------
Shareholders' equity:
Common stock, par value $2.50 per share -
authorized 400.0 shares, issued 269.5 and 268.8 shares 673.6 672.0
Paid-in capital in excess of par value 106.3 87.2
Cumulative translation adjustment (17.2) (15.0)
Retained earnings 2,135.8 1,947.6
--------------- ----------------
2,898.5 2,691.8
Less 6.3 and 6.5 shares of treasury stock, at cost 102.4 107.1
--------------- ----------------
Total shareholders' equity 2,796.1 2,584.7
--------------- ----------------
Total liabilities and shareholders' equity $ 6,186.0 $ 5,603.0
=============== ================
<FN>
See notes to condensed consolidated financial statements.
</FN>
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2
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<CAPTION>
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In millions of dollars except per share data)
Three Months Six Months
Ended June 30 Ended June 30
------------------------------- -------------------------------
1998 1997 1998 1997
------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
Revenues
Energy Group $ 1,707.0 $ 1,456.4 $ 3,296.2 $ 2,576.7
Engineering and Construction Group 768.6 774.7 1,534.7 1,551.9
------------- -------------- ------------- -------------
Total revenues $ 2,475.6 $ 2,231.1 $ 4,830.9 $ 4,128.6
============= ============== ============= =============
Operating income
Energy Group $ 198.3 $ 160.1 $ 383.3 $ 277.3
Engineering and Construction Group 49.9 30.0 78.7 59.4
General corporate (9.8) (8.1) (19.6) (16.0)
------------- -------------- ------------- -------------
Total operating income 238.4 182.0 442.4 320.7
Interest expense (12.7) (9.7) (24.0) (15.8)
Interest income 3.5 2.1 6.9 6.5
Foreign currency gains (losses) (0.1) (0.4) 2.3 0.6
Other nonoperating income (expense), net (0.4) (0.1) (0.5) 0.5
------------- -------------- ------------- -------------
Income before income taxes and minority
interests 228.7 173.9 427.1 312.5
Provision for income taxes (88.3) (68.5) (165.3) (121.2)
Minority interest in net income of subsidiaries (3.9) (3.5) (7.5) (6.4)
------------- -------------- ------------- -------------
Net income $ 136.5 $ 101.9 $ 254.3 $ 184.9
============= ============== ============= =============
Income per share:
Basic $ 0.52 $ 0.40 $ 0.97 $ 0.73
Diluted $ 0.51 $ 0.40 $ 0.95 $ 0.72
Cash dividends paid per share $ 0.125 $ 0.125 $ 0.25 $ 0.25
<FN>
See notes to condensed consolidated financial statements.
</FN>
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3
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<CAPTION>
HALLIBURTON COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In millions of dollars)
Six Months
Ended June 30
--------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 254.3 $ 184.9
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation and amortization 167.4 148.1
Provision (benefit) for deferred income taxes (8.2) (7.1)
Distributions from (advances to) related companies net of
equity in (earnings) or losses (81.6) (39.4)
Other non-cash items 12.3 5.2
Other changes, net of non-cash items:
Receivables (338.4) (220.2)
Inventories (67.3) (37.1)
Accounts payable 119.3 (83.8)
Other working capital, net (91.4) (3.4)
Other, net 11.4 29.0
------------- -------------
Total cash flows from operating activities (22.2) (23.8)
------------- -------------
Cash flows from investing activities:
Capital expenditures (326.1) (259.2)
Sales of property, plant and equipment 26.5 27.8
Sales (purchases) of businesses, net of cash (disposed) acquired 4.0 (124.7)
Other investing activities (1.5) (35.9)
------------- -------------
Total cash flows from investing activities (297.1) (392.0)
------------- -------------
Cash flows from financing activities:
Proceeds from long-term borrowing - 175.6
Payments on long-term borrowings (12.7) (0.4)
Borrowings (repayments) of short-term debt 316.4 100.8
Payments of dividends to shareholders (66.1) (63.3)
Proceeds from exercises of stock options 15.1 38.8
Payments to re-acquire common stock (1.4) (0.7)
Other financing activities (4.8) 3.5
------------- -------------
Total cash flows from financing activities 246.5 254.3
------------- -------------
Effect of exchange rate changes on cash (3.1) (1.7)
------------- -------------
Decrease in cash and equivalents (75.9) (163.2)
Cash and equivalents at beginning of year 221.3 213.6
------------- -------------
Cash and equivalents at end of period $ 145.4 $ 50.4
============= =============
Cash payments during the period for:
Interest $ 24.6 $ 14.1
Income taxes 158.2 55.6
Non-cash investing and financing activities:
Liabilities assumed in acquisitions of businesses $ 4.6 $ 286.3
Liabilities disposed of in dispositions of businesses 13.4 17.9
<FN>
See notes to condensed consolidated financial statements.
</FN>
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4
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HALLIBURTON COMPANY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Management Representation
The Company employs accounting policies that are in accordance with
generally accepted accounting principles in the United States. The preparation
of financial statements in conformity with generally accepted accounting
principles requires Company management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Ultimate results could differ from those estimates.
The accompanying unaudited condensed consolidated financial statements
present information in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-Q and
applicable rules of Regulation S-X. Accordingly, they do not include all
information or footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
Company's 1997 Annual Report on Form 10-K/A.
In the opinion of the Company, the financial statements include all
adjustments necessary to present fairly the Company's financial position as of
June 30, 1998, and the results of its operations for the three and six months
ended June 30, 1998 and 1997 and its cash flows for the six months then ended.
The results of operations for the three and six months ended June 30, 1998 and
1997 may not be indicative of results for the full year. Certain prior year
amounts have been reclassified to conform with the current year presentation.
Note 2. Comprehensive Income
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
---------------------------- ------------------------------
1998 1997 1998 1997
------------ -------------- ----------- -------------
(Millions of dollars) (Millions of dollars)
<S> <C> <C> <C> <C>
Comprehensive income:
Net income $ 136.5 $ 101.9 $ 254.3 $ 184.9
Cumulative translation
adjustment, net of tax (4.9) 12.9 (2.2) 1.7
------------ -------------- ------------- -------------
Total comprehensive income $ 131.6 $ 114.8 $ 252.1 $ 186.6
============ ============== ============= =============
</TABLE>
Comprehensive income as defined by Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income," is net income plus direct
adjustments to shareholders' equity. The cumulative translation adjustment of
certain foreign entities is the only such direct adjustment recorded by the
Company.
Note 3. Inventories
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
------------ ---------------
(Millions of dollars)
<S> <C> <C>
Sales items $ 142.3 $ 114.9
Supplies and parts 179.2 158.1
Work in process 40.5 29.3
Raw materials 32.1 24.6
------------ ---------------
Total $ 394.1 $ 326.9
============ ===============
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About forty percent of all sales items (including related work in process
and raw materials) are valued using the last-in, first-out (LIFO) method. If the
average cost method had been in use for inventories on the LIFO basis, total
inventories would have been about $3.1 million and $3.4 million higher than
reported at June 30, 1998 and December 31, 1997, respectively.
5
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Note 4. General and Administrative Expenses
General and administrative expenses were $64.3 million and $57.9 million
for the three months ended June 30, 1998 and 1997, respectively. General and
administrative expenses were $122.9 million and $108.9 million for the six
months ended June 30, 1998 and 1997, respectively.
Note 5. Income Per Share
Basic income per share amounts are based on the weighted average number of
common shares outstanding during the period. Diluted income per share includes
additional common shares that would have been outstanding if potential common
shares with a dilutive effect had been issued. The following table reconciles
basic and diluted net income.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------------------ ------------------------------
1998 1997 1998 1997
------------ ------------- ------------ --------------
(Millions of dollars and (Millions of dollars and
shares except per share data) shares except per share data)
<S> <C> <C> <C> <C>
Net income $ 136.5 $ 101.9 $ 254.3 $ 184.9
============ ============= ============ ==============
Basic weighted average shares 262.9 253.1 262.8 252.9
Effect of common stock equivalents 3.6 2.9 3.5 2.8
------------ ------------- ------------ --------------
Diluted weighted average shares 266.5 256.0 266.3 255.7
============ ============= ============ ==============
Net income per share:
Basic $ 0.52 $ 0.40 $ 0.97 $ 0.73
============ ============= ============ ==============
Diluted $ 0.51 $ 0.40 $ 0.95 $ 0.72
============ ============= ============ ==============
</TABLE>
Options to purchase 1.1 million shares of common stock which were
outstanding during the six months ended June 30, 1998 were not included in the
computation of diluted net income per share because the option exercise price
was greater than the average market price of the common shares.
Note 6. Related Companies
The Company conducts some of its operations through various joint
ventures, which are in partnership, corporate and other business forms, which
are principally accounted for using the equity method. European Marine
Contractors, Limited (EMC), which is 50% owned by the Company and part of the
Energy Group, specializes in engineering, procurement and construction of marine
pipelines. Summarized operating results for 100% of the operations of EMC are as
follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------------------ -------------------------------
1998 1997 1998 1997
------------ -------------- ------------- --------------
(Millions of dollars) (Millions of dollars)
<S> <C> <C> <C> <C>
Revenues $ 131.2 $ 144.8 $ 198.6 $ 236.2
============ ============== ============= ==============
Operating income $ 17.9 $ 34.4 $ 30.7 $ 41.0
============ ============== ============= ==============
Net income $ 12.3 $ 23.4 $ 21.2 $ 28.0
============ ============== ============= ==============
</TABLE>
Included in the Company's revenues for the three months ended June 30,
1998 and 1997 are equity in income of related companies of $31.0 million and
$40.2 million, respectively. The amounts included in revenues for the six months
ended June 30, 1998 and 1997 are $61.2 million and $60.6 million, respectively.
In the second quarter of 1997, Halliburton Energy Services, which is part
of the Energy Group, acquired a 26% ownership interest in Petroleum Engineering
Services (PES) for approximately $33.6 million. The purchase price is included
in purchases of businesses in the condensed consolidated statements of cash
flows.
6
<PAGE>
Note 7. Long-Term Debt
During 1997 the Company issued notes under its medium-term note program as
follows:
<TABLE>
<CAPTION>
Amount Issue Date Due Rate Prices Yield
- --------------------------- ------------------- -------------------- -------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
$ 125 million 02/11/97 02/01/2027 6.75% 99.78% 6.78%
$ 50 million 05/12/97 05/12/2017 7.53% Par 7.53%
$ 50 million 07/08/97 07/08/1999 6.27% Par 6.27%
$ 75 million 08/05/97 08/05/2002 6.30% Par 6.30%
- --------------------------- ------------------- -------------------- -------------------- -------------------- --------------------
</TABLE>
During March 1997, the Company incurred $56.3 million of term loans in
connection with the acquisition of the Royal Dockyard in Plymouth, England (the
Dockyard Loans). The Dockyard Loans are denominated in Sterling and bear
interest at approximately LIBOR plus 0.75% payable in semi-annual installments
through March 2004. Pursuant to certain terms of the Dockyard Loans, the Company
was required to provide initially a compensating balance of $28.7 million which
is restricted as to use by the Company. The compensating balance amount
decreases in proportion to the outstanding debt related to the Dockyard Loans
and earns interest at a rate equal to that of the Dockyard Loans. The
compensating balance of $16.6 million at June 30, 1998 is included in other
assets in the condensed consolidated balance sheet.
Note 8. Commitments and Contingencies
The Company is involved as a potentially responsible party (PRP) in
remedial activities to clean up various "Superfund" sites under applicable
Federal law which imposes joint and several liability, if the harm is
indivisible, on certain persons without regard to fault, the legality of the
original disposal, or ownership of the site. Although it is very difficult to
quantify the potential impact of compliance with environmental protection laws,
management of the Company believes that any liability of the Company with
respect to all but one of such sites will not have a material adverse effect on
the results of operations of the Company. With respect to a site in Jasper
County, Missouri (Jasper County Superfund Site), sufficient information has not
been developed to permit management to make such a determination and management
believes the process of determining the nature and extent of remediation at this
site and the total costs thereof will be lengthy. Brown & Root, Inc. (Brown &
Root), a subsidiary of the Company, has been named as a PRP with respect to the
Jasper County Superfund Site by the Environmental Protection Agency (EPA). The
Jasper County Superfund Site includes areas of mining activity that occurred
from the 1800s through the mid 1950s in the southwestern portion of Missouri.
The site contains lead and zinc mine tailings produced from mining activity.
Brown & Root is one of nine participating PRPs which have agreed to perform a
Remedial Investigation/Feasibility Study (RI/FS), which, due to various delays,
is not expected to be completed until sometime in 1999. Although the entire
Jasper County Superfund Site comprises 237 square miles as listed on the
National Priorities List, in the RI/FS scope of work, the EPA has only
identified seven areas, or subsites, within this area that need to be studied
and then possibly remediated by the PRPs. Additionally, the Administrative Order
on Consent for the RI/FS only requires Brown & Root to perform RI/FS work at one
of the subsites within the site, the Neck/Alba subsite, which only comprises
3.95 square miles. Brown & Root's share of the cost of such a study is not
expected to be material. In addition to the superfund issues, the State of
Missouri has indicated that it may pursue natural resource damage claims against
the PRPs. At the present time Brown & Root cannot determine the extent of its
liability, if any, for remediation costs or natural resource damages on any
reasonably practicable basis.
The Company and its subsidiaries are parties to various other legal
proceedings. Although the ultimate dispositions of such proceedings are not
presently determinable, in the opinion of the Company any liability that may
ensue will not be material in relation to the consolidated financial position
and results of operations of the Company.
7
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Note 9. Acquisitions and Dispositions
During March 1997, the Devonport management consortium, Devonport
Management Limited (DML), which is 51% owned by the Company, completed the
acquisition of Devonport Royal Dockyard plc, which owns and operates the
Government of the United Kingdom's Royal Dockyard in Plymouth, England, for
approximately $64.9 million. Concurrent with the acquisition of the Royal
Dockyard, the Company's ownership interest in DML increased from about 30% to
51% and DML borrowed $56.3 million under term loans.
During April 1997, the Company completed its acquisition of the outstanding
common stock of OGC International plc (OGC) for approximately $118.3 million.
OGC is engaged in providing a variety of engineering, operations and maintenance
services, primarily to the North Sea oil and gas production industry.
During July 1997, the Company acquired all of the outstanding common stock
and convertible debentures of Kinhill Holdings Limited (Kinhill) for
approximately $34 million. Kinhill, headquartered in Australia, provides
engineering for mining and minerals processing, petroleum and chemicals, water
and wastewater, transportation and commercial and civil infrastructure. Kinhill
markets its services primarily in Australia, Indonesia, Thailand, Singapore,
India, and the Philippines.
In 1997, the Company recorded approximately $99.1 million excess of cost
over net assets acquired primarily related to the purchase acquisitions of OGC
and Kinhill.
On September 30, 1997, the Company completed its acquisition of NUMAR
Corporation (NUMAR) through the merger of a subsidiary of the Company with and
into NUMAR, the conversion of the outstanding NUMAR common stock into an
aggregate of approximately 8.2 million shares of common stock of the Company and
the assumption by the Company of the outstanding NUMAR stock options (for the
exercise of which the Company has reserved an aggregate of approximately 0.9
million shares of common stock of the Company). The merger qualified as a
tax-free exchange and was accounted for using the pooling of interests method of
accounting for business combinations. The Company has not restated its financial
statements to include NUMAR's historical operating results because they are not
material to the Company. NUMAR's assets and liabilities on September 30, 1997
were included in the Company's accounts of the same date, resulting in an
increase in net assets of $21.3 million. Headquartered in Malvern, Pennsylvania,
NUMAR designs, manufacturers and markets the Magnetic Resonance Imaging Logging
(MRIL(R)) tool which utilizes magnetic resonance imaging technology to evaluate
subsurface rock formations in newly drilled oil and gas wells.
In December 1997, the Company sold its environmental services business to
Tetra Tech, Inc. for approximately $32 million. The sale was prompted by the
Company's desire to divest non-core businesses and had no significant effect on
net income in 1997.
Note 10. Halliburton / Dresser Merger
On February 26, 1998 the Company and Dresser Industries, Inc. (Dresser)
announced that a definitive merger agreement was approved by the board of
directors of both companies and executed on February 25, 1998. Approximately 175
million newly issued shares of Company common stock will be issued to Dresser
shareholders at a one-for-one exchange ratio. The transaction will be accounted
for by the pooling of interests method of accounting for business combinations
and is expected to be tax-free to Dresser's shareholders. Dresser is a
diversified company with operations in three industry segments: engineering
services; petroleum products and services; and energy equipment. The transaction
is subject to regulatory approvals in the United States and several other
countries and customary closing conditions. On April 20, 1998, the Company and
Dresser announced that the companies had received requests for additional
information concerning the proposed merger from the Antitrust Division of the
U.S. Department of Justice. The requests were not unexpected and both the
Company and Dresser are responding to the Department of Justice. The Company has
offered the Department of Justice its written commitment to divest its 36%
interest in M-I L.L.C. On June 25, 1998, shareholders of the Company voted their
approval for (1) an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized common shares from 400
million to 600 million and (2) the issuance of Company common stock pursuant to
the merger agreement between the Company and Dresser. Also, at a separate
meeting on June 25, 1998, shareholders of Dresser approved the merger agreement
between Halliburton and Dresser. On July 6, 1998, the Company and Dresser
received the European Commission's decision that the Commission will not oppose
the merger of the two companies. On July 9, 1998, the Company announced receipt
of an Advance Ruling Certificate from the Canadian Bureau of Competition Policy
clearing the merger of the two companies. The companies continue to expect to
complete the merger during the fall of 1998.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
BUSINESS ENVIRONMENT
The Company operates in over 100 countries around the world to provide a
variety of energy services and engineering and construction services to energy,
industrial and governmental customers. The industries served by the Company are
highly competitive with many substantial competitors. Operations in some
countries may be affected by unsettled political conditions, expropriation or
other governmental actions, exchange controls and currency devaluations. The
Company believes the geographic diversification of its business activities
reduces the risk that loss of its operations in any one country would be
material to its consolidated results of operations.
About 79% of the Company's revenues in 1997 were derived from the sale of
services and products, including construction activities, to the energy
industry. The decline in oil prices in the first half of 1998 has translated
into a decrease in the worldwide average rotary rig count and some hesitation on
the part of customers of the Company to commit to longer-term projects. In
response to potentially weakening markets in some areas of the world, the
Company is implementing plans to reduce the number of employees in those
geographic areas where activity levels are lower than expected, to scale back
discretionary spending on capital expenditures and to curtail discretionary
travel and other expenses.
RESULTS OF OPERATIONS
Second Quarter of 1998 Compared with the Second Quarter of 1997
Revenues
Consolidated revenues increased 11% to $2,475.6 million in the second
quarter of 1998 compared with $2,231.1 million in the same quarter of the prior
year. Approximately 61% of the Company's consolidated revenues were derived from
international activities in the second quarter of 1998 compared to 59% in the
second quarter of 1997. Consolidated international revenues increased 16% in the
second quarter of 1998 over the second quarter of 1997. Consolidated United
States revenues increased by 3% in the second quarter of 1998 compared to the
second quarter of 1997.
Energy Group revenues increased by 17% for the second quarter of 1998 over
the same quarter of the prior year notwithstanding an 8% decrease in drilling
activity as measured by the worldwide rotary rig count. International revenues
increased by 22% and United States revenues increased 6% in the second quarter
of 1998 while the United States rig count decreased 7% for the second quarter of
1998 as compared to the same quarter of the prior year. Most of the increased
revenues were from pressure pumping activities, notably in Europe/Africa, and
upstream oil and gas engineering services.
Engineering and Construction Group revenues were $768.6 million in the
second quarter of 1998 compared to $774.7 million in the same quarter of the
prior year. The slight decrease in revenues was due to the sale of the
environmental services business in December 1997, lower activity in the pulp and
paper industry, and lower activity levels in the Group's contract to provide
technical and logistical support for military peacekeeping operations in Bosnia.
These decreases were almost entirely offset by increased revenues recognized for
engineering and construction services for refining and civil contracts in the
United States and Latin America and increased revenues in Asia/Pacific from
Kinhill, which was acquired in the third quarter of 1997.
Operating Income
Consolidated operating income increased 31% to $238.4 million in the
second quarter of 1998 compared with $182.0 million in the same quarter of the
prior year. Approximately 54% of the Company's consolidated operating income was
derived from international activities in both the second quarter of 1998 and
1997.
Energy Group operating income increased 24% to $198.3 million in the
second quarter of 1998 compared with $160.1 million in the same quarter of the
prior year. The operating margin for the second quarter of 1998 was 11.6%
compared to the prior year second quarter operating margin of 11.0%. Improved
operating income was largely due to pressure pumping in the North America,
Europe/Africa and Asia/Pacific regions, improved margins on sales of completion
products in the Europe/Africa, Latin America and Asia/Pacific regions, and
upstream oil and gas engineering services in Europe and North America.
Engineering and Construction Group operating income increased 66% to $49.9
million in the second quarter of 1998 compared to $30.0 million in the second
quarter of the prior year. Operating margins were 6.5% in the second quarter of
9
<PAGE>
1998 compared to 3.9% in the prior year second quarter. Second quarter operating
income benefited from a claim on a Middle Eastern construction project.
Excluding this settlement, operating margins for the second quarter of 1998 for
the Group were about 4.5%. Included in second quarter operating income are
improved results from construction and engineering services for the chemicals
and refining lines of business.
Nonoperating Items
Interest expense increased to $12.7 million in the second quarter of 1998
compared to $9.7 million in the same quarter of the prior year due primarily to
the Company's issuance of debt under the Company's medium-term note program in
1997 for working capital, capital expenditures and acquisitions.
Interest income in the second quarter of 1998 increased to $3.5 million
from $2.1 million in the second quarter of 1997 primarily due to higher levels
of invested cash.
Foreign currency losses were $0.1 million for the second quarter of 1998
as compared to $0.4 million for the same quarter in 1997.
The effective income tax rate decreased to 38.6% for the second quarter of
1998 from 39.4% for the second quarter of 1997 and is expected to remain between
38% and 39% for the year of 1998.
Minority interest in net income of subsidiaries for the second quarter of
1998 increased to $3.9 million compared to $3.5 million for the second quarter
of 1997.
Net Income
Net income in the second quarter of 1998 increased 34% to $136.5 million,
or $0.51 per diluted share, compared with $101.9 million, or $0.40 per diluted
share, in the same quarter of the prior year.
First Six Months of 1998 Compared with the First Six Months of 1997
Revenues
Consolidated revenues increased 17% to $4,830.9 million in the first six
months of 1998 compared with $4,128.6 million in the same period of the prior
year. Approximately 61% of the Company's consolidated revenues were derived from
international activities in the first six months of 1998 compared to 57% in the
same period of 1997. Consolidated international revenues increased 25% in the
first six months of 1998 over the same period of 1997. Consolidated United
States revenues increased by 6% in the first six months of 1998 compared to the
same period of 1997.
Energy Group revenues increased 28% for the first six months of 1998 over
the same period of the prior year compared with a 1% increase in drilling
activity as measured by the worldwide rotary rig count. International revenues
increased by 36% and United States revenues increased 13% in the first six
months of 1998 while the international rig count decreased 1% and the United
States rig count increased 3% as compared to the same period of the prior year.
A large part of the increase in revenues were from upstream oil and gas
engineering services.
Engineering and Construction Group revenues decreased 1% to $1,534.7
million in the first six months of 1998 compared with $1,551.9 million in the
same six month period of the prior year. Lower revenues were due to the sale of
the environmental services business in December 1997, lower activity in the pulp
and paper industry and lower activity levels in the Group's contract to provide
technical and logistical support for military peacekeeping operations in Bosnia.
These decreases were partially offset by improved revenues recognized for
engineering and construction services for refining and civil contracts in the
United States and Latin America and increased revenues in Asia/Pacific from
Kinhill, which was acquired in the third quarter of 1997.
Operating Income
Consolidated operating income increased 38% to $442.4 million in the first
six months of 1998 compared with $320.7 million in the same period of the prior
year. Approximately 54% of the Company's consolidated operating income was
derived from international activities in the first six months of 1998 compared
to 58% in the same period of 1997.
Energy Group operating income increased 38% to $383.3 million in the first
six months of 1998 compared with $277.3 million in the same period of the prior
year. The operating margin for the first six months of 1998 was 11.6% compared
to the prior year operating margin for the same period of 10.8%. The improvement
in operating income was due largely to pressure pumping in the North America,
Europe/Africa and Asia/Pacific regions, improved margins on sales of completion
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products in the North America and Latin America regions, and upstream oil and
gas engineering services in Europe and North America.
Engineering and Construction Group operating income for the first six
months of 1998 increased 32% to $78.7 million compared to 1997 operating income
of $59.4 million for the same period. Operating margins improved to 5.1% for the
first six months of 1998 from 3.8% for the same period in 1997. Operating income
includes settlement of a claim on a Middle Eastern construction project.
Excluding this settlement, operating margins for the first six months of 1998
for the Group were about 4.2%. Operating income for the first six months of 1998
include improved results from construction and engineering services for the
chemicals and refining lines of business.
Nonoperating Items
Interest expense increased to $24.0 million in the first six months of
1998 compared to $15.8 million in the same period of the prior year due
primarily to the Company's issuance of debt under the Company's medium-term note
program in 1997 for working capital, capital expenditures and acquisitions.
Interest income in the first six months of 1998 increased to $6.9 million
from $6.5 million in the same period of 1997 primarily due to higher levels of
invested cash.
Foreign currency gains were $2.3 million for the first six months of 1998
as compared to $0.6 million for the same period in 1997.
The effective income tax rate was 38.7% for the first six months of 1998
and 38.8% for the same period of 1997. The effective income tax rate is expected
to remain between 38% and 39% for the year of 1998.
Minority interest in net income of subsidiaries was $7.5 million for the
first six months of 1998 compared to $6.4 million for the same period in the
prior year.
Net Income
Net income in the first six months of 1998 increased 38% to $254.3
million, or $0.95 per diluted share, compared with $184.9 million, or $0.72 per
diluted share, in the same period of the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company ended the second quarter of 1998 with cash and equivalents of
$145.4 million, a decrease of $75.9 million from the end of 1997.
Operating Activities
Cash flows used for operating activities were $22.2 million in the first
six months of 1998, as compared to cash flows used for operating activities of
$23.8 million in the first six months of 1997. The major operating activity use
of cash in 1998 was to fund working capital requirements related to increased
revenues from the Energy Group and for Engineering and Construction Group
projects. Operating cash was also used in funding cash needs of unconsolidated
subsidiaries.
Investing Activities
Capital expenditures were $326.1 million for the first six months of 1998,
an increase of 26% over the same period of the prior year. The increase in
capital spending primarily reflects investments in equipment and infrastructure
for the Energy Group which includes strategic investments in oil and gas
developments. The Company also continued its planned investments in its
enterprise-wide information system.
During March 1997, DML, which is 51% owned by the Company, completed the
acquisition of Devonport Royal Dockyard plc, which owns and operates the
Government of the United Kingdom's Royal Dockyard in Plymouth, England, for
approximately $64.9 million. Concurrent with the acquisition of the Royal
Dockyard, the Company's ownership interest in DML increased from about 30% to
51% and DML borrowed $56.3 million under term loans (the Dockyard Loans) bearing
interest at approximately LIBOR plus 0.75% payable in semi-annual installments
through March 2004. Pursuant to certain terms of the Dockyard Loans, the Company
was required to provide initially a compensating balance of $28.7 million which
is restricted as to use by the Company. The compensating balance amount
decreases in proportion to the outstanding debt related to the Dockyard Loans
and earns interest at a rate equal to that of the Dockyard Loans.
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During April 1997, the Company completed its acquisition of the
outstanding common stock of OGC International plc (OGC) for approximately $118.3
million. OGC is engaged in providing a variety of engineering, operations and
maintenance services, primarily to the North Sea oil and gas production
industry.
Also in April 1997, the Company purchased a 26% ownership interest in
Petroleum Engineering Services (PES) for approximately $33.6 million. PES
provides specialist well completions and interventions, completion services and
completion solutions.
Financing Activities
Cash flows from financing activities were $246.5 million in the first six
months of 1998 compared to cash flows of $254.3 million in the first six months
of 1997. The Company borrowed $316.4 million in short-term funds consisting of
commercial paper and bank loans in the first six months of 1998. Proceeds from
exercises of stock options provided cash flows of $15.1 million in the first six
months of 1998 compared to $38.8 million in the same period of the prior year.
In the first six months of 1997, the Company borrowed $100.8 million in
short-term funds net of repayments consisting of commercial paper and bank
loans. Also in the first six months of 1997, the Company issued $125.0 million
principal amount of 6.75% notes and $50.0 million principal amount of 7.53%
notes under the Company's medium-term note program.
The Company believes it has sufficient borrowing capacity to fund its
working capital requirements and investing activities. The Company's debt was
23% of total capitalization at June 30, 1998 compared to 18% at December 31,
1997. At June 30, 1998, the Company had committed short-term lines of credit
totaling $350.0 million available and unused, and other short-term lines of
credit totaling $315.0 million with several U.S. banks. Short-term borrowings of
$182.0 million were outstanding under these facilities at June 30, 1998.
FINANCIAL INSTRUMENT MARKET RISK
The Company is currently exposed to market risk from changes in foreign
currency exchange rates, and to a lesser extent, to changes in interest rates.
To mitigate market risk, the Company selectively hedges its foreign currency
exposure through the use of currency derivative instruments. The objective of
such hedging is to protect the Company's dollar cash flows from fluctuations in
currency rates of foreign denominated sales or purchases of goods or services.
Inherent in the use of derivative instruments are certain types of market risk:
volatility of the currency rates, tenor (time horizon) of the derivative
instruments, market cycles and the type of derivative instruments used. The
Company does not use derivative instruments for trading or speculative purposes.
There have been no material changes at June 30, 1998 to the amounts reported at
December 31, 1997 to the Company's calculated value at risk from foreign
exchange derivative instruments. The Company's interest rate exposures at June
30, 1998 were not materially changed from December 31, 1997.
HALLIBURTON / DRESSER MERGER
On February 26, 1998 the Company and Dresser Industries, Inc. (Dresser)
announced that a definitive merger agreement was approved by the board of
directors of both companies and executed on February 25, 1998. Approximately 175
million newly issued shares of Company common stock will be issued to Dresser
shareholders at a one-for-one exchange ratio. The transaction will be accounted
for by the pooling of interests method of accounting for business combinations
and is expected to be tax-free to Dresser's shareholders. Dresser is a
diversified company with operations in three industry segments: engineering
services; petroleum products and services; and energy equipment. The transaction
is subject to regulatory approvals in the United States and several other
countries and customary closing conditions. On April 20, 1998, the Company and
Dresser announced that the companies had received requests for additional
information concerning the proposed merger from the Antitrust Division of the
U.S. Department of Justice. The requests were not unexpected and both the
Company and Dresser are responding to the Department of Justice. The Company has
offered the Department of Justice its written commitment to divest its 36%
interest in M-I L.L.C. On June 25, 1998, shareholders of the Company voted their
approval for (1) an amendment to the Company's Restated Certificate of
Incorporation to increase the number of authorized common shares from 400
million to 600 million and (2) the issuance of Company common stock pursuant to
the merger agreement between the Company and Dresser. Also, at a separate
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meeting on June 25, 1998, shareholders of Dresser approved the merger agreement
between Halliburton and Dresser. On July 6, 1998, the Company and Dresser
received the European Commission's decision that the Commission will not oppose
the merger of the two companies. On July 9, 1998, the Company announced receipt
of an Advance Ruling Certificate from the Canadian Bureau of Competition Policy
clearing the merger of the two companies. The companies continue to expect to
complete the merger during the fall of 1998.
ENVIRONMENTAL MATTERS
The Company is involved as a potentially responsible party in remedial
activities to clean up various "Superfund" sites under applicable federal law
which imposes joint and several liability, if the harm is indivisible, on
certain persons without regard to fault, the legality of the original disposal,
or ownership of the site. Although it is very difficult to quantify the
potential impact of compliance with environmental protection laws, management of
the Company believes that any liability of the Company with respect to all but
one of such sites will not have a material adverse effect on the results of
operations of the Company. See Note 8 to the condensed consolidated financial
statements for additional information on the one site.
YEAR 2000 ISSUE
The Year 2000 (Y2K) issue is the risk that systems, products and
equipment utilizing date-sensitive software or computer chips with two-digit
date fields will fail to properly recognize the Year 2000. Such failures by the
Company's software and hardware or that of government entities, service
providers, suppliers and customers could result in interruptions of the
Company's business which could have a material adverse impact on the Company.
In response to the Y2K issue, the Company has implemented an
enterprise-wide Year 2000 Program designed to identify, assess and address
significant Y2K issues in the Company's key business operations, including
products and services, suppliers, business and engineering applications,
information technology systems, facilities and infrastructure and joint venture
projects.
The Year 2000 Program is a comprehensive, integrated, multi-phase process
covering information technology systems and hardware as well as equipment and
products with embedded computer chips technology. The primary phases of the
program are: (1) inventorying existing equipment and systems; (2) analyzing
equipment and systems to identify those which are not Y2K ready and to
prioritize critical items; (3) remediating, repairing or replacing non-Y2K ready
equipment and systems; and (4) testing to verify Y2K readiness has been
achieved. The Company anticipates having the Company's products and
mission-critical systems and equipment Y2K ready during the first half of 1999
with the balance of the year reserved for testing and implementation of new and
modified programs as required.
At the end of the second quarter of 1998, the inventory of equipment and
systems was substantially complete. The analysis phase is underway.
Remediation/installation for the majority of these systems will be performed
internally. The Company is utilizing outside contractors for remediation of
major legacy accounting and administrative systems. Some information technology
systems and Company manufactured products and developed software have been
remediated and have entered the testing phase.
The Company is in contact with its major suppliers and service providers
to establish a mutual understanding of Y2K issues and to develop solutions with
those suppliers. These suppliers are being surveyed as to their ability to
provide products that are Y2K ready and to provide uninterrupted services.
Critical suppliers are being further evaluated to review their Y2K programs. No
suppliers have been identified who expect interruption of services or supplies
to the Company.
Independent of, but concurrent with, the Company's Y2K review, the
Company is installing an enterprise-wide business information system. This
information system is scheduled to replace approximately one-half of the
Company's key finance, administrative and marketing software systems by the end
of 1999 and is Y2K ready. In addition, the Company is in the process of
replacing its desktop computing equipment and software and updating its
communications infrastructure. The Company has determined that although some of
the replaced desktop computing equipment and software may not be strictly Y2K
compliant, such replacements are nevertheless suitable for the usage intended by
the Company.
Based on the Company's review to date, it does not expect the cost of
software replacement or modification not currently included in the Company's
enterprise-wide information system to be material to its financial position or
results of operations.
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The Company entered into a merger agreement with Dresser on February 25,
1998. Within the guidelines of the U.S. Department of Justice regulations on
pre-merger activities, the Company is evaluating Dresser's Y2K program in order
to bring the two companies into a common Y2K program after the merger.
ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This standard defines reporting
requirements for operating segments and related information about products and
services, geographic areas and reliance on major customers. The Company is
evaluating the impact of this statement on its current reporting and expects to
adopt the new standard for its year ending December 31, 1998, with interim
reporting beginning in 1999.
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits." This standard revises
existing requirements for employers' disclosures for pensions and other
postretirement benefit plans. The standard does not change measurement or
recognition standards for these plans. The Company plans to present the revised
disclosure requirements in its 1998 Annual Report.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position No. 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" (SOP 98-1). SOP 98-1 provides
guidelines for companies to capitalize or expense costs incurred to develop or
obtain internal use software. The guidelines set forth in SOP 98-1 do not differ
significantly from the Company's current accounting policy for internal use
software and therefore the Company does not expect a material impact on its
results of operations or financial position from the adoption of SOP 98-1. The
Company plans to adopt SOP 98-1 effective January 1, 1999.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" (SOP 98-5). SOP 98-5 requires costs of start-up activities and
organization costs to be expensed as incurred. The Company is evaluating when it
will adopt SOP 98-5 and is currently analyzing the impact on its results of
operations from the adoption of SOP 98-5.
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and for Hedging Activities" (SFAS 133). This standard requires
entities to recognize all derivatives on the statement of financial position as
assets or liabilities and to measure the instruments at fair value. Accounting
for gains and losses from changes in those fair values are specified in the
standard depending on the intended use of the derivative and other criteria.
SFAS 133 is effective for the Company beginning January 1, 2000. The Company is
currently evaluating SFAS 133 to identify implementation and compliance methods
and has not yet determined the effect, if any, on its results of operations or
financial position.
FORWARD-LOOKING INFORMATION
In accordance with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, the Company cautions that the statements in this
quarterly report and elsewhere, which are forward-looking and which provide
other than historical information, involve risks and uncertainties that may
impact the Company's actual results of operations. While such forward-looking
information reflects the Company's best judgment based on current information,
it involves a number of risks and uncertainties and there can be no assurance
that other factors will not affect the accuracy of such forward-looking
information. While it is not possible to identify all factors, the Company
continues to face many risks and uncertainties that could cause actual results
to differ from those forward-looking statements. Such factors include: unsettled
political conditions, war, civil unrest, currency controls and governmental
actions in over 100 countries of operation; trade restrictions and economic
embargoes imposed by the United States and other countries; environmental laws,
including those that require emission performance standards for new and existing
facilities; the magnitude of governmental spending for military and logistical
support of the type provided by the Company; operations in countries with
significant amounts of political risk, including, without limitation, Algeria
and Nigeria; technological and structural changes in the industries served by
the Company; computer software and hardware and other equipment utilizing
computer technology used by governmental entities, service providers, vendors,
customers and the Company which may be impacted by the Y2K issue; completion of
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the announced merger with Dresser; integration of acquired businesses into the
Company; changes in the price of oil and natural gas; changes in the price of
commodity chemicals used by the Company; changes in capital spending by
customers in the hydrocarbon industry for exploration, development, production,
processing, refining and pipeline delivery networks; increased competition in
the hiring and retention of employees; changes in capital spending by customers
in the wood pulp and paper industries for plants and equipment; risks from
entering into fixed fee engineering, procurement and construction projects where
failure to meet schedule, cost estimates or performance targets could result in
non-reimbursable costs which cause the project not to meet expected profit
margins; and changes in capital spending by governments for infrastructure. In
addition, future trends for pricing, margins, revenues and profitability remain
difficult to predict in the industries served by the Company.
15
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PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Special Meeting held in lieu of the Annual Meeting of Stockholders of the
Company on June 25, 1998, stockholders of the Company were asked to consider and
act upon (i) a proposal to amend the Company's Restated Certificate of
Incorporation (the Charter) to increase the number of authorized shares of
common stock from 400 million to 600 million, (ii) the proposal to issue
approximately 175 million shares of Company common stock pursuant to a merger
agreement between the Company and Dresser, (iii) the election of Directors for
the ensuing year, and (iv) a proposal to ratify the appointment of Arthur
Andersen LLP as independent accountants to examine the financial statements and
books and records of the Company for 1998. Set forth below with respect to each
such matter, where applicable, is the number of votes cast for, against or
withheld, as well as the number of abstentions and broker non-votes.
i. Proposal to amend the Charter:
Number of Votes For 189,647,051
Number of Votes Against 3,181,243
Number of Votes Abstaining 326,657
Number of Broker Non-Votes 27,228,652
ii. Proposal to issue approximately 175 million shares of Company common
stock pursuant to the merger agreement with Dresser:
Number of Votes For 191,980,121
Number of Votes Against 461,627
Number of Votes Abstaining 713,203
Number of Broker Non-Votes 27,228,652
iii. Election of Directors:
Name of Nominee Votes For Votes Withheld
Anne L. Armstrong 219,675,972 707,631
Richard B. Cheney 219,736,074 647,529
Lord Clitheroe 219,710,834 672,769
Robert L. Crandall 219,670,530 713,073
Charles J. DiBona 219,749,004 634,599
William R. Howell 219,717,060 666,543
Dale P. Jones 219,763,895 619,708
Delano E. Lewis 219,775,401 608,202
C. J. Silas 219,770,552 613,051
Richard J. Stegemeier 219,709,495 674,108
iv. Proposal to ratify the appointment of Arthur Andersen LLP as
independent accountants to examine the financial statements and books
and records of the Company for 1998:
Number of Votes For 219,832,966
Number of Votes Against 299,950
Number of Votes Abstaining 250,687
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2(a) Agreement and Plan of Merger dated as of February 25, 1998 by and
among Halliburton Company, Halliburton N.C., Inc., and Dresser
Industries, Inc. (incorporated by reference to Exhibit C to
Halliburton Company's Schedule 13D filed on March 9, 1998).
2(b) Stock Option Agreement dated as of February 25, 1998 by and between
Halliburton Company and Dresser Industries, Inc. (incorporated by
reference to Exhibit B to Halliburton Company's Schedule 13D filed
on March 9, 1998).
* 3(a) Restated Certificate of Incorporation of Halliburton Company
filed with the Secretary of State of Delaware on July 23, 1998.
3(b) By-laws of Halliburton Company, as amended (incorporated by
reference to Halliburton Company's Registration Statement on Form
S-3 File No. 333-32731 filed with the Securities and Exchange
Commission on August 1, 1997).
* 10(a) Halliburton Elective Deferral Plan, as amended and restated
effective January 1, 1998.
* 10(b) Halliburton Company Senior Executives' Deferred Compensation
Plan, as amended and restated effective January 1, 1998.
* 27 Financial data schedule for the six months ended June 30, 1998
(included only in the copy of this report filed electronically with
the Commission).
* filed with this Form 10-Q
(b) Reports on Form 8-K
During the second quarter of 1998:
A Current Report on Form 8-K dated April 20, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated April 20, 1998
disclosing an information request from the U.S. Department of Justice
concerning the proposed merger between the Company and Dresser.
A Current Report on Form 8-K dated April 22, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated April 22, 1998
announcing the Company's first quarter earnings.
A Current Report on Form 8-K dated May 8, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated May 8, 1998
announcing the date of the special meeting of shareholders.
A Current Report on Form 8-K dated May 19, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated May 19, 1998
announcing declaration of the second quarter dividend.
A Current Report on Form 8-K dated June 1, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated June 1, 1998
announcing the Company had renotified its proposed merger with Dresser
to the European Commission.
A Current Report on Form 8-K dated June 12, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated June 12, 1998
announcing the initial one-month review period under the European
Community's merger regulations will expire on July 6, 1998.
A Current Report on Form 8-K dated June 25, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated June 25, 1998
announcing the results of the Company's special shareholders' meeting.
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During the third quarter of 1998 to the date hereof:
A Current Report on Form 8-K dated July 6, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated July 6, 1998
announcing the proposed merger of the Company and Dresser was cleared by
the European Commission.
A Current Report on Form 8-K dated July 7, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated July 7, 1998
announcing the Company's Halliburton Energy Services business unit was
awarded a contract to provide zonal isolation and pumping services to
Phillips Petroleum Norway.
A Current Report on Form 8-K dated July 9, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated July 9, 1998
announcing receipt of an Advance Ruling Certificate from the Canadian
Bureau of Competition Policy clearing the merger of the Company and
Dresser.
A Current Report on Form 8-K dated July 16, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated July 16, 1998
announcing declaration of the third quarter dividend.
A Current Report on Form 8-K dated July 22, 1998, was filed reporting on
Item 5. Other Events, regarding a press release dated July 22, 1998
announcing 1998 second quarter earnings.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HALLIBURTON COMPANY
Date August 12, 1998 By /s/ Gary V. Morris
-------------------------
Gary V. Morris
Executive Vice President and
Chief Financial Officer
Date August 12, 1998 By /s/ R. Charles Muchmore, Jr.
------------------------------
R. Charles Muchmore, Jr.
Vice President and Controller
(Principal Accounting Officer)
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Index to exhibits filed with this quarterly report.
Exhibit
Number Description
- -------- --------------------
3(a) Restated Certificate of Incorporation of Halliburton Company
filed with the Secretary of State of Delaware on July 23, 1998.
10(a) Halliburton Elective Deferral Plan, as amended and restated
effective January 1, 1998.
10(b) Halliburton Company Senior Executives' Deferred Compensation
Plan, as amended and restated effective January 1, 1998.
27 Financial data schedule for the six months ended June 30, 1998
(included only in the copy of this report filed electronically
with the Commission).
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RESTATED
CERTIFICATE OF INCORPORATION
OF
HALLIBURTON COMPANY
Halliburton Company (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware, hereby certifies as follows:
1. The name of the Corporation is HALLIBURTON COMPANY. HALLIBURTON
COMPANY was originally incorporated under the name HALLIBURTON HOLD CO., and the
original Certificate of Incorporation of the Corporation was filed with the
Secretary of State of the State of Delaware on November 7, 1996.
2. Pursuant to Section 245 of the General Corporation Law of the State
of Delaware, the Board of Directors of the Corporation has duly adopted this
Restated Certificate of Incorporation which only restates and integrates and
does not further amend the provisions of the Restated Certificate of
Incorporation as theretofore amended or supplemented of the Corporation and
there is no discrepancy between those provisions and the provisions of this
Restated Certificate of Incorporation.
3. The text of the Restated Certificate of Incorporation is as follows:
FIRST: The name of this Corporation is HALLIBURTON COMPANY.
SECOND: The location of its principal office in the State of Delaware
is 1209 Orange Street in the City of Wilmington, County of New Castle. The name
of the agent therein and in charge of thereof is THE CORPORATION TRUST COMPANY,
1209 Orange Street, Wilmington, Delaware.
THIRD: The nature of the business, or objects, or purposes to be
transacted, promoted or carried on are:
(a) To acquire, own and hold United States and Foreign Letters
patent; and Licenses thereunder, relating to the cementing and finishing
of oil wells, gas wells and water wells, including processes and machines for
mixing cement and other substances in an efficient manner and forcing same into
such wells; and measuring devices used in the process of cementing wells;
and under such patents and licenses and to conduct the business of cementing and
finishing oil wells, gas and water wells, and to purchase, own and use all
necessary and convenient tools, implements and appliances, including trucks,
for the conduct of such business; also such real and personal property as may
be needful in its operations. To transact any of its business in any part of
the world.
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(b) To manufacture, sell, lease, use or service any and all kinds of
supplies, tools, appliances, accessories, specialties, machinery and equipment
relating to or useful in connection with the cementing, testing, drilling,
completing, cleaning, repairing or operating oil wells, gas wells and water
wells.
(c) To acquire, own and operate such machinery, apparatus, appliances
and equipment as may be necessary, proper or incidental to the cementing,
testing, completing, repairing, cleaning and operating of oil wells, gas wells
and water wells, or for any of the purposes for which this Corporation is
organized.
(d) To apply for, purchase or in any manner to acquire, hold, use,
sell, assign, lease, grant licenses in respect of, mortgage, or otherwise
dispose of letters patent of the United States or any foreign country, patent
rights, licenses and privileges, inventions, improvements, and processes,
copyrights, trademarks, and trade names relating to or useful in connection with
any business of this Corporation, and to work, operate or develop the same, and
to carry on any business, manufacturing or otherwise, which may directly or
indirectly effectuate these objects or any of them.
(e) In general, upon approval of the Board of Directors of the
Corporation, to carry on any other business, including selling, leasing,
manufacturing and servicing, even though unrelated to the objects and purposes
enumerated in paragraphs (a), (b), (c) and (d) hereof, and to have and exercise
all the powers conferred by the laws of Delaware upon corporations, and to have
one or more offices out of the State of Delaware, and to hold, purchase,
mortgage and convey real and personal property out of the State of Delaware, and
to do any or all of the things hereinbefore set forth to the same extent as
natural persons might or could do.
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(f) The objects and purposes specified in the foregoing clauses shall,
except where otherwise expressed, be in no wise limited or restricted by
reference to, or inference from, the terms of any other clause in this
Certificate of Incorporation, but the objects and purposes specified in each of
the foregoing clauses of this article shall be regarded as independent objects
and purposes.
FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue shall be six hundred five million (605,000,000), consisting
of six hundred million (600,000,000) shares of Common Stock of the par value of
Two & 50/100 Dollars ($2.50) per share and five million (5,000,000) shares of
Preferred Stock without par value. The relative rights, preferences and
limitations of the shares of each class are as follows:
(A) PREFERRED STOCK
(1) Shares of the Preferred Stock may be issued in one or more series
at such time or times and for such consideration or considerations as the Board
of Directors may determine and authority is vested in the Board of Directors, by
resolution or resolutions from time to time to establish and designate series,
to issue shares of any such series and to fix the relative, participating,
optional, or other rights, powers, privileges, preferences, and the
qualifications, limitations or restrictions thereof, including, but not limited
to, the following:
(a) The distinctive designation and number of shares
comprising any series, which number may (except where otherwise
provided by the Board of Directors in creating such series) be
increased or decreased (but not below the number of shares thereof then
outstanding) from time to time by like action of the Board of
Directors;
(b) The dividend rate or rates on the shares of any series and
the preference or preferences, if any, over any other series (or of any
other series over such series) with respect to dividends, the terms and
conditions upon which such dividends shall be payable, and whether and
upon what conditions dividends on the shares of any series shall be
cumulative, and on such shares of any series having cumulative dividend
rights, the date or dates from which dividends on the shares of such
series shall be cumulative;
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(c) The terms, if any, upon which the shares of any series
shall be convertible into, or exchangeable for, shares of a different
series of Preferred Stock or for Common Stock including but not limited
to the price or prices or rate of exchange, and conditions of any
adjustments thereof, which price or rate may, but need not, vary
according to the time or circumstances of the conversion or exchange;
(d) Whether or not the shares of any series shall be subject
to purchase or redemption, the time or times when, and the price or
prices at which such shares shall be redeemable as well as the manner
for selecting shares to be redeemed, if less than all of a series is to
be redeemed at any given time, and other terms and conditions of such
purchase or redemption;
(e) The obligation, if any, of the Corporation to purchase or
redeem shares of any series pursuant to a sinking or other fund and the
price or prices which, the period or periods within which and the terms
and conditions upon which the shares of the series shall be redeemed in
whole or in part pursuant to such fund;
(f) The rights to which the holders of shares of any series
shall be entitled upon liquidation, dissolution of, or winding up of
the Corporation, whether the same be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation.
(g) The voting powers, full or limited, if any, to which the
shares of any series shall be entitled in addition to those required by
law, including without limitation the vote or votes per share and the
transaction of any business or of any specified item of business in
connection with which the shares of any series shall vote as a class;
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(h) Any other preferences, privileges and powers and relative,
participating, optional or other rights and qualifications, limitations
or restrictions thereof, of any series not inconsistent herewith or
with applicable law.
(2) The shares of each series of Preferred Stock shall entitle the
holders thereof to receive, when, as and if declared by the Board of Directors
out of funds legally available for dividends, cash dividends at the rate,
under the conditions and for the periods fixed by resolution or
resolutions of the Board of Directors pursuant to authority granted in
this Article for each series, and no more, and so long as any Preferred
Stock or any series thereof shall remain outstanding, no dividends shall be
declared or paid upon any shares of the Common Stock, other than dividends
payable in shares of any series or class subordinate to the Preferred Stock,
unless dividends on all outstanding Preferred Stock of all series fixed by the
Board of Directors in accordance with and pursuant to the authority
granted in this Article for each series shall be paid or set apart for payment.
(3) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the Preferred Stock
of each series then outstanding shall be entitled to receive payment out of the
net assets of the Corporation whether from capital or surplus or both of the
liquidation price fixed for such series by the Board of Directors by resolution,
if any is so fixed, at the time and under the circumstances applicable before
any payment shall be made to the holders of shares of any series of lesser rank
to such series or to holders of shares of Common Stock of the Corporation. If
the stated amounts payable in such event on the Preferred Stock of all series
are not paid in full, the shares of all series of equal rank shall share ratably
in any distribution of assets in accordance with the sums which would be payable
on such distribution if all sums payable were discharged in full. Neither the
merger or the consolidation of the Corporation nor the voluntary sale or
conveyance of the Corporation property as an entirety or any part thereof shall
be deemed to be a liquidation, dissolution or winding up of the Corporation for
the purposes of this paragraph.
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(4) Except as is otherwise required by law or as otherwise provided in
a resolution or resolutions by the Board of Directors in accordance with the
provisions of this Article, the holders of any series of Preferred Stock shall
not be entitled to vote at any meeting of the stockholders for the election of
Directors or for any other purpose or otherwise to participate in any action
taken by the Corporation or the stockholders thereof, or to receive notice of
any meeting of stockholders. If the holders of any series of Preferred Stock
should become entitled to vote at any meeting of the stockholders for the
election of Directors, no such holder shall have the right of cumulative voting.
(5) Each share of a series of Preferred Stock shall be equal in every
respect to every other share of the same series.
(6) Shares of Preferred Stock which have been purchased or redeemed,
whether through the operation of a sinking fund or otherwise, or which, if
convertible or exchangeable, have been converted into or exchanged for shares of
stock of any other class or series shall have the status of authorized and
unissued shares of Preferred Stock of the same series and may be reissued as a
part of the series of which they were originally a part or may be reclassified
and reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors or as part of any other
series of Preferred Stock, unless otherwise provided with respect to any
series in the resolution or resolutions adopted by the Board of Directors
providing for the issuance of any series of Preferred Stock.
(The Designation, Rights and Preferences of Series A Junior
Participating Preferred Stock, Without Par Value is set forth in
Exhibit A hereto.)
(B) COMMON STOCK
(1) Subject to the rights of the outstanding Preferred Stock with
respect to the payment of preferential dividends, if any, and after the
Corporation shall have complied with the requirements, if any, with respect to
setting aside sinking or analogous funds as to any series of Preferred Stock,
holders of the Common Stock shall be entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of any funds of the
Corporation legally available therefor.
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(2) Upon any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, and after the full amounts, if any, to which
the holders of outstanding Preferred Stock of each series are respectively
preferentially entitled have been distributed or set apart for distribution, all
the remaining assets of the Corporation available for distribution shall be
distributed pro rata to the holders of Common Stock.
(3) Except as may be otherwise required by law or provided by this
Certificate of Incorporation, each holder of Common Stock shall have one vote in
respect of each share of stock held by him on all matters voted upon by the
stockholders.
FIFTH: The name and mailing address of the Incorporator are as follows:
NAME MAILING ADDRESS
Robert M. Kennedy Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201-3391
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: The private property of the stockholders shall not be subject
to the payment of corporate debts to any extent whatever.
EIGHTH: Cumulative voting shall not be allowed. Each Stockholder shall
be entitled, at all elections of Directors of this Corporation, to as many votes
as shall equal the number of shares of stock held and owned by him and entitled
to vote at such meeting under this Certificate of Incorporation for as many
Directors as there are to be elected, unless such right to vote in such manner
is limited or denied by other provisions of this Certificate of Incorporation.
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Vacancies caused by the death or resignation of any Director and newly
created directorships resulting from any increase in the authorized number of
Directors may be filled by a vote of at least a majority of the Directors then
in office, though less than a quorum, and the Director so chosen shall hold
office until the next annual meeting of the Stockholders.
NINTH: The By-laws may be altered or repealed at any regular meeting of
the Stockholders, or at any special meeting of the Stockholders at which a
quorum is present or represented, provided notice of the proposed alteration or
repeal be contained in the notice of such special meeting, by the affirmative
vote of the majority of the Stockholders entitled to vote at such meeting and
present or represented thereat, or by the affirmative vote of the majority of
the Board of Directors at any regular meeting of the Board, or at any special
meeting of the Board, if notice of the proposed alteration or repeal be
contained in the notice of such special meeting; provided, however, that no
change of the time or place of the meeting for the election of Directors shall
be made within sixty (60) days next before the day on which such meeting is to
be held, and that in case of any change of time or place, notice thereof shall
be given to each Stockholder in person or by letter mailed to his last known
post office address at least twenty (20) days before the meeting is held.
Voting for Directors need not be by ballot except upon the demand, at
or before the election, of the holders of ten percent (10%) or more of the
shares in person or by proxy and entitled to vote at such election.
TENTH: The Corporation is hereby authorized to, and shall, indemnify
directors, officers and employees of the Corporation and such other parties as
are set forth below in accordance with the following provisions:
(a) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
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fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit, or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or agent
of the Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including attorneys' fees
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine upon application
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that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.
(c) To the extent that any such person referred to hereinabove has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b), or in the defense of any
claim, issue or matter therein, he shall be indemnified against expenses,
including attorneys' fees, actually and reasonably incurred by him in connection
therewith.
(d) Except in those instances where the provisions of subsection (c) of
this Article are applicable, or unless ordered by a court, any indemnification
under subsections (a) and (b) hereof shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of
such person referred to hereinabove is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (a) and (b)
of this Article. Such determination shall be made (1) by the Board of Directors
by a majority vote of a quorum consisting of directors who were not parties to
such action, suit or proceeding, or (2) if such a quorum is not obtainable, or,
even if obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the Stockholders.
(e) Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final disposition of
such action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of the director,
officer, employee or agent to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Corporation as
authorized in this Article.
(f) The indemnification provided by this Article shall not be deemed
exclusive of any other rights to which any person referred to hereinabove may be
entitled under any By-law, agreement, vote of the Stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
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action in another capacity while holding such office, and shall continue as to a
person who has ceased to act in any capacity hereinabove named in this Article
and shall inure to the benefit of the heirs, executors and administrators of
such a person.
(g) The indemnification provided by this Article shall not be deemed
exclusive of any other power to indemnify or right to indemnification which the
Corporation or any person referred to hereinabove may have or acquire under the
laws of the State of Delaware including without limitation the General
Corporation Law of Delaware or any amendment thereto or substitute therefor.
(h) The provisions of this Article shall be applicable to claims,
actions, suits or other proceedings referred to in subsections (a) and (b) of
this Article made or commenced after the adoption hereof, whether arising from
conduct or act or omission occurring before or after the adoption hereof.
ELEVENTH: Both Stockholders and Directors shall have power, if the
By-laws so provide, to hold their meeting either within or without the State of
Delaware and to keep the books of this Corporation (subject to the provisions of
the Statutes) outside of the State of Delaware at such places as may be from
time to time designated in the By-laws.
TWELFTH: In furtherance and not in limitation of the power conferred by
statute, the Board of Directors of this Corporation are expressly authorized to
fix the amount to be reserved as working capital, to authorize and cause to be
executed mortgages and liens upon the real and personal property belonging to
it.
THIRTEENTH: This Corporation reserves the right to amend, alter, change
or repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute and all rights conferred on
Stockholders herein are granted subject to this reservation.
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FOURTEENTH: No holder of any class of stock of this Corporation shall
have any preemptive or preferential right of subscription or purchase with
reference to the issuance or sale of any class of stock of the Corporation
whether now or hereafter authorized, or of any securities or obligations
convertible into or carrying or evidencing any right to purchase any class of
stock of the Corporation whether now or hereafter authorized.
FIFTEENTH: No director shall be personally liable to the Corporation or
any stockholder for monetary damages for breach of fiduciary duty by such
director as a director; except for any matter in respect of which such director
shall be liable under Section 174 of the Delaware General Corporation Law or any
amendment thereto or successor provision thereof or shall be liable by reason
that, in addition to any and all other requirements for such liability, such
director (i) shall have breached the duty of loyalty to the Corporation or its
stockholders, (ii) in acting or failing to act, shall not have acted in good
faith or shall have acted in a manner involving intentional misconduct or a
knowing violation of law or (iii) shall have derived an improper personal
benefit. Neither the amendment nor repeal of this Article FIFTEENTH shall
eliminate or reduce the effect of this Article FIFTEENTH in respect of any
matter occurring, or any cause of action, suit or claim that, but for this
Article FIFTEENTH, would accrue or arise, prior to such amendment or repeal. If
the Delaware General Corporation Law is amended after approval by the
stockholders of this Article FIFTEENTH to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the Delaware General Corporation Law, as so amended from
time to time.
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IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
executed on behalf of the Corporation by its Vice President and Secretary this
23rd day of July, 1998.
HALLIBURTON COMPANY
By: /s/ Susan S. Keith
------------------------------
Susan S. Keith
Vice President and Secretary
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Exhibit A
to Restated Certificate of Incorporation
--------------------------------
DESIGNATION,
RIGHTS AND PREFERENCES
OF
SERIES A JUNIOR PARTICIPATING PREFERRED
STOCK, WITHOUT PAR VALUE
of
HALLIBURTON COMPANY
At a meeting of the Board of Directors of Halliburton Company (the
"Company") the following resolution increasing the series of Preferred Stock
designated as Series A Junior Participating Preferred Stock from two (2) million
shares to three (3) million shares was duly adopted pursuant to the authority
granted to and vested in the Board of Directors of the Company in accordance
with the provisions of its Restated Certificate of Incorporation:
RESOLVED, that the series of 2,000,000 shares of Series A
Junior Participating Preferred Stock, without par value, of the Company
be, and hereby is, increased to 3,000,000 shares pursuant to the
authority granted to and vested in the Board of Directors of the
Company in accordance with the provisions of the Restated Certificate
of Incorporation of the Company and that the designation and amount
thereof and the relative rights, preferences and limitations thereof
(in addition to the provisions set forth in the Restated Certificate of
Incorporation of the Company which are applicable to the Preferred
Stock of all series) are as follows:
I. Designation and Amount. The shares of such series shall be
designated as the "Series A Junior Participating Preferred Stock" (the "Junior
Preferred Stock") and the number of shares constituting such series shall be
three (3) million. Such number of shares may be increased or decreased by
resolution of the Board of Directors; provided, that no decrease shall reduce
the number of shares of Junior Preferred Stock to a number less than that of the
shares then outstanding plus the number of shares issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Company.
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II. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior
to the shares of Junior Preferred Stock with respect to dividends, the
holders of shares of Junior Preferred Stock, in preference to the
holders of common stock, $2.50 par value, of the Company (the "Common
Stock") and of any other stock ranking junior (as to dividends) to
Junior Preferred Stock, shall be entitled to receive, when, as and if
declared by the Board of Directors out of funds legally available for
the purpose, cumulative quarterly dividends payable in cash or in kind,
as hereinafter provided, on the last day of March, June, September and
December in each year (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly
Dividend Payment Date after the first issuance of a share or fraction
of a share of Junior Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 (payable in
cash) or (b) subject to the provision for adjustment hereinafter set
forth, 100 times the aggregate per share amount (payable in cash) of
all cash dividends, and 100 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions,
other than a dividend payable in shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance
of any share or fraction of a share of Junior Preferred Stock. If the
Company shall at any time declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or
combination of the outstanding shares of Common Stock (by
reclassification or otherwise), into a greater or lesser number of
shares of Common Stock, then in each such case the amount to which
holders of shares of Junior Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that was outstanding immediately prior to such event.
(B) The Company shall declare a dividend or distribution on
the Junior Preferred Stock as provided in paragraph (A) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock);
provided that, if no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend
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Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1.00 per share on the Junior Preferred Stock shall
nevertheless accrue and be cumulative on the outstanding shares of
Junior Preferred Stock as provided in paragraph (C) of this Section.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Junior Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares
of Junior Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a
Quarterly Dividend Payment Date or is a date after the record date for
the determination of holders of shares of Junior Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Junior Preferred Stock in an amount less than the
total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share by share basis among all
such shares at the time outstanding. The Board of Directors may fix a
record date for the determination of holders of shares of Junior
Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than
60 days prior to the date fixed for the payment thereof.
III. Voting Rights. The holders of shares of Junior Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Junior Preferred Stock shall entitle the holder
thereof to 100 votes on all matters submitted to a vote of the
shareholders of the Company. If the Company shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock,
or effect a subdivision or combination of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the
number of votes per share to which holders of shares of Junior
Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of
which is the number of shares of Common Stock outstanding immediately
after such event and the denominator of which is the number of shares
of Common Stock that were outstanding immediately prior to such event.
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(B) Except as otherwise provided in the Restated Certificate
of Incorporation or by law, the holders of shares of Junior Preferred
Stock and the holders of shares of Common Stock shall vote together as
one class on all matters submitted to a vote of shareholders of the
Company.
IV. Certain Restrictions.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Junior Preferred Stock as provided in
Section II are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of
Junior Preferred Stock outstanding shall have been paid in full, the
Company shall not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise
acquire for consideration any shares of stock ranking
junior (as to dividends) to the Junior Preferred
Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a
parity (as to dividends) with the Junior Preferred
Stock, except dividends paid ratably on the Junior
Preferred Stock and all such parity stock on which
dividends are payable or in arrears in proportion to
the total amounts to which the holders of all such
shares are then entitled; or
(iii) purchase or otherwise acquire for consideration any
shares of Junior Preferred Stock, or any shares of
stock ranking on a parity (as to dividends) with
the Junior Preferred Stock, except in accordance with a
purchase offer made in writing or by publication (as
determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of
Directors, after consideration of the respective
annual dividend rates and other relative rights
and preferences of the respective series and
classes, shall determine in good faith will result
in fair and equitable treatment among the respective
series or classes.
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(B) The Company shall not permit any subsidiary of the Company
to purchase or otherwise acquire for consideration any shares of stock
of the Company unless the Company could, under paragraph (A) of this
Section IV, purchase or otherwise acquire such shares at such time and
in such manner.
V. Reacquired Shares. Any shares of Junior Preferred Stock purchased or
otherwise acquired by the Company in any manner whatsoever shall be retired and
cancelled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of Preferred Stock and
may be reissued as part of a series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.
VI. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Company, no distribution shall be made (1) to
the holders of shares of stock ranking junior (as to amounts payable upon
liquidation, dissolution or winding up) to the Junior Preferred Stock unless,
prior thereto, the holders of Junior Preferred Stock shall have received an
amount per share (rounded to the nearest cent) equal to the greater of (a)
$100.00 per share, or (b) an amount per share, subject to the provision for
adjustment hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share to holders of Common Stock, plus, in either case, an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment, or (2) to the holders of stock
ranking on a parity (as to amounts payable or upon liquidation, dissolution or
winding up) with the Junior Preferred Stock, except distributions made ratably
on the Junior Preferred Stock and all other such parity stock in proportion to
the total amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up. If the Company shall at any time declare
or pay any dividend on Common Stock payable in shares of Common Stock, or effect
a subdivision or combination of the outstanding shares of Common Stock (by
reclassification or otherwise) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount to which holders of
shares of Junior Preferred Stock were entitled immediately prior to such event
under the provision in clause (1) (b) of the preceding sentence shall be
adjusted by multiplying such amount by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
VII. Consolidation, Merger, etc. If the Company shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
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or any other property, or any combination thereof, then in any such case the
shares of Junior Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 100 times the aggregate amount of stock,
securities, cash or any other property, or any combination thereof, into which
or for which each share of Common Stock is changed or exchanged. If the Company
shall at any time declare or pay any dividend on Common Stock payable in shares
of Common Stock, or effect a subdivision or combination of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of shares
of Junior Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.
VIII. No Redemption. The shares of Junior Preferred Stock shall not be
redeemable. So long as any shares of Junior Preferred Stock remain outstanding,
the Company shall not purchase or otherwise acquire for consideration any shares
of stock ranking junior (either as to dividends or upon liquidation, dissolution
or winding up) to the Junior Preferred Stock unless the Company shall
substantially concurrently also purchase or acquire for consideration a
proportionate number of shares of Junior Preferred Stock.
IX. Rank. Except as otherwise provided in its Restated Certificate
of Incorporation, the Company may authorize or create any series of Preferred
Stock ranking prior to or on a parity with the Junior Preferred Stock as to
dividends or as to distribution of assets upon liquidation, dissolution or
winding up.
X. Amendment. The Restated Certificate of Incorporation of the
Company shall not be amended in any manner which would materially alter or
change the powers, preferences or special rights of the Junior Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of a majority of the outstanding shares of Junior Preferred Stock,
voting together as a single class.
The foregoing resolution was adopted by the Board of Directors of the
Corporation, pursuant to the authority vested in it by the Restated Certificate
of Incorporation of the Corporation, at a meeting of the Board of Directors duly
held on the 19th day of May, 1998 and the Certificate of Designation, Rights and
Preferences of Series A Junior Participating Preferred Stock, Without Par Value
was filed with the Secretary of State of the State of Delaware on July 2, 1998.
39
HALLIBURTON ELECTIVE DEFERRAL PLAN
AS AMENDED AND RESTATED EFFECTIVE
JANUARY 1, 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE PAGE
<S> <C> <C> <C>
I - Definitions and Construction ........................................................ I-1
II - Participation ....................................................................... II-1
III - Account Credits ..................................................................... III-1
IV - Withdrawals ......................................................................... IV-1
V - Payment of Benefits ................................................................. V-1
VI - Administration of the Plan........................................................... VI-1
VII - Administration of Funds.............................................................. VII-1
VIII - Nature of the Plan................................................................... VIII-1
IX - Participating Employers ............................................................. IX-1
X - Miscellaneous ....................................................................... X-1
</TABLE>
(i)
<PAGE>
HALLIBURTON ELECTIVE DEFERRAL PLAN
HALLIBURTON COMPANY, having heretofore established the Halliburton
Elective Deferral Plan, pursuant to Section 10.4 of said Plan, hereby amends and
restates said Plan effective as of January 1, 1998.
(ii)
<PAGE>
I.
Definitions and Construction
1.1 Definitions. Where the following words and phrases appear in the
Plan, they shall have the respective meanings set forth below, unless their
context clearly indicates to the contrary.
(1) Account: A memorandum bookkeeping account established on the records of
the Employer for a Participant that is credited with amounts determined
in accordance with Article III of the Plan. As of any determination
date, a Participant's benefit under the Plan shall be equal to the
amount credited to his Account as of such date. A Participant shall
have a 100% nonforfeitable interest in his Account at all times.
(1A) Act: The Employee Retirement Income Security Act of 1974, as amended.
(2) Base Salary: The base rate of cash compensation paid by the Employer to
or for the benefit of a Participant for services rendered or labor
performed while a Participant, including base pay a Participant could
have received in cash in lieu of (A) deferrals pursuant to Section 3.1
and (B) contributions made on his behalf to any qualified plan
maintained by the Employer or to any cafeteria plan under section 125
of the Code maintained by the Employer.
(3) Bonus Compensation: With respect to any Participant for a Plan
Year, the amount awarded under a bonus plan maintained by the Employer.
(4) Code: The Internal Revenue Code of 1986, as amended.
(5) Compensation Committee: The Compensation Committee of the Directors.
(6) Committee: The administrative committee appointed by the Compensation
Committee to administer the Plan.
(7) Company: Halliburton Company.
(8) Directors: The Board of Directors of the Company.
(9) Employer: The Company and each eligible organization designated as an
Employer in accordance with the provisions of Article IX of the Plan.
(10) Participant: Each individual who has been selected for participation
in the Plan and who has become a Participant pursuant to Article II.
(11) Plan: The Halliburton Elective Deferral Plan, as amended from time to
time.
I-1
<PAGE>
(12) Plan Year: The twelve-consecutive month period commencing January 1
of each year.
(13) Retirement: The date the Participant retires in accordance with
the terms of his Employer's retirement policy as in effect at that
time.
(14) Trust: The trust, if any, established under the Trust Agreement.
(15) Trust Agreement: The agreement, if any, entered into between the
Employer and the Trustee pursuant to Article VIII.
(16) Trust Fund: The funds and properties, if any, held pursuant to
the provisions of the Trust Agreement, together with all income,
profits and increments thereto.
(17) Trustee: The trustee or trustees appointed by the Committee who are
qualified and acting under the Trust Agreement at any time.
(18) Unforeseeable Emergency: A severe financial hardship to the Participant
resulting from a sudden and unexpected illness or accident of the
Participant or of a dependent (as defined in section 152(a) of the
Code) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant.
1.2 Number and Gender. Wherever appropriate herein, words used in the
singular shall be considered to include the plural and words used in the plural
shall be considered to include the singular. The masculine gender, where
appearing in the Plan, shall be deemed to include the feminine gender.
1.3 Headings. The headings of Articles and Sections herein are included
solely for convenience, and if there is any conflict between such headings and
the text of the Plan, the text shall control.
I-2
<PAGE>
II.
Participation
2.1 Participation. Participants in the Plan are those employees of the
Employer (a) who are subject to the income tax laws of United States, (b) who
are officers or members of a select group of highly compensated employees of the
Employer, and (c) who are selected by the Committee, in its sole discretion, as
Participants. The Committee shall notify each Participant of his selection as a
Participant. Subject to the provisions of Section 2.2, a Participant shall
remain eligible to defer Base Salary and/or Bonus Compensation hereunder for
each Plan Year following his initial year of participation in the Plan.
2.2 Cessation of Active Participation. Notwithstanding any provision
herein to the contrary, an individual who has become a Participant in the Plan
shall cease to be entitled to defer Base Salary and/or Bonus Compensation
hereunder effective as of any date designated by the Committee. Any such
Committee action shall be communicated to the affected individual prior to the
effective date of such action.
II-1
<PAGE>
III.
Account Credits
3.1 Base Salary Deferrals.
(a) Any Participant may elect to defer receipt of an integral
percentage of from 5% to 50% of his Base Salary, in 5% increments, for any Plan
Year; provided, however, that a Participant may elect to defer receipt of an
integral percentage of from 5% to 90% of his Base Salary, in 5% increments, for
the Plan Year in which he is first eligible to participate in the Plan. A
Participant's election to defer receipt of a percentage of his Base Salary for
any Plan Year shall be made on or before the last day of the preceding Plan
Year. Notwithstanding the foregoing, if an individual initially becomes a
Participant other than on the first day of a Plan Year, such Participant's
election to defer receipt of a percentage of his Base Salary for such Plan Year
may be made no later than 30 days after he becomes a Participant, but such
election shall be prospective only. The reduction in a Participant's Base Salary
pursuant to his election shall be effected by Base Salary reductions as of each
payroll period within the election period. Base Salary for a Plan Year not
deferred by a Participant pursuant to this Paragraph shall be received by such
Participant in cash, except as provided by any other plan maintained by the
Employer. Deferrals of Base Salary under this Plan shall be made before elective
deferrals or contributions of Base Salary under any other plan maintained by the
Employer. Base Salary deferrals made by a Participant shall be credited to such
Participant's Account as of the date the Base Salary deferred would have been
received by such Participant in cash had no deferral been made pursuant to this
Section. Except as provided in Paragraph (b), deferral elections for a Plan Year
pursuant to this Section shall be irrevocable.
(b) A Participant shall be permitted to revoke his election to
defer receipt of his Base Salary for any Plan Year in the event of an
Unforeseeable Emergency, as determined by the Committee in its sole discretion.
For purposes of the Plan, the decision of the Committee regarding the existence
or nonexistence of an Unforeseeable Emergency of a Participant shall be final
and binding. Further, the Committee shall have the authority to require a
Participant to provide such proof as it deems necessary to establish the
existence and significant nature of the Participant's Unforeseeable Emergency. A
Participant who is permitted to revoke his Base Salary deferral election during
a Plan Year shall not be permitted to resume Base Salary deferrals under the
Plan until the next following Plan Year.
3.2 Bonus Compensation Deferrals. Any Participant may elect to defer
receipt of an integral percentage of from 5% to 90% of his Bonus Compensation,
in 5% increments, for any Plan Year. A Participant's election to defer receipt
of a percentage of his Bonus Compensation for any Plan Year shall be made on or
before the last day of the preceding Plan Year. Notwithstanding the foregoing,
if any individual initially becomes a Participant other than on the first day of
a Plan Year, such Participant's election to defer receipt of a percentage of his
Bonus Compensation for such Plan Year may be made no later than 30 days after he
becomes a Participant, but such election shall apply only to a pro rata portion
of his Bonus Compensation for such Plan Year based upon the number of complete
months remaining in such Plan Year divided by twelve. If Bonus Compensation for
III-1
<PAGE>
a Plan Year is payable in more than one future Plan Year under the applicable
bonus plan, a Participant shall also make a separate election under this Section
with respect to such Bonus Compensation for each Plan Year in which such Bonus
Compensation is payable. Deferrals of Bonus Compensation under this Plan shall
be made before elective deferrals or contributions of Bonus Compensation under
any other plan maintained by the Employer. Bonus Compensation deferrals made by
a Participant shall be credited to such Participant's Account as of the date the
Bonus Compensation deferred would have been received by such Participant had no
deferral been made pursuant to this Section 3.2. Deferral elections for a Plan
Year pursuant to this Section shall be irrevocable.
3.3 Earnings Credits. For each Plan Year, a Participant's Account shall
be credited semi-annually on June 30 and December 31 with an amount of earnings
based on the weighted average balance of such Account during the preceding six
months and the Moody's corporate bond average annual yield for long-term
investment grade bonds during the six-month period ended seven months prior to
each semi-annual earnings credit date, plus 2%. (For example, the rate earned
for the six months ended December 31, 1995 would be based on the average Moody's
rate for the six months ended May 31, 1995, plus 2%.) So long as there is any
balance in any Account, such Account shall continue to receive earnings credits
pursuant to this Section.
III-2
<PAGE>
IV.
Withdrawals
Participants shall be permitted to make withdrawals from the Plan only
in the event of an Unforeseeable Emergency, as determined by the Committee in
its sole discretion. No withdrawal shall be allowed to the extent that such
Unforeseeable Emergency is or may be relieved (a) through reimbursement or
compensation by insurance or otherwise, (b) by liquidation of the Participant's
assets, to the extent the liquidation of such assets would not itself cause
severe financial hardship or (c) by cessation of Base Salary deferrals under the
Plan pursuant to Section 3.1(b). Further, the Committee shall permit a
Participant to withdraw only the amount it determines, in its sole discretion,
to be reasonably needed to satisfy the Unforeseeable Emergency.
IV-1
<PAGE>
V.
Payment of Benefits
5.1 Payment Election Generally. In conjunction with each deferral
election made by a Participant pursuant to Article III for a Plan Year, such
Participant shall elect, subject to Sections 5.4, 5.5, 5.7 and 5.8, the time and
the form of payment with respect to such deferral and the earnings credited
thereto. Except as provided in Section 5.3, any such election regarding the time
and form of payment of a deferral and the earnings credited thereto shall be
irrevocable once made.
5.2 Time of Benefit Payment. With respect to each deferral election
made by a Participant pursuant to Article III, such Participant shall elect to
commence payment of such deferral and the earnings credited thereto on one of
the following dates:
(a) Retirement; or
(b) A specific future month and year, but not earlier than
five years from the date of the deferral if the Participant has not
attained age fifty-five at the time of the deferral or one year from
the date of the deferral if the Participant has attained age fifty-five
at the time of the deferral, and not later than the first day of the
year in which the Participant attains age seventy.
5.3 Form of Benefit Payment. With respect to each deferral election
made by a Participant pursuant to Article III, such Participant shall elect the
form of payment with respect to such deferral and the earnings credited thereto
from one of the following forms:
(a) A lump sum; or
(b) Installment payments for a period not to exceed ten
years.
Installment payments shall be paid annually on the first business day of January
of each Plan Year; provided however, that not later than sixty days prior to the
date payment is to commence, a Participant may elect to have his installment
payments paid quarterly on the first business day of each calendar quarter. Each
installment payment shall be determined by multiplying the deferral and the
earnings credited thereto at the time of the payment by a fraction, the
numerator of which is one and the denominator of which is the number of
remaining installment payments to be made to Participant. In the event the total
amount credited to a Participant's Account does not exceed $50,000, the
Committee may, in its sole discretion, pay such amounts in a lump sum.
5.4 Total and Permanent Disability. If a Participant becomes totally
and permanently disabled while employed by the Employer, payment of the amounts
credited to such Participant's Account shall commence on the first business day
of the second calendar quarter following the date the Committee makes a
determination that the Participant is totally and permanently disabled, in the
form of payment determined in accordance with Section 5.3. The above
notwithstanding, if such Participant is already receiving payments pursuant to
Section 5.2(b) and Section 5.3(b), such payments shall continue. For purposes of
V-1
<PAGE>
the Plan, a Participant shall be considered totally and permanently disabled if
the Committee determines, based on a written medical opinion (unless waived by
the Committee as unnecessary), that such Participant is permanently incapable of
performing his job for physical or mental reasons.
5.5 Death. In the event of a Participant's death at a time when amounts
are credited to such Participant's Account, such amounts shall be paid to such
Participant's designated beneficiary or beneficiaries in five annual
installments commencing as soon as administratively feasible after such
Participant's date of death. However, the Participant's designated beneficiary
or beneficiaries may request a lump sum payment based upon hardship, and the
Committee, in its sole discretion, may approve such request.
5.6 Designation of Beneficiaries.
(a) Each Participant shall have the right to designate the
beneficiary or beneficiaries to receive payment of his benefit in the event of
his death. Each such designation shall be made by executing the beneficiary
designation form prescribed by the Committee and filing same with the Committee.
Any such designation may be changed at any time by execution of a new
designation in accordance with this Section.
(b) If no such designation is on file with the Committee at
the time of the death of the Participant or such designation is not effective
for any reason as determined by the Committee, then the designated beneficiary
or beneficiaries to receive such benefit shall be as follows:
(1) If a Participant leaves a surviving spouse, his
benefit shall be paid to such surviving spouse;
(2) If a Participant leaves no surviving spouse, his
benefit shall be paid to such Participant's executor or administrator,
or to his heirs at law if there if no administration of such
Participant's estate.
5.7 Other Termination of Employment. If a Participant terminates his
employment with the Employer before Retirement for a reason other than total and
permanent disability or death, the amounts credited to such Participant's
Account shall be paid to the Participant in a lump sum no less than thirty days
and no more than one year after the Participant's date of termination of
employment.
5.8 Change in the Company's Credit Rating. If the Standard & Poor's
rating for the Company's senior indebtedness falls below BBB, the amounts
credited to Participants' Accounts shall be paid to the Participants in a lump
sum within forty-five days after the date of change of such credit rating.
5.9 Payment of Benefits. To the extent the Trust Fund, if any, has
sufficient assets, the Trustee shall pay benefits to Participants or their
beneficiaries, except to the extent the Employer pays the benefits directly and
provides adequate evidence of such payment to the Trustee. To the extent the
V-2
<PAGE>
Trustee does not or cannot pay benefits out of the Trust Fund, the benefits
shall be paid by the Employer. Any benefit payments made to a Participant or for
his benefit pursuant to any provision of the Plan shall be debited to such
Participant's Account. All benefit payments shall be made in cash to the fullest
extent practicable.
5.10 Unclaimed Benefits. In the case of a benefit payable on behalf of
a Participant, if the Committee is unable to locate the Participant or
beneficiary to whom such benefit is payable, upon the Committee's determination
thereof, such benefit shall be forfeited to the Employer. Notwithstanding the
foregoing, if subsequent to any such forfeiture the Participant or beneficiary
to whom such benefit is payable makes a valid claim for such benefit, such
forfeited benefit shall be paid by the Employer or restored to the Plan by the
Employer.
5.11 No Acceleration of Bonus Compensation. The time of payment of any
Bonus Compensation that the Participant has elected to defer but that has not
yet been credited to the Participant's Account because it is not yet payable
without regard to the deferral shall not be accelerated as a result of the
provisions of this Article. If, pursuant to the provisions of this Article,
payment of such Bonus Compensation would no longer be deferred at the time it
becomes payable, such Bonus Compensation shall be paid to the Participant within
90 days of the date it would have been payable had the Participant not made a
deferral election.
V-3
<PAGE>
VI.
Administration of the Plan
6.1 Committee Powers and Duties. The general administration of the Plan
shall be vested in the Committee. The Committee shall supervise the
administration and enforcement of the Plan according to the terms and provisions
hereof and shall have all powers necessary to accomplish these purposes,
including, but not by way of limitation, the right, power, authority, and duty:
(a) To make rules, regulations, and bylaws for the
administration of the Plan that are not inconsistent with the terms and
provisions hereof, and to enforce the terms of the Plan and the rules
and regulations promulgated thereunder by the Committee;
(b) To construe in its discretion all terms, provisions,
conditions, and limitations of the Plan;
(c) To correct any defect or to supply any omission or to
reconcile any inconsistency that may appear in the Plan in such manner
and to such extent as it shall deem in its discretion expedient to
effectuate the purposes of the Plan;
(d) To employ and compensate such accountants, attorneys,
investment advisors, and other agents, employees, and independent
contractors as the Committee may deem necessary or advisable for the
proper and efficient administration of the Plan;
(e) To determine in its discretion all questions relating to
eligibility;
(f) To determine whether and when there has been a termination
of a Participant's employment with the Employer, and the reason for
such termination;
(g) To make a determination in its discretion as to the right
of any person to a benefit under the Plan and to prescribe procedures
to be followed by distributees in obtaining benefits hereunder; and
(h) To receive and review reports from the Trustee as to the
financial condition of the Trust Fund, if any, including its receipts
and disbursements.
VI-1
<PAGE>
6.2 Self-Interest of Participants. No member of the Committee shall
have any right to vote or decide upon any matter relating solely to himself
under the Plan (including, without limitation, Committee decisions under Article
II) or to vote in any case in which his individual right to claim any benefit
under the Plan is particularly involved. In any case in which a Committee member
is so disqualified to act and the remaining members cannot agree, the
Compensation Committee shall appoint a temporary substitute member to exercise
all the powers of the disqualified member concerning the matter in which he is
disqualified.
6.3 Claims Review. In any case in which a claim for Plan benefits of a
Participant or beneficiary is denied or modified, the Committee shall furnish
written notice to the claimant within ninety days (or within 180 days if
additional information requested by the Committee necessitates an extension of
the ninety-day period), which notice shall:
(a) State the specific reason or reasons for the denial
or modification;
(b) Provide specific reference to pertinent Plan
provisions on which the denial or modification is based;
(c) Provide a description of any additional material or
information necessary for the Participant, his beneficiary, or
representative to perfect the claim and an explanation of why such
material or information is necessary; and
(d) Explain the Plan's claim review procedure as
contained herein.
In the event a claim for Plan benefits is denied or modified, if the
Participant, his beneficiary, or a representative of such Participant or
beneficiary desires to have such denial or modification reviewed, he must,
within sixty days following receipt of the notice of such denial or
modification, submit a written request for review by the Committee of its
initial decision. In connection with such request, the Participant, his
beneficiary, or the representative of such Participant or beneficiary may review
any pertinent documents upon which such denial or modification was based and may
submit issues and comments in writing. Within sixty days following such request
for review the Committee shall, after providing a full and fair review, render
its final decision in writing to the Participant, his beneficiary or the
representative of such Participant or beneficiary stating specific reasons for
such decision and making specific references to pertinent Plan provisions upon
which the decision is based. If special circumstances require an extension of
such sixty-day period, the Committee's decision shall be rendered as soon as
possible, but not later than 120 days after receipt of the request for review.
If an extension of time for review is required, written notice of the extension
shall be furnished to the Participant, beneficiary, or the representative of
such Participant or beneficiary prior to the commencement of the extension
period.
VI-2
<PAGE>
6.4 Employer to Supply Information. The Employer shall supply full and
timely information to the Committee, including, but not limited to, information
relating to each Participant's compensation, age, retirement, death, or other
cause of termination of employment and such other pertinent facts as the
Committee may require. The Employer shall advise the Trustee, if any, of such of
the foregoing facts as are deemed necessary for the Trustee to carry out the
Trustee's duties under the Plan and the Trust Agreement. When making a
determination in connection with the Plan, the Committee shall be entitled to
rely upon the aforesaid information furnished by the Employer.
6.5 Indemnity. The Company shall indemnify and hold harmless each
member of the Committee against any and all expenses and liabilities arising out
of his administrative functions or fiduciary responsibilities, including any
expenses and liabilities that are caused by or result from an act or omission
constituting the negligence of such member in the performance of such functions
or responsibilities, but excluding expenses and liabilities that are caused by
or result from such member's own gross negligence or willful misconduct.
Expenses against which such member shall be indemnified hereunder shall include,
without limitation, the amounts of any settlement or judgment, costs, counsel
fees, and related charges reasonably incurred in connection with a claim
asserted or a proceeding brought or settlement thereof.
VI-3
<PAGE>
VII.
Administration of Funds
7.1 Payment of Expenses. All expenses incident to the administration of
the Plan and Trust, including but not limited to, legal, accounting, Trustee
fees, and expenses of the Committee, may be paid by the Employer and, if not
paid by the Employer, shall be paid by the Trustee from the Trust Fund, if any.
7.2 Trust Fund Property. All income, profits, recoveries,
contributions, forfeitures and any and all moneys, securities and properties of
any kind at any time received or held by the Trustee, if any, shall be held for
investment purposes as a commingled Trust Fund pursuant to the terms of the
Trust Agreement. The Committee shall maintain one or more Accounts in the name
of each Participant, but the maintenance of an Account designated as the Account
of a Participant shall not mean that such Participant shall have a greater or
lesser interest than that due him by operation of the Plan and shall not be
considered as segregating any funds or property from any other funds or property
contained in the commingled fund. No Participant shall have any title to any
specific asset in the Trust Fund, if any.
VII-1
<PAGE>
VIII.
Nature of the Plan
The Employer intends and desires by the adoption of the Plan to
recognize the value to the Employer of the past and present services of
employees covered by the Plan and to encourage and assure their continued
service with the Employer by making more adequate provision for their future
retirement security. The Plan is intended to constitute an unfunded, unsecured
plan of deferred compensation for a select group of management or highly
compensated employees of the Employer. Plan benefits herein provided are to be
paid out of the Employer's general assets. The Plan constitutes a mere promise
by the Employers to make benefit payments in the future and Participants have
the status of general unsecured creditors of the Employers. Nevertheless,
subject to the terms hereof and of the Trust Agreement, if any, the Employers,
or the Company on behalf of the Employers, may transfer money or other property
to the Trustee and the Trustee shall pay Plan benefits to Participants and their
beneficiaries out of the Trust Fund.
The Committee, in its sole discretion, may establish the Trust and
direct the Employers to enter into the Trust Agreement and adopt the Trust for
purposes of the Plan. In such event, the Employers shall remain the owner of all
assets in the Trust Fund and the assets shall be subject to the claims of each
Employer's creditors if such Employer ever becomes insolvent. For purposes
hereof, an Employer shall be considered "insolvent" if (a) the Employer is
unable to pay its debts as they become due, or (b) the Employer is subject to a
pending proceeding as a debtor under the United States Bankruptcy Code (or any
successor federal statute). The chief executive officer of the Employer and its
board of directors shall have the duty to inform the Trustee in writing if the
Employer becomes insolvent. Such notice given under the preceding sentence by
any party shall satisfy all of the parties' duty to give notice. When so
informed, the Trustee shall suspend payments to the Participants and hold the
assets for the benefit of the Employer's general creditors. If the Trustee
receives a written allegation that the Employer is insolvent, the Trustee shall
suspend payments to the Participants and hold the Trust Fund for the benefit of
the Employer's general creditors, and shall determine within the period
specified in the Trust Agreement whether the Employer is insolvent. If the
Trustee determines that the Employer is not insolvent, the Trustee shall resume
payments to the Participants. No Participant or beneficiary shall have any
preferred claim to, or any beneficial ownership interest in, any assets of the
Trust Fund.
VIII-1
<PAGE>
IX.
Participating Employers
The Committee may designate any entity or organization eligible by law
to participate in this Plan as an Employer by written instrument delivered to
the Secretary of the Company and the designated Employer. Such written
instrument shall specify the effective date of such designated participation,
may incorporate specific provisions relating to the operation of the Plan which
apply to the designated Employer only and shall become, as to such designated
Employer and its employees, a part of the Plan. Each designated Employer shall
be conclusively presumed to have consented to its designation and to have agreed
to be bound by the terms of the Plan and any and all amendments thereto upon its
submission of information to the Committee required by the terms of or with
respect to the Plan; provided, however, that the terms of the Plan may be
modified so as to increase the obligations of an Employer only with the consent
of such Employer, which consent shall be conclusively presumed to have been
given by such Employer upon its submission of any information to the Committee
required by the terms of or with respect to the Plan. Except as modified by the
Committee in its written instrument, the provisions of this Plan shall be
applicable with respect to each Employer separately, and amounts payable
hereunder shall be paid by the Employer which employs the particular
Participant, if not paid from the Trust Fund.
IX-1
<PAGE>
X.
Miscellaneous
10.1 Not Contract of Employment. The adoption and maintenance of the
Plan shall not be deemed to be a contract between the Employer and any person or
to be consideration for the employment of any person. Nothing herein contained
shall be deemed to give any person the right to be retained in the employ of the
Employer or to restrict the right of the Employer to discharge any person at any
time nor shall the Plan be deemed to give the Employer the right to require any
person to remain in the employ of the Employer or to restrict any person's right
to terminate his employment at any time.
10.2 Alienation of Interest Forbidden. Except as hereinafter provided,
the interest of a Participant or his beneficiary or beneficiaries hereunder may
not be sold, transferred, assigned, or encumbered in any manner, either
voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be null and void;
neither shall the benefits hereunder be liable for or subject to the debts,
contracts, liabilities, engagements or torts of any person to whom such benefits
or funds are payable, nor shall they be an asset in bankruptcy or subject to
garnishment, attachment or other legal or equitable proceedings. Plan provisions
to the contrary notwithstanding, the Committee shall comply with the terms and
provisions of an order that satisfies the requirements for a "qualified domestic
relations order" as such term is defined in section 206(d)(3)(B) of the Act,
including an order that requires distributions to an alternate payee prior to a
Participant's "earliest retirement age" as such term is defined in section
206(d)(3)(E)(ii) of the Act.
10.3 Withholding. All deferrals and payments provided for hereunder
shall be subject to applicable withholding and other deductions as shall be
required of the Employer under any applicable local, state or federal law.
10.4 Amendment and Termination. The Compensation Committee may from
time to time, in its discretion, amend, in whole or in part, any or all of the
provisions of the Plan; provided, however, that no amendment may be made that
would impair the rights of a Participant with respect to amounts already
allocated to his Account. The Compensation Committee may terminate the Plan at
any time. In the event that the Plan is terminated, the balance in a
Participant's Account shall be paid to such Participant or his designated
beneficiary in a single lump sum payment of cash in full satisfaction of all of
such Participant's or beneficiary's benefits hereunder. Any such amendment to or
termination of the Plan shall be in writing and signed by any member of the
Compensation Committee.
10.5 Severability. If any provision of this Plan shall be held illegal
or invalid for any reason, said illegality or invalidity shall not affect the
remaining provisions hereof; instead, each provision shall be fully severable
and the Plan shall be construed and enforced as if said illegal or invalid
provision had never been included herein.
10.6 Governing Laws. All provisions of the Plan shall be construed
in accordance with the laws of Texas except to the extent preempted by federal
law.
X-1
HALLIBURTON COMPANY
SENIOR EXECUTIVES'
DEFERRED COMPENSATION PLAN
AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I: PURPOSE OF THE PLAN I-1
ARTICLE II: DEFINITIONS II-1
ARTICLE III: ADMINISTRATION OF THE PLAN III-1
ARTICLE IV: ALLOCATIONS UNDER THE PLAN,
PARTICIPATION IN THE PLAN AND
SELECTION FOR AWARDS IV-1
ARTICLE V: NON-ASSIGNABILITY OF AWARDS V-1
ARTICLE VI: VESTING VI-1
ARTICLE VII: DISTRIBUTION OF AWARDS VII-1
ARTICLE VIII: NATURE OF PLAN VIII-1
ARTICLE IX: FUNDING OF OBLIGATION IX-1
ARTICLE X: AMENDMENT OR TERMINATION OF PLAN X-1
ARTICLE XI: GENERAL PROVISIONS XI-1
ARTICLE XII: EFFECTIVE DATE XII-1
(1)
<PAGE>
HALLIBURTON COMPANY
SENIOR EXECUTIVES'
DEFERRED COMPENSATION PLAN
Halliburton Company, having heretofore established the Halliburton
Company Senior Executives' Deferred Compensation Plan, pursuant to the
provisions of Article X of said Plan, hereby amends and restates said Plan to be
effective in accordance with the provisions of Article XII hereof.
(2)
<PAGE>
ARTICLE I
Purpose of the Plan
The purpose of the Halliburton Company Senior Executives' Deferred
Compensation Plan is to promote growth of the Company, provide an additional
means of attracting and holding qualified, competent executives and provide
supplemental retirement benefits for the Participants.
I-1
<PAGE>
ARTICLE II
Definitions
(A) "Account(s)" shall mean a Participant's Deferred Compensation
Account, ERISA Restoration Account, and/or Mandatory Deferral Account, including
amounts credited thereto.
(B) "Administrative Committee" shall mean the administrative committee
appointed by the Compensation Committee to administer the Plan.
(C) "Allocation Year" shall mean the calendar year for which an
allocation is made to a Participant's Account pursuant to Article IV.
(D) "Board of Directors" shall mean the Board of Directors of the
Company.
(E) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(F) "Compensation Committee" shall mean the Compensation Committee of
the Board of Directors.
(G) "Company" shall mean Halliburton Company.
(H) "Deferred Compensation Account" shall mean an individual account for
each Participant on the books of such Participant's Employer to which is
credited amounts allocated for the benefit of such Participant pursuant to the
provisions of Article IV, Paragraph (E).
(I) "Employee" shall mean any senior executive, including an officer of
an Employer (whether or not he is also a director thereof), who is employed by
an Employer on a full-time basis, who is compensated for such employment by a
regular salary, and who, in the opinion of the Compensation Committee, is one of
the key personnel of an Employer in a position to contribute materially to its
continued growth and development and to its future financial success, or who in
the past has contributed materially to its growth, development and financial
success. The term does not include independent contractors or persons who are
retained by an Employer as consultants only.
(J) "Employer" shall mean the Company and any Subsidiary designated as
an Employer in accordance with the provisions of Article III of the Plan.
(J1) "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
II-1
<PAGE>
(K) "ERISA Restoration Account" shall mean an individual account for
each Participant on the books of such Participant's Employer to which is
credited amounts allocated for the benefit of such Participant pursuant to the
provisions of Article IV, Paragraph (G). Such Account shall include amounts
allocated to a Participant's Excess Benefit Account prior to January 1, 1995.
(L) "Excess Remuneration Account" shall mean an individual account for
each Participant on the books of such Participant's Employer to which is
credited amounts allocated for the benefit of such Participant pursuant to the
provisions of Article IV, Paragraph (H).
(M) "Participant" shall mean an Employee who is allocated deferred
compensation hereunder.
(N) "Plan" shall mean the Halliburton Company Senior Executives'
Deferred Compensation Plan, as amended and restated January 1, 1996, and as the
same may thereafter be amended from time to time.
(O) "Subsidiary" shall mean at any given time, any other corporation of
which an aggregate of 80% or more of the outstanding voting stock is owned of
record or beneficially, directly or indirectly, by the Company or any other of
its Subsidiaries or both.
(P) "Termination of Service" shall mean severance from employment with
an Employer for any reason other than a transfer between Employers.
(Q) "Trust" shall mean any trust created pursuant to the provisions of
Article IX.
(R) "Trust Agreement" shall mean the agreement establishing the Trust.
(S) "Trustee" shall mean the trustee of the Trust.
(T) "Trust Fund" shall mean assets under the Trust as may exist from
time to time.
II-2
<PAGE>
ARTICLE III
Administration of the Plan
(A) The Compensation Committee shall appoint an Administrative Committee
to administer, construe and interpret the Plan. Such Administrative Committee,
or such successor Administrative Committee as may be duly appointed by the
Compensation Committee, shall serve at the pleasure of the Compensation
Committee. Decisions of the Administrative Committee with respect to any matter
involving the Plan shall be final and binding on the Company, its shareholders,
each Employer and all officers and other executives of the Employers. For
purposes of the Employee Retirement Income Security Act of 1974, the
Administrative Committee shall be the Plan "administrator" and shall be the
"named fiduciary" with respect to the general administration of the Plan.
(B) The Administrative Committee shall maintain complete and adequate
records pertaining to the Plan, including but not limited to Participants'
Accounts, amounts transferred to the Trust, reports from the Trustee and all
other records which shall be necessary or desirable in the proper administration
of the Plan. The Administrative Committee shall furnish the Trustee such
information as is required to be furnished by the Administrative Committee or
the Company pursuant to the Trust Agreement.
(C) The Company (the "Indemnifying Party") hereby agrees to indemnify
and hold harmless the members of the Administrative Committee (the "Indemnified
Parties") against any losses, claims, damages or liabilities to which any of the
Indemnified Parties may become subject to the extent that such losses, claims,
damages or liabilities or actions in respect thereof arise out of or are based
upon any act or omission of the Indemnified Party in connection with the
administration of this Plan (including any act or omission of such Indemnified
Party constituting negligence, but excluding any act or omission of such
Indemnified Party constituting gross negligence or wilful misconduct), and will
reimburse the Indemnified Party for any legal or other expenses reasonably
incurred by him or her in connection with investigating or defending against any
such loss, claim, damage, liability or action.
(D) Promptly after receipt by the Indemnified Party under the preceding
paragraph of notice of the commencement of any action or proceeding with respect
to any loss, claim, damage or liability against which the Indemnified Party
believes he or she is indemnified under the preceding paragraph, the Indemnified
Party shall, if a claim with respect thereto is to be made against the
Indemnifying Party under such paragraph, notify the Indemnifying Party in
writing of the commencement thereof; provided, however, that the omission so to
notify the Indemnifying Party shall not relieve it from any liability which it
may have to the Indemnified Party to the extent the Indemnifying Party is not
prejudiced by such omission. If any such action or proceeding shall be brought
against the Indemnified Party, and it shall notify the Indemnifying Party of the
commencement thereof, the Indemnifying Party shall be entitled to participate
therein, and, to the extent that it shall wish, to assume the defense thereof,
III-1
<PAGE>
with counsel reasonably satisfactory to the Indemnified Party, and, after notice
from the Indemnifying Party to the Indemnified Party of its election to assume
the defense thereof, the Indemnifying Party shall not be liable to such
Indemnified Party under the preceding paragraph for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation or reasonable expenses of
actions taken at the written request of the Indemnifying Party. The Indemnifying
Party shall not be liable for any compromise or settlement of any such action or
proceeding effected without its consent, which consent will not be unreasonably
withheld.
(E) The Administrative Committee may designate any Subsidiary as an
Employer by written instrument delivered to the Secretary of the Company and the
designated Employer. Such written instrument shall specify the effective date of
such designated participation, may incorporate specific provisions relating to
the operation of the Plan which apply to the designated Employer only and shall
become, as to such designated Employer and its employees, a part of the Plan.
Each designated Employer shall be conclusively presumed to have consented to its
designation and to have agreed to be bound by the terms of the Plan and any and
all amendments thereto upon its submission of information to the Administrative
Committee required by the terms of or with respect to the Plan; provided,
however, that the terms of the Plan may be modified so as to increase the
obligations of an Employer only with the consent of such Employer, which consent
shall be conclusively presumed to have been given by such Employer upon its
submission of any information to the Administrative Committee required by the
terms of or with respect to the Plan. Except as modified by the Administrative
Committee in its written instrument, the provisions of this Plan shall be
applicable with respect to each Employer separately, and amounts payable
hereunder shall be paid by the Employer which employs the particular
Participant, if not paid from the Trust Fund.
(F) No member of the Administrative Committee shall have any right to
vote or decide upon any matter relating solely to himself under the Plan or to
vote in any case in which his individual right to claim any benefit under the
Plan is particularly involved. In any case in which an Administrative Committee
member is so disqualified to act and the remaining members cannot agree, the
Compensation Committee shall appoint a temporary substitute member to exercise
all the powers of the disqualified member concerning the matter in which he is
disqualified.
III-2
<PAGE>
ARTICLE IV
Allocations Under the Plan,
Participation in the Plan and Selection for Awards
(A) Only Employees shall be eligible to be Participants in the Plan. The
Compensation Committee shall be the sole judge of who shall be eligible to be a
Participant for any Allocation Year. The selection of an Employee to be a
Participant for a particular Allocation Year shall not constitute him a
Participant for another Allocation Year unless he is selected to be a
Participant for such other Allocation Year by the Compensation Committee.
(B) Each Allocation Year the Compensation Committee shall, in its sole
discretion, determine what amounts shall be available for allocation to the
Accounts of the Participants pursuant to Paragraph (E) below.
(C) No award shall be made to any person while he is a voting member of
the Compensation Committee.
(D) The Compensation Committee from time to time may adopt, amend or
revoke such regulations and rules as it may deem advisable for its own purposes
to guide in determining which of the Employees it shall deem to be Participants
for a particular Allocation Year and the method and manner of payment thereof to
the Participants.
(E) The Compensation Committee, during the Allocation Year involved or
during the next succeeding Allocation Year, shall determine which eligible
Employees it shall designate as Participants for such Allocation Year and the
amounts allocated to each Participant for such Allocation Year. In making its
determination, the Compensation Committee shall consider such factors as the
Compensation Committee may in its sole discretion deem material. The
Compensation Committee, in its sole discretion, may notify an Employee at any
time during a particular Allocation Year or in the Allocation Year following the
Allocation Year for which the award is made that he has been selected as a
Participant for all or part of such Allocation Year, and may determine and
notify him of the amount which shall be allocated to him for such Allocation
Year. The decision of the Compensation Committee in selecting an Employee to be
a Participant or in making any allocation to him shall be final and conclusive,
and nothing herein shall be deemed to give any Employee or his legal
representatives or assigns any right to be a Participant for such Allocation
Year or to be allocated any amount except to the extent of the amount, if any,
allocated to a Participant for a particular Allocation Year, but at all times
subject to the provisions of the Plan.
(F) An Employee whose Service is Terminated during the Allocation Year
and who, on the date of Termination of Service, was eligible to be a Participant
may be selected as a Participant for such part of the Allocation Year prior to
IV-1
<PAGE>
his Termination and be granted such award with respect to his services during
such part of the Allocation Year as the Compensation Committee, in its sole
discretion and under any rules it may promulgate, may determine.
(G) The Administrative Committee shall determine for each Allocation
Year which Participants' allocations of Employer contributions and forfeitures
under qualified defined contribution plans sponsored by the Employers have been
reduced for such Allocation Year by reason of the application of Section
401(a)(17) or Section 415 of the Code, or any combination of such Sections, or
by reason of elective deferrals under the Halliburton Elective Deferral Plan,
and shall allocate to the credit of each such Participant under the Plan an
amount equal to the amount of such reductions applicable to such Participant.
(H) The Compensation Committee may, in its discretion, allocate to the
credit of a Participant under the Plan all or any part of any remuneration
payable by the Employer to such Participant which would otherwise be treated as
excessive employee remuneration within the meaning of Section 162(m) of the Code
for any Allocation Year, rather than paying such excessive remuneration to such
Participant.
(I) Allocations to Participants under the Plan shall be made by
crediting their respective Accounts on the books of their Employers as of the
last day of the Allocation Year, except that an allocation under Paragraph (H)
shall be credited to a Participant on the date the amount would have been paid
to the Participant had it not been deferred pursuant to the provisions of
Paragraph (H). Allocations under Paragraph (E) above shall be credited to the
Participants' Deferred Compensation Accounts, allocations under Paragraph (G)
above shall be credited to the Participants' ERISA Restoration Accounts and
allocations under Paragraph (H) above shall be credited to the Participants'
Excess Remuneration Account. Accounts of Participants shall also be credited
with interest as of the last day of each Allocation Year, at the rate set forth
in Paragraph (J) below, on the average monthly credit balance of the Account
being calculated by using the balance of each Account on the first day of each
month. Prior to Termination of Service, the annual interest shall accumulate as
a part of the Account balance. After Termination of Service, the annual interest
for such Allocation Year may be paid as more particularly set forth hereinafter.
(J) Interest shall be credited on amounts allocated to Participants'
Deferred Compensation Accounts at the rate of 5% per annum for periods prior to
Termination of Service. Interest shall be credited on amounts allocated to
Participants' ERISA Restoration Accounts and Excess Remuneration Accounts, and
on amounts allocated to Participants' Deferred Compensation Accounts for periods
subsequent to Termination of Service, at the rate of 10% per annum.
IV-2
<PAGE>
ARTICLE V
Non-Assignability of Awards
No Participant shall have any right to commute, encumber, pledge,
transfer or otherwise dispose of or alienate any present or future right or
expectancy which he or she may have at any time to receive payments of any
allocations made to such Participant, all such allocations being expressly
hereby made non-assignable and non-transferable; provided, however, that nothing
in this Article shall prevent transfer (A) by will, (B) by the applicable laws
of descent and distribution or (C) pursuant to an order that satisfies the
requirements for a "qualified domestic relations order" as such term is defined
in section 206(d)(3)(B) of the ERISA and section 414(p)(1)(A) of the Code,
including an order that requires distributions to an alternate payee prior to a
Participant's "earliest retirement age" as such term is defined in section
206(d)(3)(E)(ii) of the ERISA and section 414(p)(4)(B) of the Code. Attempts to
transfer or assign by a Participant (other than in accordance with the preceding
sentence) shall, in the sole discretion of the Compensation Committee after
consideration of such facts as it deems pertinent, be grounds for terminating
any rights of such Participant to any awards allocated to but not previously
paid over to such Participant.
V-1
<PAGE>
ARTICLE VI
Vesting
All amounts credited to a Participant's Accounts shall be fully vested
and not subject to forfeiture for any reason except as provided in Article V.
VI-1
<PAGE>
ARTICLE VII
Distribution of Awards
(A) Upon Termination of Service of a Participant, the Administrative
Committee (i) shall certify to the Trustee or the treasurer of the Employer, as
applicable, the amount credited to each of the Participant's Accounts on the
books of each Employer for which the Participant was employed at a time when he
earned an award hereunder, (ii) shall determine whether the payment of the
amount credited to each of the Participant's Accounts under the Plan is to be
paid directly by the applicable Employer, from the Trust Fund, if any, or by a
combination of such sources (except to the extent the provisions of the Trust
Agreement, if any, specify payment from the Trust Fund) and (iii) shall
determine and certify to the Trustee or the treasurer of the Employer, as
applicable, the method of payment of the amount credited to each of a
Participant's Accounts, selected by the Administrative Committee from among the
following alternatives:
(1) A single lump sum payment upon Termination of Service;
(2) A payment of one-half of the Participant's balance upon
Termination of Service, with payment of the additional one-half to be made on or
before the last day of a period of one year following Termination; or
(3) Payment in monthly installments over a period not to exceed
ten years with such payments to commence upon Termination of Service.
The above notwithstanding, if the total amount credited to the Participant's
Accounts upon Termination of Service is less than $50,000, such amount shall
always be paid in a single lump sum payment upon Termination of Service.
(B) The Trustee or the treasurer of the Employer, as applicable, shall
thereafter make payments of awards in the manner and at the times so designated,
subject, however, to all of the other terms and conditions of this Plan and the
Trust Agreement, if any. This Plan shall be deemed to authorize the payment of
all or any portion of a Participant's award from the Trust Fund to the extent
such payment is required by the provisions of the Trust Agreement, if any.
(C) Interest on the second half of a payment under Paragraph (A)(2)
above shall be paid with the final payment, while interest on payments under
Paragraph (A)(3) above may be paid at each year end or may be paid as a part of
a level monthly payment computed by the Administrative Committee through the use
of such tables as the Administrative Committee shall select from time to time
for such purpose.
VII-1
<PAGE>
(D) If a Participant shall die while in the service of an Employer, or
after Termination of Service and prior to the time when all amounts payable to
him under the Plan have been paid to him, any remaining amounts payable to the
Participant hereunder shall be payable to the estate of the Participant. The
Administrative Committee shall cause the Trustee or the treasurer of the
Employer, as applicable, to pay to the estate of the Participant all of the
awards then standing to his credit in a lump sum or in such other form of
payment consistent with the alternative methods of payment set forth above as
the Administrative Committee shall determine after considering such facts and
circumstances relating to the Participant and his estate as it deems pertinent.
(E) If the Plan is terminated pursuant to the provisions of Article X,
the Compensation Committee may, at its election and in its sole discretion,
cause the Trustee or the treasurer of the Employer, as applicable, to pay to all
Participants all of the awards then standing to their credit in the form of lump
sum payments.
VII-2
<PAGE>
ARTICLE VIII
Nature of Plan
This Plan constitutes a mere promise by the Employers to make benefit
payments in the future and Participants have the status of general unsecured
creditors of the Employers. Further, the adoption of this Plan and any setting
aside of amounts by the Employers with which to discharge their obligations
hereunder shall not be deemed to create a trust; legal and equitable title to
any funds so set aside shall remain in the Employers, and any recipient of
benefits hereunder shall have no security or other interest in such funds. Any
and all funds so set aside shall remain subject to the claims of the general
creditors of the Employers, present and future. This provision shall not require
the Employers to set aside any funds, but the Employers may set aside such funds
if they choose to do so.
VIII-1
<PAGE>
ARTICLE IX
Funding of Obligation
Article VIII above to the contrary notwithstanding, the Employers may
fund all or part of their obligations hereunder by transferring assets to a
trust if the provisions of the trust agreement creating the Trust require the
use of the Trust's assets to satisfy claims of an Employer's general unsecured
creditors in the event of such Employer's insolvency and provide that no
Participant shall at any time have a prior claim to such assets. Any transfers
of assets to a trust may be made by each Employer individually or by the Company
on behalf of all Employers. The assets of the Trust shall not be deemed to be
assets of this Plan.
IX-1
<PAGE>
ARTICLE X
Amendment or Termination of Plan
The Compensation Committee shall have the power and right from time to
time to modify, amend, supplement, suspend or terminate the Plan as it applies
to each Employer, provided that no such change in the Plan may deprive a
Participant of the amounts allocated to his or her Accounts or be retroactive in
effect to the prejudice of any Participant and the interest rate applicable to
amounts credited to Participants' Accounts for periods subsequent to Termination
of Service shall not be reduced below 6% per annum. Any such modification,
amendment, supplement, suspension or termination shall be in writing and signed
by a member of the Compensation Committee.
X-1
<PAGE>
ARTICLE XI
General Provisions
(A) No Participant shall have any preference over the general creditors
of an Employer in the event of such Employer's insolvency.
(B) Nothing contained herein shall be construed to give any person the
right to be retained in the employ of an Employer or to interfere with the right
of an Employer to terminate the employment of any person at any time.
(C) If the Administrative Committee receives evidence satisfactory to it
that any person entitled to receive a payment hereunder is, at the time the
benefit is payable, physically, mentally or legally incompetent to receive such
payment and to give a valid receipt therefor, and that an individual or
institution is then maintaining or has custody of such person and that no
guardian, committee or other representative of the estate of such person has
been duly appointed, the Administrative Committee may direct that such payment
thereof be paid to such individual or institution maintaining or having custody
of such person, and the receipt of such individual or institution shall be valid
and a complete discharge for the payment of such benefit.
(D) Payments to be made hereunder may, at the written request of the
Participant, be made to a bank account designated by such Participant, provided
that deposits to the credit of such Participant in any bank or trust company
shall be deemed payment into his hands.
(E) Wherever any words are used herein in the masculine, feminine or
neuter gender, they shall be construed as though they were also used in another
gender in all cases where they would so apply, and whenever any words are used
herein in the singular or plural form, they shall be construed as though they
were also used in the other form in all cases where they would so apply.
(F) THIS PLAN SHALL BE CONSTRUED AND ENFORCED UNDER THE LAWS OF THE
STATE OF TEXAS EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.
XI-1
<PAGE>
ARTICLE XII
Effective Date
This amendment and restatement of the Plan shall be effective from and
after January 1, 1998 and shall continue in force during subsequent years unless
amended or revoked by action of the Compensation Committee.
HALLIBURTON COMPANY
By /s/ Dale P. Jones
----------------------
Dale P. Jones
Vice Chairman
XII-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Halliburton Company consolidated financial statements for the six months ended
June 30, 1998, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> Jan-01-1998
<PERIOD-END> Jun-30-1998
<EXCHANGE-RATE> 1
<CASH> 145
<SECURITIES> 0
<RECEIVABLES> 2,543
<ALLOWANCES> 0
<INVENTORY> 394
<CURRENT-ASSETS> 3,333
<PP&E> 4,187
<DEPRECIATION> 2,372
<TOTAL-ASSETS> 6,186
<CURRENT-LIABILITIES> 2,145
<BONDS> 525
0
0
<COMMON> 674
<OTHER-SE> 2,122
<TOTAL-LIABILITY-AND-EQUITY> 6,186
<SALES> 0
<TOTAL-REVENUES> 4,831
<CGS> 0
<TOTAL-COSTS> 4,266
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> 427
<INCOME-TAX> 165
<INCOME-CONTINUING> 254
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 254
<EPS-PRIMARY> 0.97
<EPS-DILUTED> 0.95
</TABLE>
