Oilfield services conglomerate Halliburton Co.'s fourth-quarter loss shrank by 78 percent with the wrap-up of its multibillion-dollar asbestos and silica settlement, the company said Friday. Its results fell short of Wall Street expectations, however.
The company's fourth-quarter net loss of $201 million, or 45 cents per share, included a $384 million loss, or 86 cents per share, which is a non-cash expense reflecting the increase in value of 59.5 million Halliburton shares involved in the settlement. In the fourth quarter of 2003, Halliburton posted a net loss of $947 million, or $2.18 per share, which included a $1.1 billion charge related to the asbestos settlement.
Excluding the charge, Halliburton reported income from continuing operations of $183 million, or 41 cents per share, compared to $146 million, or 34 cents per share, in the fourth quarter of 2003.
Analysts surveyed by Thomson First Call had expected earnings of 48 cents per share.
This week Halliburton began distributing $2.775 billion in cash to thousands of people who claim to have been harmed by asbestos and silica, and the 59.5 million shares, issued last week, have been placed in a trust to be sold over time. Together, along with notes with a net present value expected to be less than $100 million, the payouts will settle all current and future asbestos and silica claims. As the shares are sold, the proceeds forwarded to claimants will be the value of shares as of the day of sale.
Halliburton shares fell $1.64, or 3.8 percent, to $41.87 in morning trading Friday on the New York Stock Exchange.
Halliburton inherited the claims when the company acquired Dresser Industries Inc. for $7.7 billion in 1998, during Vice President Dick Cheney's 1995-2000 tenure as CEO.
Halliburton's revenues for the quarter reached $5.2 billion, down 5 percent from $5.46 billion a year ago because of reduced government contract work primarily in the Middle East by KBR, Halliburton's engineering and construction unit.
For the year, Halliburton reported a net loss of $977 million, or $2.21 per share, compared to a net loss of $820 million, or $1.88 per share, for 2003. Revenues for 2004 were $20.46 billion, compared to $16.27 billion in 2003.
KBR, formerly known as Kellogg, Brown & Root, reported fourth-quarter revenue of $3 billion, a 17 percent decrease from $3.66 billion in the year-ago period. The company said $1.7 billion of KBR's revenues stemmed from Iraq-related work.
KBR operating income for the quarter was breakeven, compared to operating income of $82 million in the year-ago period. Halliburton said those results reflected a $22 million restructuring charge. Operating income from KBR's Iraq work also dropped by $20 million year-over-year because the company completed its Restore Iraqi Oil, or RIO, contract, Halliburton said.
The company's energy services group reported fourth-quarter revenues of $2.2 billion, a 21 percent increase over $1.8 billion in the October-December period of 2003. The unit also reported a 54 jump in operating income, $370 million in the fourth quarter compared to $241 million in the same period last year.