INCORPORATION: DE

COMPANY-NUMBER:  
FORTUNE NUMBER: 0153  
FORBES NUMBER: SA150; AS279; PR098; MV292  
CUSIP NUMBER: 406216101

PRI-SIC: 1389  
2ND-SIC: 1389, 1629

DESCRIPTION:  
THE GROUP'S PRINCIPAL ACTIVITY IS TO PROVIDE A VARIETY OF SERVICES, 
PRODUCTS, MAINTENANCE, ENGINEERING AND CONSTRUCTION TO ENERGY, INDUSTRIAL 
AND GOVERNMENTAL CUSTOMERS. THE GROUP OPERATES THROUGH TWO SEGMENTS: ENERGY 
SERVICES GROUP AND ENGINEERING AND CONSTRUCTION GROUP. THE ENERGY SERVICES 
SEGMENT PROVIDES A WIDE RANGE OF DISCRETE SERVICES AND PRODUCTS, AS WELL AS 
INTEGRATED SOLUTIONS TO CUSTOMERS FOR THE EXPLORATION, DEVELOPMENT AND 
PRODUCTION OF OIL AND GAS. THE ENGINEERING AND CONSTRUCTION SEGMENT PROVIDES 
ENGINEERING, PROCUREMENT, CONSTRUCTION, PROJECT MANAGEMENT AND FACILITIES 
OPERATION AND MAINTENANCE FOR OIL AND GAS AND OTHER INDUSTRIAL AND 
GOVERNMENTAL CUSTOMERS. DURING THE YEAR 2001, THE GROUP ACQUIRED MAGIC EARTH 
INC AND PGS DATA MANAGEMENT. ENERGY SERVICES ACCOUNTED FOR 67% OF 2001 
REVENUES AND ENGINEERING AND CONSTRUCTION SERVICES, 33%.

SHARE INFORMATION:
CURRENT OUTSTANDING SHARES (SOURCE: 10-Q 07/24/2002)	436,351,938
SHARES HELD BY OFFICERS AND DIRECTORS (SOURCE: PROXY)	2,987,183
SHAREHOLDERS (SOURCE: 10-K)	25,100

 

STOCK INFORMATION
LATEST TRADE DATE	08/23/2002
FOR WEEK ENDING	08/22/2002
VOLUME	2,476,000
HIGH (OR ASKED)	15.070
LOW (OR BID)	14.100
CLOSE (OR AVERAGE)	15.000

 

EARNINGS INFORMATION
FOR TWELVE-MONTHS ENDING	07/2002
EPS	-0.360
PRICE/EARNINGS RATIO	41.667

 


OWNERSHIP:

FIDELITY MANAGEMENT & RESEARCH CORP, 8.57% (PRX 04-09-2002)

TYPE          DATE(Q,M)    OWNERS    CHANGE (000S) HELD  %OWN

INVEST. COS.  06/30/2002(Q)               0           0  0.00

INSTITUTIONS  06/30/2002(Q)  400      1,803     293,988 67.40

5% OWNERS     06/30/2002(M)    2         NA      59,763 13.71

INSIDERS      06/30/2002(M)   32         NA       2,509  0.57

 

DIVIDEND INFORMATION
INDICATED ANNUAL DIVIDEND	0.500
CURRENT DIVIDEND	0.1250
EX-DIVIDEND DATE	06/04/2002
RECORD DATE	06/06/2002
PAYABLE DATE	06/27/2002
PAYMENT METHOD	U.S. Currency

PREVIOUS DIVIDEND	0.1250
EX-DIVIDEND DATE	02/26/2002
RECORD DATE	02/28/2002
PAYABLE DATE	03/21/2002
PAYMENT METHOD	U.S. Currency

 


SUBSIDIARIES:
 
ABERDEEN CARGO HANDLING SERVICES LTD. (UNITED KINGDOM)
 
ACN 052 291 264 PTY 
 LTD. (AUSTRALIA)
 
ACN 005 585 795 PTY. LTD. (AUSTRALIA)
 
ACN 009 091 105 PTY 
 LTD. (AUSTRALIA)
 
ADUTE PTY LTD. (AUSTRALIA)
 
AL-RUSHAID TAYLOR DIVING LTD. 
 (SAUDI ARABIA)
 
AMERICAN THAI BARITE LTD. (THAILAND)
 
AOC AUSTRALIA PTY. LTD. 
 (AUSTRALIA)
 
AOC BROWN & ROOT CANADA LTD. (CANADA)
 
AOC CANADA LTD. 
 (CANADA)
 
AOC HOPKINSONS LTD. (UNITED KINGDOM)
 
AOC INTERNATIONAL LTD. (UNITED 
 KINGDOM)
 
AOC NIGERIA LTD. (NIGERIA)
 
AOC SERVICES LTD. (JERSEY)
 
AOC TECHNICAL 
 SERVICES LTD. (UNITED KINGDOM)
 
AOC TURBINE SERVICES LTD. (UNITED 
 KINGDOM)
 
AOC/WOOD OFFSHORE CONTRACTORS LTD. (UNITED KINGDOM)
 
AOCI NEW LTD. 
 (UNITED KINGDOM)
 
ARABIAN MINERALS & CHEMICALS LTD. (SAUDI ARABIA)
 
ARABIAN 
 PIPECOATING COMPANY LTD. (SAUDI ARABIA)
 
ARABIAN ROCKBITS & DRILLING TOOLS 
 COMPANY, LTD. (SAUDI ARABIA)
 
ARABIAN SHAW PIPECOATERS (THAILAND) LTD. 
 (THAILAND)
 
ARCTIC PACIFIC CONTRACTORS (UK) LTD. (UNITED KINGDOM)
 
ARCTIC 
 PACIFIC CONTRACTORS INTERNATIONAL, LLC (UNITED STATES)
 
AS-BUILT SOLUTIONS 
 LTD. (UNITED KINGDOM)
 
ASIA ENERGY SERVICES SDN. BHD. (MALAYSIA)
 
ASIA PACIFIC 
 CONTRACTING PTY LTD. (AUSTRALIA)
 
ASIA PACIFIC TRANSPORT FINANCE PTY LTD. 
 (AUSTRALIA)
 
ASIA PACIFIC TRANSPORT PTY LTD. (AUSTRALIA)
 
ASIAN MARINE 
 CONTRACTORS LTD. (MAURITIUS)
 
ATLANTIC MINERALS & PRODUCTS CORP. (UNITED 
 STATES)
 
AVA (U.K.) LTD. (UNITED KINGDOM)
 
AVA SARL (FRANCE)
 
AVALON FINANCIAL 
 SERVICES, LTD. (CAYMAN ISLANDS)
 
AWE PLC (UNITED KINGDOM)
 
AXELSON PUMP CO. 
 (UNITED STATES)
 
AXELSON-KUBAN LLC (CIS)
 
B&R-G5 INDUSTRIAL SERVICES 
 (PROPRIETARY) LTD. (SOUTH AFRICA)
 
B. THORNTON, LTD. (UNITED KINGDOM)
 
BAKHSH 
 KELLOGG SAUDI ARABIA LTD. (SAUDI ARABIA)
 
BAROID (FAR EAST) PTE. LTD. 
 (SINGAPORE)
 
BAROID (SAUDI ARABIA) LTD. (SAUDI ARABIA)
 
BAROID AUSTRALIA PTY. 
 LTD. (AUSTRALIA)
 
BAROID CARIBBEAN LTD. (CAYMAN ISLANDS)
 
BAROID CORP. (UNITED 
 KINGDOM)
 
BAROID DE VENEZUELA, SA (VENEZUELA)
 
BAROID DRILLING CHEMICAL 
 PRODUCTS LTD. (NIGERIA)
 
BAROID GMBH (GERMANY)
 
BAROID INTERNATIONAL, INC. 
 (UNITED STATES)
 
BAROID INTERNATIONAL TRADING CORP. (UNITED STATES)
 
BAROID 
 INTERNATIONAL, SPA (ITALY)
 
BAROID LTD. (UNITED KINGDOM)
 
BAROID NIGERIA, INC. 
 (UNITED STATES)
 
BAROID OF NIGERIA LTD. (NIGERIA)
 
BAROID PIGMINA INDUSTRIAL E 
 COMERCIAL LTDA (BRAZIL)
 
BAROID SARL (TUNISIA)
 
BAROID SALES EXPORT CORP. 
 (UNITED STATES)
 
BAROID SERVICES SDN. BHD. (MALAYSIA)
 
BAROID TECHNOLOGY, INC. 
 (UNITED STATES)
 
BAROID TRINIDAD SERVICES LTD. (TRINIDAD)
 
BAROID/VIDCO, LLC 
 (UNITED STATES)
 
BETEX BV (NETHERLANDS)
 
BHPE-KINHILL (INDIA) PRIVATE LTD. 
 (INDIA)
 
BITC HOLDINGS (US) LLC (UNITED STATES)
 
BITC (US) LLC (UNITED STATES) 
 BLUEFOIL LTD. (UNITED KINGDOM)
 
BONNY PROJECT MANAGEMENT COMPANY LTD. (UNITED 
 KINGDOM)
 
BRAMA BROWN & ROOT & MARSHALL AEROSPACE LTD. (UNITED 
 KINGDOM)
 
BREDERO PRICE BRASIL LTDA (BRAZIL)
 
BREDERO PRICE COATERS LTD. 
 (AUSTRALIA)
 
BREDERO PRICE COATERS (THAILAND) LTD. (THAILAND)
 
BREDERO PRICE 
 COLOMBIA BV (NETHERLANDS)
 
BREDERO PRICE CO. (UNITED STATES)
 
BREDERO PRICE 
 CUSTOM COATINGS LTD. (CYPRUS)
 
BREDERO PRICE DE MEXICO SA DE CV 
 (MEXICO)
 
BREDERO PRICE HOLDING BV (NETHERLANDS)
 
BREDERO PRICE INTERNATIONAL 
 BV (NETHERLANDS)
 
BREDERO PRICE ITALY SRL (ITALY)
 
BREDERO PRICE PIPECOATERS 
 (THAILAND) LTD. (THAILAND)
 
BREDERO PRICE PIPECOATERS BV 
 (NETHERLANDS)
 
BREDERO PRICE SERVICES LTD. (UNITED KINGDOM)
 
BREDERO-PRICE 
 SINGAPORE PTE LTD. (SINGAPORE)
 
BREDERO SHAW AUSTRALIA PTY. LTD. 
 (AUSTRALIA)
 
BREDERO-SHAW CO. (CANADA)
 
BREDERO-SHAW, INC. (UNITED 
 STATES)
 
BREDERO-SHAW, SL (SPAIN)
 
BREDERO-SHAW INTERNATIONAL LTD. 
 (BARBADOS)
 
BRESWATER MARINE CONTRACTING BV (NETHERLANDS)
 
BRITISH PLEUGER 
 SUBMERSIBLE PUMPS LTD. (UNITED KINGDOM)
 
BRITISH UNDERWATER ENGINEERING LTD. 
 (UNITED KINGDOM)
 
BROWN & ROOT (ASIA PACIFIC) PTE. LTD. (SINGAPORE)
 
BROWN & 
 ROOT (GULF) EC (BAHRAIN)
 
BROWN & ROOT (LABUAN) SENDIRIAN BERHAD 
 (MALAYSIA)
 
BROWN & ROOT (MALAYSIA) SDN. BHD. (MALAYSIA)
 
BROWN & ROOT 
 (OVERSEAS) LTD. (JERSEY)
 
BROWN & ROOT (S) PTE LTD. (SINGAPORE)
 
BROWN & ROOT 
 (SERVICES) LTD. (UNITED KINGDOM)
 
BROWN & ROOT-MURPHY, LLC (UNITED 
 STATES)
 
BROWN & ROOT AOC LTD. (UNITED KINGDOM)
 
BROWN & ROOT BANGLADESH LTD. 
 (UNITED KINGDOM)
 
BROWN & ROOT CAYMAN HOLDINGS, INC. (CAYMAN ISLANDS)
 
BROWN & 
 ROOT CONSTRUCTION (OVERSEAS) LTD. (UNITED KINGDOM)
 
BROWN & ROOT CONSTRUCTION 
 PTY LTD. (AUSTRALIA)
 
BROWN & ROOT EALING TECHNICAL SERVICES LTD. (UNITED 
 KINGDOM)
 
BROWN & ROOT ENERGY SERVICES (INDIA) PRIVATE LTD. (INDIA)
 
BROWN & 
 ROOT ENGINEERING SDN. BHD. (MALAYSIA)
 
BROWN & ROOT ESPANOLA, SA 
 (SPAIN)
 
BROWN & ROOT GEMSA, SA (VENEZUELA)
 
BROWN & ROOT HIGHLANDS 
 FABRICATORS LTD. (UNITED KINGDOM)
 
BROWN & ROOT INDUSTRIAL SERVICES 
 PHILIPPINES INC. (PHILIPPINES)
 
BROWN & ROOT INGENIEROS PETROLEROS DE 
 VENEZUELA, CA (VENEZUELA)
 
BROWN & ROOT INTERNATIONAL EASTERN, INC. 
 (PANAMA)
 
BROWN & ROOT INVESTMENTS (NO. 1) PTY LTD. (AUSTRALIA)
 
BROWN & ROOT 
 MAINTENANCE, INC. (PANAMA)
 
BROWN & ROOT MANAGEMENT LTD. (CANADA)
 
BROWN & 
 ROOT MID EAST LLC (OMAN)
 
BROWN & ROOT N.A. LTD. (BRITISH VIRGIN 
 ISLANDS)
 
BROWN & ROOT NIGERIA LTD. (NIGERIA)
 
BROWN & ROOT OPERATIONS PTY 
 LTD. (AUSTRALIA)
 
BROWN & ROOT PROJECTS LTD. (UNITED KINGDOM)
 
BROWN & ROOT 
 PROJECTS (NO. 1) PTY LTD. (AUSTRALIA)
 
BROWN & ROOT PROJECTS PTY LTD. 
 (AUSTRALIA)
 
BROWN & ROOT PTY. LTD. (AUSTRALIA)
 
BROWN & ROOT SAUDI LIMITED 
 CO. (SAUDI ARABIA)
 
BROWN & ROOT SERVICIOS INDUSTRIALES, INC. (PANAMA)
 
BROWN 
 & ROOT TECHNOLOGY (NO. 2) LTD. (UNITED KINGDOM)
 
BROWN & ROOT TECHNOLOGY LTD. 
 (UNITED KINGDOM)
 
BROWN & ROOT TOLL ROAD INVESTMENT PARTNERS, INC. (UNITED 
 STATES)
 
BROWN & ROOT, BOOZ-ALLEN LTD. (UNITED KINGDOM)
 
BUCHAN FABRICATIONS 
 LTD. (UNITED KINGDOM)
 
BUE SHIPS LTD. (UNITED KINGDOM)
 
CARIBBEAN NITROGEN 
 COMPANY LTD. (TRINIDAD)
 
CARIBBEAN NITROGEN COMPANY LTD. (TOBAGO)
 
CASPIAN 
 TRANSCO INC. (CAYMAN ISLANDS)
 
CCC CAYMAN, LTD. (CAYMAN ISLANDS)
 
CEBAR SDN. 
 BHD. (BRUNEI)
 
CEBO BOHRMATERIALEN GMBH (GERMANY)
 
CEBO CYPRUS LTD. 
 (CYPRUS)
 
CEBO HOLLAND BV (NETHERLANDS)
 
CEBO INTERNATIONAL BV 
 (NETHERLANDS)
 
CEBO MARINE BV (NETHERLANDS)
 
CEBO OFFSHORE SERVICES SDN. BHD. 
 (MALAYSIA)
 
CEBO U.K. LTD. (UNITED KINGDOM)
 
CHALFONT LTD. 
 (CYPRUS)
 
CHEMTRONICS, INC. (UNITED STATES)
 
CNOOC-OTIS WELL COMPLETION 
 SERVICES LTD. (CHINA)
 
COMBISA, S DE RL DE CV (MEXICO)
 
COMMERCIAL RESINS DE 
 MEXICO, SA DE CV (MEXICO)
 
COMPANIA DE SERVICIOS NMR, SA (ARGENTINA)
 
COMPANIA 
 TRANSANDINA DE EXPORTACION, INC. (UNITED STATES)
 
COMPRESSION COAT 
 INTERNATIONAL LTD.
 
CONKEL, S DE RL DE CV (MEXICO)
 
CONSORCIO CONTRINA LLC 
 (UNITED KINGDOM)
 
CONSTRUCTORA INDOLATINA, SA DE CV (MEXICO)
 
CONSTRUCTORES DE 
 VENEZUELA, BROWN & ROOT, INC., CA (VENEZUELA)
 
CYRIL LEA & ASSOCIATES LTD. 
 (UNITED KINGDOM)
 
DB STRATABIT GMBH (GERMANY)
 
DB STRATABIT LTD. (UNITED 
 KINGDOM)
 
DB STRATABIT PTE LTD. (SINGAPORE)
 
DB STRATABIT SDN. BHD. (MALAYSIA) 
 DDPS LTD. (UNITED KINGDOM)
 
D. HOLMES LTD. (UNITED KINGDOM)
 
DEVONPORT 
 ENGINEERING SERVICES LTD. (UNITED KINGDOM)
 
DEVONPORT MANAGEMENT LTD. (UNITED 
 KINGDOM)
 
DEVONPORT ROYAL DOCKYARD LTD. (UNITED KINGDOM)
 
DEVONPORT ROYAL 
 DOCKYARD PENSION TRUSTEES LTD. (UNITED KINGDOM)
 
DORHOLD LTD. (UNITED KINGDOM) 
 
 
DRESSER (ALGERIA) INC. (UNITED STATES)
 
DRESSER AG (LIECHTENSTEIN)
 
DRESSER 
 ANSTALT (LIECHTENSTEIN)
 
DRESSER AUSTRALIA PTY. LTD. (AUSTRALIA)
 
DRESSER BV 
 (NETHERLANDS)
 
DRESSER CAMEROON SARL (CAMEROON)
 
DRESSER CASPIAN, INC. (UNITED 
 STATES)
 
DRESSER CONGO SARL (CONGO)
 
DRESSER CORP. (UNITED STATES)
 
DRESSER DEL 
 ECUADOR SA (ECUADOR)
 
DRESSER FAR EAST, INC. (UNITED STATES)
 
DRESSER FOREIGN 
 SALES CORPORATION LTD. (GUAM)
 
DRESSER HOLDING, INC. (UNITED STATES)
 
DRESSER 
 INDUSTRIA, SA (BOLIVIA)
 
DRESSER INDUSTRIES, INC. (UNITED STATES)
 
DRESSER 
 INDUSTRIES-RUS (CIS)
 
DRESSER INTERNATIONAL SALES CORP. (DELAWARE)
 
DRESSER 
 INVESTMENTS NV (NETHERLANDS ANTILLES)
 
DRESSER IRELAND FINANCE CO. 
 (IRELAND)
 
DRESSER KELLOGG ENERGY SERVICES (NIGERIA) LTD. (NIGERIA)
 
DRESSER 
 KELLOGG ENERGY SERVICES (S. AFRICA) (PROPRIETA. (SOUTH AFRICA)
 
DRESSER 
 KELLOGG ENERGY SERVICES CORP. (PANAMA)
 
DRESSER KELLOGG ENERGY SERVICES INC. 
 (UNITED STATES)
 
DRESSER KELLOGG ENERGY SERVICES LTD. (UNITED 
 KINGDOM)
 
DRESSER KELLOGG SOUTH AFRICA LTD. (UNITED STATES)
 
DRESSER MINERALS 
 INTERNATIONAL, INC. (TEXAS)
 
DRESSER OIL TOOLS ARABIA LIMITED CO. (SAUDIA 
 ARABIA)
 
DRESSER OIL TOOLS, INC. (UNITED STATES)
 
DRESSER OILFIELD GABON SARL 
 (GABON)
 
DRESSER OILFIELD OPERATIONS (NIGERIA) INC. (UNITED STATES)
 
DRESSER 
 OILFIELD SERVICES BV (NETHERLANDS)
 
DRESSER OILFIELD SERVICES, INC. (UNITED 
 STATES)
 
DRESSER SOUTH AFRICA (PROPRIETARY) LTD. (SOUTH AFRICA)
 
DRESSER 
 SOVIET ENGINEERING (CIS)
 
DRESSER U.K. LTD. (UNITED KINGDOM)
 
DRESSER U.K. 
 PENSIONS LTD. (UNITED KINGDOM)
 
DRESSER-SHAW CO. (CANADA)
 
DRILLING FLUIDS 
 TECHNOLOGY AS (NORWAY)
 
DS CONTROLS, RUSSIA (RUSSIA)
 
EMC NEDERLAND BV 
 (NETHERLANDS)
 
ENVENTURE GLOBAL TECHNOLOGY, LLC (UNITED STATES)
 
EUROPEAN 
 MARINE CONTRACTORS LTD. (UNITED KINGDOM)
 
EUROPEAN MARINE CONTRACTORS LLC 
 (UNITED STATES)
 
FANN INSTRUMENT CO. (UNITED STATES)
 
FARGO ENGINEERING CO. 
 (UNITED STATES)
 
FASTEX DEFENCE SERVICES LTD. (UNITED KINGDOM)
 
FASTFLOW 
 SERVICES LTD. (UNITED KINGDOM)
 
FASTTRAX LTD. (UNITED KINGDOM)
 
FREIGHT LINK 
 PTY LTD. (AUSTRALIA)
 
G&H MANAGEMENT LLC (UNITED STATES)
 
GAZDMD AVTOMATIKA 
 (CIS)
 
GB SUBWORK BV (NETHERLANDS)
 
GEARHART (UNITED KINGDOM) LTD. (UNITED 
 KINGDOM)
 
GEARHART WELL EVALUATION LTD. (UNITED KINGDOM)
 
GEOPHYSICAL SERVICE 
 EUROPE CO. LTD. (HUNGARY)
 
GEORGE STREET PARADE LTD. (UNITED 
 KINGDOM)
 
GEOSOURCE EPIG SERVICES COMPANY LTD. (SUDAN)
 
GEOSOURCE 
 INTERNATIONAL (NEDERLAND) BV (NETHERLANDS)
 
GLOBAL DRILLING SERVICES, INC. 
 (PANAMA)
 
GO TURKEY SA (ISLE OF NEVIS)
 
GRANHERNE, INC. (UNITED 
 STATES)
 
GRANHERNE & CO LLC (OMAN)
 
GRANHERNE (HOLDINGS) LTD. (UNITED KINGDOM) 
 GRANHERNE INFORMATION SYSTEMS LTD. (UNITED KINGDOM)
 
GRANHERNE INTERNATIONAL 
 (HOLDINGS) LTD. (UNITED KINGDOM)
 
GRANHERNE INTERNATIONAL LTD. (UNITED 
 KINGDOM)
 
GRANHERNE LTD. (UNITED KINGDOM)
 
GRANHERNE SDN. BHD. 
 (MALAYSIA)
 
GREEN SEA OPERATIONS AS (NORWAY)
 
GROVE TK LTD. (UNITED 
 KINGDOM)
 
HALLIBURTON (PROPRIETARY) LTD. (SOUTH AFRICA)
 
HALLIBURTON (U.K.) 
 LTD. (UNITED KINGDOM)
 
HALLIBURTON ACQUISITIONS LTD. (UNITED 
 KINGDOM)
 
HALLIBURTON AFFILIATES CORP. (UNITED STATES)
 
HALLIBURTON ARGENTINA 
 SA (ARGENTINA)
 
HALLIBURTON ARKHANGELSK, LTD. (RUSSIA)
 
HALLIBURTON AS (NORWAY) 
 
 
HALLIBURTON AUSTRALIA PTY. LTD. (AUSTRALIA)
 
HALLIBURTON BV 
 (NETHERLANDS)
 
HALLIBURTON BROWN & ROOT INTERNATIONAL LTD. (UNITED 
 KINGDOM)
 
HALLIBURTON BROWN & ROOT LTD. (UNITED KINGDOM)
 
HALLIBURTON C.I.C.S. 
 INC. (CAYMAN ISLANDS)
 
HALLIBURTON CIMENTACAO LTDA (BRAZIL)
 
HALLIBURTON CO. 
 (UNITED STATES)
 
HALLIBURTON COMPANY AUSTRIA GMBH (AUSTRIA)
 
HALLIBURTON 
 COMPANY GERMANY GMBH (GERMANY)
 
HALLIBURTON COMPANY U.K. LTD. (UNITED KINGDOM) 
 
 
HALLIBURTON CONSULTING SERVICES NIGERIA LTD. (NIGERIA)
 
HALLIBURTON DE 
 MEXICO, SA DE CV (MEXICO)
 
HALLIBURTON DEL AMAZONAS SA (PERU)
 
HALLIBURTON DEL 
 PERU SA (PERU)
 
HALLIBURTON DENMARK AS (DENMARK)
 
HALLIBURTON DH LTD. (UNITED 
 KINGDOM)
 
HALLIBURTON ENERGY DEVELOPMENT (KAZAKHSTAN) LTD. (CAYMAN 
 ISLANDS)
 
HALLIBURTON ENERGY DEVELOPMENT (KAZAKHSTAN), INC. (UNITED 
 STATES)
 
HALLIBURTON ENERGY DEVELOPMENT (NORTH SEA), INC. (UNITED 
 STATES)
 
HALLIBURTON ENERGY DEVELOPMENT LTD. (CAYMAN ISLANDS)
 
HALLIBURTON 
 ENERGY SERVICES (MALAYSIA) SDN. BHD. (MALAYSIA)
 
HALLIBURTON ENERGY SERVICES 
 LTD. (UNITED KINGDOM)
 
HALLIBURTON ENERGY SERVICES NIGERIA LTD. 
 (NIGERIA)
 
HALLIBURTON ENERGY SERVICES ROMANIA SRL (ROMANIA)
 
HALLIBURTON 
 ENERGY SERVICES, INC. (UNITED STATES)
 
HALLIBURTON EPC-22 HOLDINGS, S DE RL 
 DE CV (MEXICO)
 
HALLIBURTON EQUIPMENT COMPANY SAE (EGYPT)
 
HALLIBURTON 
 ESPANOLA SA (SPAIN)
 
HALLIBURTON FAR EAST PTE LTD. (SINGAPORE)
 
HALLIBURTON 
 GEODATA (OVERSEAS) LTD. (UNITED KINGDOM)
 
HALLIBURTON GEODATA LTD. (UNITED 
 KINGDOM)
 
HALLIBURTON GLOBAL, LTD. (CAYMAN ISLANDS)
 
HALLIBURTON GROUP CANADA 
 INC. (CANADA)
 
HALLIBURTON HOLDING BV (NETHERLANDS)
 
HALLIBURTON HOLDING 
 GERMANY GMBH (GERMANY)
 
HALLIBURTON HOLDINGS AUSTRALIA PTY. LTD. 
 (AUSTRALIA)
 
HALLIBURTON HOLDINGS LTD. (UNITED KINGDOM)
 
HALLIBURTON I CAYMAN, 
 LTD. (CAYMAN ISLANDS)
 
HALLIBURTON II CAYMAN, LTD. (CAYMAN 
 ISLANDS)
 
HALLIBURTON IMCO (CAMEROON) SARL (CAMEROON)
 
HALLIBURTON IMCO (GABON) 
  SARL (GABON)
 
HALLIBURTON INTERNATIONAL GMBH (AUSTRIA)
 
HALLIBURTON 
 INTERNATIONAL, INC. (UNITED STATES)
 
HALLIBURTON ITALIANA SPA 
 (ITALY)
 
HALLIBURTON KAZAKHSTAN OILFIELD SERVICES, LTD. 
 (KAZAKHSTAN)
 
HALLIBURTON KBR OPERATIONS PTY LTD. (AUSTRALIA)
 
HALLIBURTON KBR 
 PTY LTD. (AUSTRALIA)
 
HALLIBURTON KBR PRODUCTION SERVICES PTY LTD. (AUSTRALIA) 
 
 
HALLIBURTON KBR WATER SERVICES PTY LTD. (AUSTRALIA)
 
HALLIBURTON LATIN 
 AMERICA SA (PANAMA)
 
HALLIBURTON LTD. (UNITED KINGDOM)
 
HALLIBURTON LOGGING 
 SERVICES (M) SDN. BHD. (MALAYSIA)
 
HALLIBURTON MANUFACTURING & SERVICES LTD. 
 (UNITED KINGDOM)
 
HALLIBURTON MANUFACTURING (SINGAPORE) PTE. LTD. (SINGAPORE) 
 HALLIBURTON MULTINATIONAL, INC. (UNITED STATES)
 
HALLIBURTON NEW ZEALAND LTD. 
 (NEW ZEALAND)
 
HALLIBURTON NIGERIA LTD. (NIGERIA)
 
HALLIBURTON NUS CORP. 
 (UNITED STATES)
 
HALLIBURTON OFFSHORE SERVICES, INC. (CAYMAN 
 ISLANDS)
 
HALLIBURTON OIL SERVICES VIETNAM LTD. (VIETNAM)
 
HALLIBURTON 
 OILFIELD SERVICES INDIA LTD. (INDIA)
 
HALLIBURTON OILFIELD SERVICES LTD. 
 (RUSSIA)
 
HALLIBURTON OPERATIONS NIGERIA LTD. (NIGERIA)
 
HALLIBURTON OVERSEAS 
 LTD. (CAYMAN ISLANDS)
 
HALLIBURTON PARTNERS CANADA LTD. (CANADA)
 
HALLIBURTON 
 PENSION TRUSTEE LTD. (UNITED KINGDOM)
 
HALLIBURTON PRODUCTS & SERVICES LTD. 
 (CAYMAN ISLANDS)
 
HALLIBURTON PRODUTOS LTDA (BRAZIL)
 
HALLIBURTON REAL ESTATE 
 SERVICES, INC. (UNITED STATES)
 
HALLIBURTON SAS (FRANCE)
 
HALLIBURTON S.C., 
 INC. (UNITED STATES)
 
HALLIBURTON SAUDI LOGGING LLC (SAUDI 
 ARABIA)
 
HALLIBURTON SERVICES (MALAYSIA) SDN. BHD. (MALAYSIA)
 
HALLIBURTON 
 SERVICIOS (CHILE) LTDA (CHILE)
 
HALLIBURTON SERVICOS LTDA 
 (BRAZIL)
 
HALLIBURTON SINGAPORE PTE. LTD. (SINGAPORE)
 
HALLIBURTON TECHNICAL 
 SERVICES, INC. (UNITED STATES)
 
HALLIBURTON TESEL LTD. (UNITED 
 KINGDOM)
 
HALLIBURTON TRINIDAD LTD. (TRINIDAD)
 
HALLIBURTON TUNISIA (OFFSHORE) 
 LTD. (TUNISIA)
 
HALLIBURTON WEST AFRICA LTD. (CAYMAN ISLANDS)
 
HALLIBURTON 
 WORLDWIDE LTD. (CAYMAN ISLANDS)
 
HALLIBURTON WORLDWIDE SERVICES, INC. (UNITED 
 STATES)
 
HALLIBURTON Z, LTD. (CAYMAN ISLANDS)
 
HALLIBURTON-ATYRAU OIL & GAS 
 SERVICES (KAZAKHSTAN)
 
HALSON FINANCIAL SERVICES LTD. (CAYMAN ISLANDS)
 
HBR 
 (THAILAND) LTD. (THAILAND)
 
HBR ASIA CONTRACTORS LTD. (HONG KONG)
 
HBR ENERGY, 
 INC. (UNITED STATES)
 
HBR NL HOLDINGS, LLC
 
HED (INDONESIA), INC. (UNITED 
 STATES)
 
HGS ENTERPRISES INC. (PANAMA)
 
HGS LTD. (UNITED KINGDOM)
 
HLS INDIA 
 LTD. (INDIA)
 
HLS NIGERIA LTD. (NIGERIA)
 
HMB SUBWORK LTD. (UNITED 
 KINGDOM)
 
HOBBYMARKT CAPELLE BV (NETHERLANDS)
 
HOBBYMARKT CAPELLE DE MEXICO, 
 SA DE CV (MEXICO)
 
HOLMES BLOWERS LTD. (UNITED KINGDOM)
 
HOWARD HUMPHREYS & 
 PARTNERS LTD. (UNITED KINGDOM)
 
HOWARD HUMPHREYS (KENYA) LTD. (KENYA)
 
HOWARD 
 HUMPHREYS (TANZANIA) LTD. (TANZANIA)
 
HOWARD HUMPHREYS (UGANDA) LTD. (UGANDA) 
 HOWARD HUMPHREYS (ZIMBABWE) LTD. (UNITED KINGDOM)
 
HOWARD HUMPHREYS GROUP 
 LTD. (UNITED KINGDOM)
 
HOWARD HUMPHREYS LTD. (UNITED KINGDOM)
 
HOWARD 
 HUMPHREYS PROJECT MANAGEMENT (HK) LTD. (HONG KONG)
 
HOWARD HUMPHREYS PROJECT 
 MANAGEMENT LTD. (UNITED KINGDOM)
 
HUAMEI HALLIBURTON PETROLEUM TECHNICAL 
 SERVICE CO. LTD. (CHINA)
 
HUNTING-BRAE LTD. (UNITED KINGDOM)
 
ILEX 
 TECHNOLOGIES LTD. (UNITED KINGDOM)
 
INTEGRATED DOCUMATICS LTD. (UNITED 
 KINGDOM)
 
INTEGRATED POWER SERVICES PTY LTD. (AUSTRALIA)
 
INTERNATIONAL 
 ADMINISTRATIVE SERVICES, LTD. (CAYMAN ISLANDS)
 
INTERNATIONAL AUTOMATIVE 
 TECHNOLOGIES, LLC (UNITED STATES)
 
IPEM DEVELOPMENTS LTD. (UNITED 
 KINGDOM)
 
JET RESEARCH CENTER, INC. (UNITED STATES)
 
JET RESEARCH CORP. 
 (UNITED STATES)
 
KAPEQ TRADING LTD. (CYPRUS)
 
KBR CALEDONIA LTD. (UNITED 
 KINGDOM)
 
KBR DE MONTEREY SA DE CV (MEXICO)
 
KBR DEVELOPMENT CORP. (CAYMAN 
 ISLANDS)
 
KBR/TECHNIP, LLC (UNITED STATES)
 
KBRDC CNC (CAYMAN) LTD. (CAYMAN 
 ISLANDS)
 
KBRDC NITROGEN 2000 (CAYMAN) LTD. (CAYMAN ISLANDS)
 
KBRDC NITROGEN 
 2000 (ST. LUCIA) LTD. (ST. LUCIA)
 
K INTERNATIONAL ENGINEERS PTY LTD.
 
KELLOGG 
 (MALAYSIA) SDN. BHD. (MALAYSIA)
 
KELLOGG AFRICA GROWTH FUND INC. (UNITED 
 STATES)
 
KELLOGG BROWN & ROOT ALGERIA INC. (UNITED STATES)
 
KELLOGG BROWN & 
 ROOT CONSULTANCY (MALAYSIA) SDN. BHD. (MALAYSIA)
 
KELLOGG BROWN & ROOT 
 ENGINEERING CORP. (UNITED STATES)
 
KELLOGG BROWN & ROOT FAR EAST, INC. 
 (UNITED STATES)
 
KELLOGG BROWN & ROOT GMBH (GERMANY)
 
KELLOGG BROWN & ROOT, 
 INC. (UNITED STATES)
 
KELLOGG BROWN & ROOT INDIA LTD. (UNITED STATES)
 
KELLOGG 
 BROWN & ROOT INTERNATIONAL, INC. (DELAWARE)
 
KELLOGG BROWN & ROOT 
 INTERNATIONAL, INC. (PANAMA)
 
KELLOGG BROWN & ROOT LTD. (UNITED 
 KINGDOM)
 
KELLOGG CARDON, CA (VENEZUELA)
 
KELLOGG CHINA INC. (UNITED 
 STATES)
 
KELLOGG CHIYODA SERVICES LTD. (CAYMAN ISLANDS)
 
KELLOGG CONSTRUCTION 
 LTD. (UNITED KINGDOM)
 
KELLOGG FRANCE, SA (FRANCE)
 
KELLOGG INTERNATIONAL 
 SERVICES CORP. (UNITED STATES)
 
KELLOGG INTERNATIONAL SERVICES LTD. (CAYMAN 
 ISLANDS)
 
KELLOGG IRAN, INC. (UNITED STATES)
 
KELLOGG ISL LTD. (CAYMAN ISLANDS) 
 
 
KELLOGG KOREA, INC. (UNITED STATES)
 
KELLOGG MALAYSIA, INC. (UNITED 
 STATES)
 
KELLOGG MEXICO, INC. (UNITED STATES)
 
KELLOGG MIDDLE EAST LTD. 
 (UNITED STATES)
 
KELLOGG OFFSHORE LTD. (UNITED KINGDOM)
 
KELLOGG OVERSEAS 
 CORP. (UNITED STATES)
 
KELLOGG PAN AMERICAN, CA (VENEZUELA)
 
KELLOGG PAN 
 AMERICAN CORP. (UNITED STATES)
 
KELLOGG SAUDI ARABIA LTD. (UNITED 
 STATES)
 
KELLOGG SERVICES, INC. (UNITED STATES)
 
KESTREL SUBSEA SYSTEMS LTD. 
 (UNITED KINGDOM)
 
KINHILL BUILDING INVESTIGATION PTY LTD. (AUSTRALIA)
 
KINHILL 
 HOLDINGS PTY LTD. (AUSTRALIA)
 
KINHILL INDIA PRIVATE LTD. (INDIA)
 
KINHILL 
 INVESTMENTS PTY LTD. (AUSTRALIA)
 
KINHILL PACIFIC PTY. LTD. 
 (AUSTRALIA)
 
KINHILL PAKISTAN (PRIVATE) LTD. (PAKISTAN)
 
KINHILL PNG LTD. (NEW 
 GUINEA)
 
KINHILL PTE LTD. (SINGAPORE)
 
KINHILL SAGRIC PTY LTD. 
 (AUSTRALIA)
 
KINHILL SUPERANNUATION NOMINEES PTY LTD. (AUSTRALIA)
 
KPA, SA DE 
 CV (MEXICO)
 
KRSA LTD. (UNITED KINGDOM)
 
KRW ENERGY SYSTEMS INC. (UNITED 
 STATES)
 
LANDMARK AMERICA LATINA, SA (PANAMA)
 
LANDMARK DE MEXICO, SA DE CV 
 (MEXICO)
 
LANDMARK EAME, LTD. (UNITED KINGDOM)
 
LANDMARK GRAPHICS COLOMBIA SA 
 (COLOMBIA)
 
LANDMARK GRAPHICS CORP. (UNITED STATES)
 
LANDMARK GRAPHICS DO 
 BRASIL LTDA (BRAZIL)
 
LANDMARK GRAPHICS EUROPE/AFRICA, INC. (UNITED 
 STATES)
 
LANDMARK GRAPHICS INTERNATIONAL, INC. (UNITED STATES)
 
LANDMARK 
 GRAPHICS (MALAYSIA) SDN. BHD. (MALAYSIA)
 
LANDMARK GRAPHICS (NIGERIA) LTD. 
 (NIGERIA)
 
LANDMARK GRAPHICS VENEZUELA CA (VENEZUELA)
 
LAUREL FINANCIAL 
 SERVICES BV (NETHERLANDS)
 
LAUT-AOC SDN. BHD. (BRUNEI)
 
LCL KNIGHTSBRIDGE LTD. 
 (UNITED KINGDOM)
 
LIAOHE HALLIBURTON FLOW MEASUREMENT CO. (CHINA)
 
LMK 
 RESOURCES (MAURITIUS)
 
LMK RESOURCES PAKISTAN (PVT.) LTD. (PAKISTAN)
 
LNG 
 SERVICOS E GESTAO DE PROJECTOS LTDA (PORTUGAL)
 
M. W. KELLOGG COMPANY LTD. 
 (CANADA)
 
M. W. KELLOGG CONSTRUCTORS INC. (UNITED STATES)
 
M. W. KELLOGG GROUP 
 LTD. (UNITED KINGDOM)
 
M. W. KELLOGG INTERNATIONAL LTD. (UNITED KINGDOM)
 
M. 
 W. KELLOGG LTD. (UNITED KINGDOM)
 
M. W. KELLOGG PENSIONS LTD. (UNITED KINGDOM) 
 
 
M. W. KELLOGG TECHNOLOGY CO. (UNITED STATES)
 
MAGIC EARTH, INC. (UNITED 
 STATES)
 
MAGIC EARTH, LTD. (UNITED KINGDOM)
 
MANAGEMENT LOGISTICS, INC. 
 (UNITED STATES)
 
MANTENIMIENTO MARINO DE MEXICO, S DE RL DE CV 
 (MEXICO)
 
MAREND LTD. (UNITED KINGDOM)
 
MASHHOR WELL SERVICES SDN. BHD. 
 (BRUNEI)
 
MASONEILAN INTERNATIONAL, LLC (UNITED STATES)
 
MID-VALLEY, INC. 
 (UNITED STATES)
 
MIDDLE EAST TECHNOLOGIES, INC. (UNITED STATES)
 
MILLENNIUM 
 LINK LTD. (UNITED KINGDOM)
 
MONENCO OFFSHORE LTD. (CANADA)
 
MONO GROUP (UNITED 
 KINGDOM)
 
MONO GROUP PENSION TRUSTEES LTD. (UNITED KINGDOM)
 
MONO PUMPS 
 (AUSTRALIA) PTY. LTD. (AUSTRALIA)
 
MONO PUMPS (ENGINEERING) LTD. (UNITED 
 KINGDOM)
 
MONO PUMPS (MANFACTURING) LTD. (UNITED KINGDOM)
 
MONO PUMPS (NEW 
 ZEALAND) LTD. (NEW ZEALAND)
 
MONO PUMPS (U.K.) LTD. (UNITED KINGDOM)
 
MONO 
 PUMPS LTD. (UNITED KINGDOM)
 
MONOFLO, INC. (UNITED STATES)
 
MOROCCAN ENGINEERS 
 & CONSTRUCTORS (MOROCCO)
 
NEDERLANDS BEDRIJFSKLEDING SERVICE BV (NETHERLANDS) 
 NEW OCEAN CONTRACTORS LTD. (UNITED KINGDOM)
 
NIBOD MINES LTD. (NIGERIA)
 
NILE 
 OILFIELD ENGINEERING LTD. (SUDAN)
 
NL BAROID (CAMEROON) SARL (CAMEROON)
 
NL DO 
 BRAZIL LTDA (BRAZIL)
 
NL OVERSEAS SERVICE COMPANY LTD. (UNITED KINGDOM)
 
NORSK 
 MODIFIKAJON OG VEDLIKEHOLD SERVICE AS (NORWAY)
 
NORTH SEA ASSETS LTD. (UNITED 
 KINGDOM)
 
NUMALOG, LTD. (ISRAEL)
 
NUMAR UK LTD. (UNITED KINGDOM)
 
NUS OF 
 MARYLAND, INC. (UNITED STATES)
 
OGC INTERNATIONAL LTD. (UNITED 
 KINGDOM)
 
OILFIELD TELECOMMUNICATIONS, INC. (UNITED STATES)
 
OTIS ENGINEERING 
 ITALIANA SRL (ITALY)
 
OVERSEAS ADMINISTRATION SERVICES, LTD. (CAYMAN ISLANDS) 
 OVERSEAS MARINE LEASING CO. (UNITED STATES)
 
P.T. BAROID (INDONESIA)
 
P.T. 
 BREDERO PRICE (INDONESIA)
 
P.T. BROWN & ROOT (INDONESIA)
 
P.T. HALLIBURTON 
 DRILLING SYSTEMS (INDONESIA)
 
P.T. HALLIBURTON (INDONESIA)
 
P.T. HALLIBURTON 
 LOGGING SERVICES (INDONESIA)
 
P.T. INDOKOR SPERRY-SUN (INDONESIA)
 
P.T. JAYA 
 KINHILL ARKONIN (INDONESIA)
 
P.T. KINHILL (INDONESIA)
 
P.T. LANDMARK 
 CONCURRENT SOLUSI (INDONESIA)
 
P.T. NUMAR (INDONESIA)
 
P.T. SECURITY MULIA 
 (INDONESIA)
 
P.T. UDEMCO OTIS (INDONESIA)
 
PACE AS (NORWAY)
 
PALOAK LTD. 
 (UNITED KINGDOM)
 
PES FRANCE (FRANCE)
 
PES NETHERLANDS LTD. (UNITED 
 KINGDOM)
 
P.E.S. PETROQUIP LTD. (UNITED KINGDOM)
 
P.E.S. PETROSEAL LTD. 
 (UNITED KINGDOM)
 
P.E.S. PETROSERV LTD. (UNITED KINGDOM)
 
P.E.S. PETROSPEC 
 LTD. (UNITED KINGDOM)
 
PES TRUSTEES LTD. (UNITED KINGDOM)
 
PETROLEUM 
 ENGINEERING SERVICES (ITALIA) SRL (ITALY)
 
PETROLEUM ENGINEERING SERVICES 
 ASIA PTY. LTD. (AUSTRALIA)
 
PETROLEUM ENGINEERING SERVICES LTD. (UNITED 
 KINGDOM)
 
PETROLEUM ENGINEERING SERVICES NORGE AS (NORWAY)
 
PETROLEUM 
 INFORMATION & EQUIPMENT SERVICES PTE. LTD. (SINGAPORE)
 
PETROLEUM 
 MANUFACTURING SERVICES LTD. (UNITED KINGDOM)
 
PETRODATA AS 
 (NORWAY)
 
PETROLOGIC LTD. (UNITED KINGDOM)
 
PGS DATA MANAGEMENT (UK) LTD. 
 (UNITED KINGDOM)
 
PLANTATION LAND COMPANY, INC. (UNITED STATES)
 
POLINEX-CEKOP 
 SA (POLAND)
 
PROFESSIONAL RESOURCES, LTD. (BERMUDA)
 
PROPERTY & CASUALTY 
 INSURANCE, LTD. (U.S. UNITED STATES)
 
PROPERTY & CASUALTY INSURANCE, LTD. 
 (BERMUDA)
 
PULLMAN KELLOGG PLANT SERVICES ALGERIA, INC. (UNITED 
 STATES)
 
REZAYAT BROWN & ROOT SAUDI COMPANY LTD. (SAUDI ARABIA)
 
ROAD 
 MANAGEMENT CONSOLIDATED PLC (UNITED KINGDOM)
 
ROAD MANAGEMENT GROUP LTD. 
 (UNITED KINGDOM)
 
ROAD MANAGEMENT LTD. (UNITED KINGDOM)
 
ROAD MANAGEMENT 
 SERVICES (A13) HOLDINGS LTD. (UNITED KINGDOM)
 
ROAD MANAGEMENT SERVICES (A13) 
 PLC (UNITED KINGDOM)
 
ROAD MANAGEMENT SERVICES (GLOUCESTER) LTD. (UNITED 
 KINGDOM)
 
ROAD MANAGEMENT SERVICES (PETERBOROUGH) LTD. (UNITED 
 KINGDOM)
 
ROCKWATER (NORTH SEA) LTD. (UNITED KINGDOM)
 
ROCKWATER BV 
 (NETHERLANDS)
 
ROCKWATER CV (NETHERLANDS)
 
ROCKWATER HOLDINGS LTD. (UNITED 
 KINGDOM)
 
ROCKWATER LTD. (UNITED KINGDOM)
 
ROCKWATER OFFSHORE CONTRACTORS 2 BV 
 (NETHERLANDS)
 
ROTARY BROWN & ROOT PTE. LTD. (SINGAPORE)
 
SATTAHIP PIPECOATERS 
 LTD. (THAILAND)
 
SBR OFFSHORE LTD. (CANADA)
 
SCIENTIFIC & TECHNICAL COMPUTING 
 CENTRE PTY LTD. (AUSTRALIA)
 
SEAFORTH ENGINEERING LTD. (UNITED 
 KINGDOM)
 
SEAFORTH KINERGETICS LTD. (UNITED KINGDOM)
 
SEAFORTH MARINE SERVICES 
 LTD. (UNITED KINGDOM)
 
SEAFORTH MARITIME (HOLDINGS) LTD. (UNITED 
 KINGDOM)
 
SEAFORTH MARITIME LTD. (UNITED KINGDOM)
 
SECURITY DBS (MEM) EC 
 (BAHRAIN)
 
SECURITY DBS BV (NETHERLANDS)
 
SECURITY DBS ITALIA SRL 
 (ITALY)
 
SECURITY DBS SA (FRANCE)
 
SEMBROWN EQUIPMENT PTE LTD. 
 (SINGAPORE)
 
SEMI SUB SERVICES BV (NETHERLANDS)
 
SERVICE EMPLOYEES 
 INTERNATIONAL, INC. (CAYMAN ISLANDS)
 
SERVICIOS HALLIBURTON DE VENEZUELA, SA 
 (UNITED STATES)
 
SERVICIOS INDUSTRIALES WORTHINGTON, SA (VENEZUELA)
 
SERVICIOS 
 PROFESIONALES PETROLEROS, S DE RL DE CV (MEXICO)
 
SERVICIOS TECNICOS BROWN & 
 ROOT, SA (PANAMA)
 
SHAPADU ROCKWATER SDN. BHD. (MALAYSIA)
 
SHAW INDUSTRIES 
 PTY. LTD. (AUSTRALIA)
 
SHAW PIPE INDUSTRIES LTD. (CANADA)
 
SIAM BROWN & ROOT 
 LTD. (THAILAND)
 
SIF-ISOPIPE SA (FRANCE)
 
SINOKELLOGG ENGINEERING CO. 
 (CHINA)
 
SNAMPROGETTI NETHERLANDS, BV (NETHERLANDS)
 
SOCIEDAD ESPANOLA DE 
 BOMBAS Y MAQUINARIA SA (SPAIN)
 
SPERRY SUN SAUDIA COMPANY LTD. (SAUDI ARABIA) 
 SPERRY-SUN (U.K.) LTD. (UNITED KINGDOM)
 
SPERRY-SUN DE ECUADOR SA 
 (ECUADOR)
 
STRATA BIT LTD. (UNITED KINGDOM)
 
STRATAMODEL (BARBADOS) EXPORT 
 LTD. (BARBADOS)
 
STRATAMODEL (FSC) (BARBADOS)
 
STUDEBAKER-WORTHINGTON (U.K.) 
 LTD. (UNITED KINGDOM)
 
SUBSAHARA SERIVCES, INC. (UNITED STATES)
 
SUBSEA HMB 
 LTD. (UNITED KINGDOM)
 
SUB SEA OFFSHORE (B) BERHAD (BRUNEI)
 
SUB SEA OFFSHORE 
 (HOLDINGS) LTD. (UNITED KINGDOM)
 
SUB SEA OFFSHORE LTD. (UNITED KINGDOM)
 
SUB 
 SEA OFFSHORE PTE. LTD. (SINGAPORE)
 
SUB SEA OVERSEAS, INC. (PANAMA)
 
SUB SEA 
 WORLDWIDE, INC. (PANAMA)
 
SUBSEAKAT (MALAYSIA) SDN. BHD. (MALAYSIA)
 
SYMINGTON 
 WAYNE OVERSEAS, LTD. (CANADA)
 
T.K. VALVE HOLDINGS (UNITED KINGDOM)
 
TAYLOR 
 DIVING (SOUTH EAST ASIA) PTE. LTD. (SINGAPORE)
 
TAYLOR INTERNATIONAL DIVING 
 COMPANY, INC. (UNITED STATES)
 
TESEL HOLDINGS LTD. (UNITED KINGDOM)
 
THAI 
 PIPECOATERS LTD. (THAILAND)
 
ARAB GEOPHYSICAL EXPLORATION SERVICES CO. (LIBYA) 
 
 
THERMOTITE AS (NORWAY)
 
THERMOTITE BRASIL LTDA (BRAZIL)
 
THERMOTITE SUBSEA 
 INSULATION, INC. (UNITED STATES)
 
THOMCO (NO. 2011) PTY LTD. (AUSTRALIA)
 
TRES 
 GAVIOTAS, SA DE CV (MEXICO)
 
TRI-CAN PERFORATORS LTD. (TRINIDAD)
 
TRICONOS 
 MINEROS SA (CHILE)
 
TSKJ-SERVICOS DE ENGENHARIA LTDA (PORTUGAL)
 
TSKJ II 
 CONSTRUCOES INTERNACIONAIS SOCIEDADE UNIPESSOAL LT. (PORTUGAL)
 
TSKJ NIGERIA 
 LTD. (NIGERIA)
 
UCAMAR SHIPPING & TRANSPORTATION COMPANY (CAYMAN) LT. (CAYMAN 
 ISLANDS)
 
UMC ENGINEERING SDN. BHD. (MALAYSIA)
 
UNIGLOBE ENGINEERING LTD. 
 (CYPRUS)
 
UNIVERSAL ENERGY SERVICES AKTIENGESELLSCHAFT 
 (LIECHTENSTEIN)
 
UNIVERSAL ENERGY SERVICES SRL (ITALY)
 
VACTOR INDUSTRIAL 
 POLLUTION (U.K.) LTD. (UNITED KINGDOM)
 
VOSNOC LTD. (CYPRUS)
 
W.T. LTD. 
 (UNITED KINGDOM)
 
WALBRIDGE BROWN & ROOT INTERNATIONAL LLC 

OFFICERS (NAME/AGE/TITLE/REMUNERATION): (SOURCE: 10K)

BLURTON, JERRY H./ 57/ VICE PRESIDENT, TREASURER / NA

CARRIERE, MARGARET E./ 50/ VICE PRESIDENT / NA

COLEMAN, LESTER L./ 59/ EXECUTIVE VICE PRESIDENT, LEGAL COUNSEL

(PRX 04-09-2002) / $ 1,887,028

FOSHEE, DOUGLAS L./ 42/ EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER /

NA

HARL, ROBERT R./ 51/ SUBSIDIARY OFFICER (PRX 04-09-2002) / $ 1,548,913

HEINEMANN, ROBERT F./ 48/ VICE PRESIDENT, CHIEF TECHNOLOGY OFFICER / NA

HUFFMAN, ARTHUR D./ 49/ VICE PRESIDENT / NA

LESAR, DAVID J./ 48/ CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER,

PRESIDENT (PRX 04-09-2002) / $ 7,220,308

MORRIS, GARY V./ 48/ EXECUTIVE VICE PRESIDENT (PRX 04-09-2002) /

$ 2,101,458

MUCHMORE, R. CHARLES, JR./ 48/ VICE PRESIDENT, CONTROLLER / NA

HOWELL, WILLIAM R./ 66/ EXECUTIVE OFFICER, DIRECTOR (PRX 04-09-2002) / NA

HUNT, RAY L./ 58/ EXECUTIVE OFFICER, DIRECTOR (PRX 04-09-2002) / NA

KEITH, SUSAN S./ NA/ VICE PRESIDENT, SECRETARY (PRX 04-09-2002) / NA

ORTIZ, EDGAR J./ NA/ SUBSIDIARY OFFICER (PRX 04-09-2002) / $ 2,211,594

 


DIRECTORS/NOMINEES (NAME/AGE/TITLE/REMUNERATION): (SOURCE: PROXY 04/09/2002)

LESAR, DAVID J./ 48/ CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER,

PRESIDENT (10-Q 06-30-2002) / $ 7,220,308

CRANDALL, ROBERT L./ 66/ DIRECTOR (10-Q 06-30-2002) / NA

DERR, KENNETH T./ 65/ DIRECTOR (10-Q 06-30-2002) / NA

DI BONA, CHARLES JOSEPH/ 70/ DIRECTOR (10-Q 06-30-2002) / NA

EAGLEBURGER, LAWRENCE SIDNEY/ 71/ DIRECTOR (10-Q 06-30-2002) / NA

HOWELL, WILLIAM R./ 66/ EXECUTIVE OFFICER, DIRECTOR (10-Q 06-30-2002) / NA

HUNT, RAY L./ 58/ EXECUTIVE OFFICER, DIRECTOR (10-Q 06-30-2002) / NA

LEWIS, AYLWIN B./ 47/ DIRECTOR (10-Q 06-30-2002) / NA

MARTIN, J. LANDIS/ 56/ DIRECTOR (10-Q 06-30-2002) / NA

PRECOURT, JAY ANTHONY/ 64/ DIRECTOR (10-Q 06-30-2002) / NA

REED, DEBRA L./ 45/ DIRECTOR (10-Q 06-30-2002) / NA

SILAS, CECIL JESSE/ 69/ DIRECTOR (10-Q 06-30-2002) / NA

 


NUMBER OF EMPLOYEES: 85,000 (SOURCE: 10-K)

FISCAL YEAR END: 12/31  
LATEST ANNUAL FINANCIAL DATE: 12/31/2001  
LATEST QUARTERLY FINANCIAL DATE: 06/30/2002

AUDITOR INFORMATION:  
AUDITOR CHANGE: KPMG PEAT MARWICK (8-K 04-17-2002)  
AUDITOR: ARTHUR ANDERSEN & CO (SOURCE: 10-K)  
AUDITOR'S REPORT:  UNQUALIFIED

LEGAL COUNSEL: NA  
STOCK TRANSFER AGENT: NA

SEGMENT DATA
(SOURCE: 10-K 12/31/2001)	SALES	OP INCOME
ENERGY SERVICES GROUP	8,722,000,000	1,015,000,000
ENGINEERING & CONSTRUCTION	4,324,000,000	143,000,000

 

FIVE YEAR SUMMARY
YEAR	SALES	NET INCOME	EPS
2001	13,046,000,000	809,000,000	1.89
2000	11,944,000,000	501,000,000	1.13
1999	12,313,000,000	438,000,000	1.00
1998	14,504,000,000	-15,000,000	-0.03
1997	13,498,000,000	772,000,000	1.79

5-YEAR GROWTH RATE	-0.8	1.1	1.3

 

ASSETS (in thousands)
FISCAL YEAR END	12/31/2001	12/31/2000	12/31/1999
CASH	290,000	231,000	466,000
MARKETABLE SECURITIES	NA	NA	NA
RECEIVABLES	3,015,000	3,845,000	2,974,000
INVENTORIES	787,000	723,000	723,000

RAW MATERIALS	NA	NA	NA
WORK IN PROGRESS	NA	NA	NA
FINISHED GOODS	NA	NA	NA
NOTES RECEIVABLE	NA	NA	NA
OTHER CURRENT ASSETS	1,481,000	769,000	1,199,000
TOTAL CURRENT ASSETS	5,573,000	5,568,000	5,362,000
PROPERTY, PLANT & EQUIPMENT	2,669,000	2,410,000	2,390,000
ACCUMULATED DEPRECIATION	NA	NA	NA
NET PROPERTY & EQUIPMENT	2,669,000	2,410,000	2,390,000
INVEST & ADVANCES TO SUBS	551,000	400,000	384,000

OTHER NON-CURRENT ASSETS	NA	391,000	310,000
DEFERRED CHARGES	410,000	340,000	398,000
INTANGIBLES	720,000	597,000	505,000
DEPOSITS & OTHER ASSETS	1,043,000	397,000	290,000
TOTAL ASSETS	10,966,000	10,103,000	9,639,000

 

LIABILITIES (in thousands)
FISCAL YEAR END	12/31/2001	12/31/2000	12/31/1999
NOTES PAYABLE	44,000	1,570,000	939,000
ACCOUNTS PAYABLE	917,000	782,000	665,000
CURRENT LONG TERM DEBT	81,000	8,000	308,000
CURRENT CAPITAL LEASES	NA	NA	NA

ACCRUED EXPENSES	357,000	273,000	206,000
INCOME TAXES	194,000	113,000	120,000
OTHER CURRENT LIABILITIES	1,315,000	1,080,000	795,000
TOTAL CURRENT LIABILITIES	2,908,000	3,826,000	3,033,000
MORTGAGES	NA	NA	NA
DEFERRED CHARGES & INCOME	NA	NA	NA
CONVERTIBLE DEBT	NA	NA	NA
LONG TERM DEBT	1,403,000	1,049,000	1,056,000
NON-CURRENT CAPITAL LEASES	NA	NA	NA
OTHER LONG TERM LIABILITIES	1,862,000	1,262,000	1,219,000

TOTAL LIABILITIES	6,173,000	6,137,000	5,308,000
MINORITY INTEREST	41,000	38,000	44,000
PREFERRED STOCK	NA	NA	NA
COMMON STOCK NET	1,138,000	1,132,000	1,120,000
CAPITAL SURPLUS	298,000	259,000	68,000
RETAINED EARNINGS	4,327,000	3,733,000	3,453,000
TREASURY STOCK	688,000	845,000	99,000
OTHER LIABILITIES	-323,000	-351,000	-255,000
SHAREHOLDERS' EQUITY	4,752,000	3,928,000	4,287,000
TOTAL LIABILITIES & NET WORTH	10,966,000	10,103,000	9,639,000

 

INCOME STATEMENT (in thousands)
FISCAL YEAR END	12/31/2001	12/31/2000	12/31/1999
NET SALES	12,939,000	11,856,000	12,214,000
COST OF GOODS	11,575,000	11,218,000	11,608,000
GROSS PROFIT	1,364,000	638,000	606,000
R & D EXPENDTURES	NA	NA	NA

SELLING, GENERAL & ADMIN	387,000	352,000	351,000
INCOME BEFORE DEPREC & AMORT	977,000	286,000	255,000
DEPRECIATION & AMORTIZATION	NA	NA	NA
NON-OPERATING INCOME	124,000	195,000	193,000
INTEREST EXPENSE	147,000	146,000	141,000
INCOME BEFORE TAX	954,000	335,000	307,000
PROVISION FOR INCOME TAXES	384,000	129,000	116,000
MINORITY INTEREST	19,000	18,000	17,000
INVESTMENT GAINS (LOSSES)	NA	NA	NA
OTHER INCOME	NA	NA	NA

NET INCOME BEFORE EX-ITEMS	551,000	188,000	174,000
EX-ITEM & DISCONTINUED OPNS	258,000	313,000	264,000
NET INCOME	809,000	501,000	438,000
OUTSTANDING SHARES	434,000	427,000	442,000

 

CASH FLOW STATEMENT (in thousands)
CASH FROM OPERATIONS	12/31/2001	12/31/2000	12/31/1999
NET INCOME (LOSS)	809,000	501,000	438,000
DEPRECIATION & AMORTIZATION	NA	503,000	511,000
NET INC(DEC) IN ASSETS & LIABS	443,000	-593,000	-683,000
CASH FROM (USED IN) DISC OPS	NA	-313,000	-283,000

OTHER ADJUSTMENTS, NET	-223,000	-155,000	-41,000
NET CASH FROM (USED IN) OPS	1,029,000	-57,000	-58,000
CASH FROM INVESTMENTS	12/31/2001	12/31/2000	12/31/1999
(INC) DEC PROP & PLANT	-677,000	-369,000	-402,000
ACQ (DISP) OF SUBS OR OTH BUS	-159,000	9,000	284,000
INC (DEC) IN INVESTMENTS	-22,000	NA	NA
OTHER CASH INFLOW (OUTFLOW)	NA	-51,000	11,000
NET CASH FROM (USED IN) INVESTING	-858,000	-411,000	-107,000

CASH FROM FINANCING	12/31/2001	12/31/2000	12/31/1999
ISSUANCES OF EQUITY SHARES	-7,000	-664,000	39,000
ISSUANCES (REPAYMENT) OF DEBT	NA	NA	NA
INC (DEC) IN BANK, OTH BORROWINGS	-1,116,000	321,000	377,000
DIVIDENDS, OTHER DISTRIBUTIONS	-215,000	-221,000	-221,000
OTHER CASH INFLOW (OUTFLOW)	1,246,000	806,000	228,000
NET CASH FROM FINANCING	-92,000	242,000	423,000
EFFECT OF EXCHG RATES ON CASH	-20,000	-9,000	5,000

NET CHANGE CASH & EQUIVALENTS	59,000	-235,000	263,000
CASH & EQUIVS AT START OF YEAR	231,000	466,000	203,000
CASH & EQUIVS AT YEAR END	290,000	231,000	466,000

 

RATIO ANALYSIS
FISCAL YEAR END	12/31/2001	12/31/2000	12/31/1999
QUICK RATIO	1.14	1.07	1.13
CURRENT RATIO	1.92	1.46	1.77
SALES/CASH	44.62	51.32	26.21
SALES, GENERAL & ADMIN/SALES	0.03	0.03	0.03

RECEIVABLES TURNOVER	4.29	3.08	4.11
RECEIVABLES DAY SALES	83.89	116.75	87.66
INVENTORIES TURNOVER	16.44	16.40	16.89
INVENTORIES DAY SALES	21.90	21.95	21.31
NET SALES/WORKING CAPITAL	4.86	6.81	5.24
NET SALES/PLANT & EQUIPMENT	4.85	4.92	5.11
NET SALES/CURRENT ASSETS	2.32	2.13	2.28
NET SALES/TOTAL ASSETS	1.18	1.17	1.27
NET SALES/EMPLOYEES	152,224	127,484	118,583
TOTAL LIAB/TOTAL ASSETS	0.56	0.61	0.55

TOTAL LIAB/INVESTED CAPITAL	1.00	1.23	0.99
TOTAL LIAB/COMMON EQUITY	1.31	1.58	1.25
TIMES INTEREST EARNED	7.49	3.29	3.18
CURRENT DEBT/EQUITY	0.02	0.00	0.07
LONG TERM DEBT/EQUITY	0.30	0.27	0.25
TOTAL DEBT/EQUITY	0.31	0.27	0.32
TOTAL ASSETS/EQUITY	2.31	2.57	2.25
PRE-TAX INCOME/NET SALES	0.07	0.03	0.03
PRE-TAX INCOME/TOTAL ASSETS	0.09	0.03	0.03
PRE-TAX INCOME/INVESTED CAP	0.15	0.07	0.06

PRE-TAX INCOME/COMM EQUITY	0.20	0.09	0.07
NET INCOME/NET SALES	0.06	0.04	0.04
NET INCOME/TOTAL ASSETS	0.07	0.05	0.05
NET INCOME/INVESTED CAP	0.13	0.10	0.08
NET INCOME/COMMON EQUITY	0.17	0.13	0.10
R & D/NET SALES	NA	NA	NA
R & D/NET INCOME	NA	NA	NA
R & D/EMPLOYEES	NA	NA	NA

 

QUARTERLY ASSETS (in thousands)
QUARTERLY REPORT FOR	06/30/2002	03/31/2002
CASH	383,000	266,000
MARKETABLE SECURITIES	NA	NA
RECEIVABLES	3,606,000	2,856,000
INVENTORIES	808,000	814,000

RAW MATERIALS	NA	NA
WORK IN PROGRESS	NA	NA
FINISHED GOODS	NA	NA
NOTES RECEIVABLE	NA	NA
OTHER CURRENT ASSETS	379,000	1,502,000
TOTAL CURRENT ASSETS	5,176,000	5,438,000
PROPERTY, PLANT & EQUIPMENT	2,692,000	2,757,000
ACCUMULATED DEPRECIATION	NA	NA
NET PROPERTY & EQUIPMENT	2,692,000	2,757,000
INVEST & ADVANCES TO SUBS	NA	524,000

OTHER NON-CURRENT ASSETS	NA	NA
DEFERRED CHARGES	512,000	405,000
INTANGIBLES	725,000	720,000
DEPOSITS & OTHER ASSETS	2,882,000	1,036,000
TOTAL ASSETS	11,987,000	10,880,000

 
 

QUARTERLY LIABILITIES (in thousands)
QUARTERLY REPORT FOR	06/30/2002	03/31/2002
NOTES PAYABLE	66,000	6,000
ACCOUNTS PAYABLE	1,140,000	1,026,000
CURRENT LONG TERM DEBT	215,000	81,000
CURRENT CAPITAL LEASES	NA	NA

ACCRUED EXPENSES	492,000	306,000
INCOME TAXES	78,000	149,000
OTHER CURRENT LIABILITIES	996,000	1,142,000
TOTAL CURRENT LIABILITIES	2,987,000	2,710,000
MORTGAGES	NA	NA
DEFERRED CHARGES & INCOME	NA	NA
CONVERTIBLE DEBT	NA	NA
LONG TERM DEBT	1,264,000	1,402,000
NON-CURRENT CAPITAL LEASES	NA	NA
OTHER LONG TERM LIABILITIES	3,430,000	1,955,000

TOTAL LIABILITIES	7,681,000	6,067,000
MINORITY INTEREST	51,000	46,000
PREFERRED STOCK	NA	NA
COMMON STOCK NET	1,141,000	1,141,000
CAPITAL SURPLUS	296,000	313,000
RETAINED EARNINGS	3,742,000	4,294,000
TREASURY STOCK	635,000	662,000
OTHER LIABILITIES	-289,000	-319,000
SHAREHOLDERS' EQUITY	4,255,000	4,767,000
TOTAL LIABILITIES & NET WORTH	11,987,000	10,880,000

 
 

QUARTERLY INCOME STATEMENT (in thousands)
QUARTERLY REPORT FOR	06/30/2002	03/31/2002
NET SALES	3,207,000	2,989,000
COST OF GOODS	3,482,000	2,939,000
GROSS PROFIT	-275,000	50,000
R & D EXPENDTURES	NA	NA

SELLING, GENERAL & ADMIN	97,000	53,000
INCOME BEFORE DEPREC & AMORT	-372,000	-3,000
DEPRECIATION & AMORTIZATION	NA	NA
NON-OPERATING INCOME	-28,000	126,000
INTEREST EXPENSE	30,000	32,000
INCOME BEFORE TAX	-430,000	91,000
PROVISION FOR INCOME TAXES	-77,000	36,000
MINORITY INTEREST	5,000	5,000
INVESTMENT GAINS (LOSSES)	NA	NA
OTHER INCOME	NA	NA

NET INCOME BEFORE EX-ITEMS	-358,000	50,000
EX-ITEM & DISCONTINUED OPNS	-140,000	-28,000
NET INCOME	-498,000	22,000
OUTSTANDING SHARES	436,000	435,000

 
 


COMMENTS:  
NA

FINANCIAL FOOTNOTES:
 (SOURCE 10-K)
   The following text was taken directly from an EDGAR filing.
   HALLIBURTON COMPANY Notes to Annual Financial Statements
   Note 1. Significant Accounting Policies We employ accounting policies that are in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us 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. Principles of consolidation. The consolidated financial statements include the accounts of our company and all of our subsidiaries in which we own greater than 50% interest or control. All material intercompany accounts and transactions are eliminated. Investments in companies in which we own 50% interest or less and have a significant influence are accounted for using the equity method and if we do not have significant influence we use the cost method. Prior year amounts have been reclassified to conform to the current year presentation. Revenues and income recognition. We recognize revenues as services are rendered or products are shipped. The distinction between services and product sales is based upon the overall activity of the particular business operation. Revenues from engineering and construction contracts are reported on the percentage of completion method of accounting using measurements of progress towards completion appropriate for the work performed. Progress is generally based upon physical progress, man-hours or costs incurred based upon the appropriate method for the type of job. All known or anticipated losses on contracts are provided for currently. Claims and change orders which are in the process of being negotiated with customers, for extra work or changes in the scope of work are, included in revenue when collection is deemed probable. Training and consulting service revenues are recognized as the services are performed. Sales of perpetual software licenses, net of deferred maintenance fees, are recorded as revenue upon shipment. Sales of use licenses are recognized as revenue over the license period. Post-contract customer support agreements are recorded as deferred revenues and recognized as revenue ratably over the contract period of generally one year's duration. Research and development. Research and development expenses are charged to income as incurred. See Note 4 for research and development expense by business segment. Software development costs. Costs of developing software for sale are charged to expense when incurred, as research and development, until technological feasibility has been established for the product. Once technological feasibility is established, software development costs are capitalized until the software is ready for general release to customers. We capitalized costs related to software developed for resale of $ 19 million in 2001, $ 7 million in 2000 and $ 12 million in 1999. Amortization expense of software development costs was $ 16 million for 2001, $ 12 million for 2000 and $ 15 million for 1999. Once the software is ready for release, amortization of the software development costs begins. Capitalized software development costs are amortized over periods which do not exceed five years. Income per share. Basic income per share is based on the weighted average number of common shares outstanding during the year. Diluted income per share includes additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued. See Note 10 for a reconciliation of basic and diluted income per share. Cash equivalents. We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. Receivables. Our receivables are generally not collateralized. With the exception of claims and change orders which are in the process of being negotiated with customers, unbilled work on uncompleted contracts generally represents work currently billable, and this work is usually billed during normal billing processes in the next several months. The claims and change orders, included in unbilled receivables, amounted to $ 234 million at December 31, 2001 and $ 113 million at December 31, 2000. Included in notes and accounts receivable are notes with varying interest rates totaling $ 19 million at December 31, 2001 and $ 38 million at December 31, 2000.
   Inventories. Inventories are stated at the lower of cost or market. Cost represents invoice or production cost for new items and original cost less allowance for condition for used material returned to stock. Production cost includes material, labor and manufacturing overhead. The cost of most inventories is determined using either the first-in, first-out method or the average cost method, although the cost of some United States manufacturing and field service inventories is determined using the last-in, first-out method. Inventories of sales items owned by foreign subsidiaries and inventories of operating supplies and parts are generally valued at average cost. See Note 5. Property, plant and equipment. Property, plant and equipment are reported at cost less accumulated depreciation, which is generally provided on the straight-line method over the estimated useful lives of the assets. Some assets are depreciated on accelerated methods. Accelerated depreciation methods are also used for tax purposes, wherever permitted. Upon sale or retirement of an asset, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is recognized. When events or changes in circumstances indicate that assets may be impaired, an evaluation is performed. The estimated future undiscounted cash flows associated with the asset are compared to the asset's carrying amount to determine if a write-down to market value or discounted cash flow value is required. We follow the successful efforts method of accounting for oil and gas properties. See Note 6. Maintenance and repairs. Expenditures for maintenance and repairs are expensed; expenditures for renewals and improvements are generally capitalized. We use the accrue-in-advance method of accounting for major maintenance and repair costs of marine vessel dry docking expense and major aircraft overhauls and repairs. Under this method we anticipate the need for major maintenance and repairs and charge the estimated expense to operations before the actual work is performed. At the time the work is performed, the actual cost incurred is charged against the amounts that were previously accrued with any deficiency or excess charged or credited to operating expense. Goodwill. For acquisitions occurring prior to July 1, 2001, goodwill is
   amortized on a straight-line basis over periods not exceeding 40 years.
   Effective July 1, 2001, we adopted SFAS No. 141, "Business Combinations" which
   precludes amortization of goodwill on acquisitions completed subsequent to June
   30, 2001. See Note 12 for discussion of this accounting change. Goodwill is
   continually monitored for potential impairment. When negative conditions such as
   significant current or projected operating losses exist, a review is performed
   to determine if the projected undiscounted future cash flows indicate that an
   impairment exists. If an impairment exists, goodwill, and, if appropriate, the
   associated assets are reduced to reflect the estimated discounted cash flows to
   be generated by the underlying business. This practice is consistent with
   methodologies in SFAS No. 121 "Accounting for the Impairment of Long-lived
   Assets and for Long-lived Assets to be Disposed of." Income taxes. Deferred tax assets and liabilities are recognized for the
   expected future tax consequences of events that have been recognized in the
   financial statements or tax returns. A valuation allowance is provided for
   deferred tax assets if it is more likely than not that these items will either
   expire before we are able to realize their benefit, or that future deductibility
   is uncertain. Derivative instruments. We enter into derivative financial transactions to
   hedge existing or projected exposures to changing foreign currency exchange rates, interest rates and commodity prices. We do not enter into derivative transactions for speculative or trading purposes. Effective January 1, 2001, we adopted SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities." See Note 12. SFAS No. 133 requires that we recognize all derivatives on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value and reflected immediately through the results of operations. If the derivative is designated as a hedge under SFAS No. 133, depending on the nature of the hedge, changes in the fair value of derivatives are either offset against:
 -   the change  in fair  value of the hedged  assets,
liabilities,  or  firm commitments through earnings; or  -   recognized
in other comprehensive  income until the hedged item is  recognized in
earnings.
 
 The ineffective portion of a derivative's change in fair value is immediately recognized in earnings. Recognized gains or losses on derivatives entered into to manage foreign exchange risk are included in foreign currency gains and losses on the consolidated statements of income. Gains or losses on interest rate derivatives are included in interest expense and gains or losses on commodity derivatives are included in operating income. During the three years ended December 31, 2001, we did not enter into any significant transactions to hedge commodity prices. See Note 8 for discussion of interest rate swaps and Note 16 for further discussion of foreign currency exchange derivatives.
   Foreign currency translation. Foreign entities whose functional currency is
   the United States dollar translate monetary assets and liabilities at year-end
   exchange rates and non-monetary items are translated at historical rates. Income
   and expense accounts are translated at the average rates in effect during the
   year, except for depreciation, cost of product sales and revenues, and expenses
   associated with non-monetary balance sheet accounts which are translated at
   historical rates. Gains or losses from changes in exchange rates are recognized
   in consolidated income in the year of occurrence. Foreign entities whose
   functional currency is the local currency translate net assets at year-end rates
   and income and expense accounts at average exchange rates. Adjustments resulting
   from these translations are reflected in the consolidated statements of shareholders' equity titled "Cumulative Translation Adjustment." Loss contingencies. We accrue for loss contingencies based upon our best estimates in accordance with SFAS No. 5, "Accounting for Contingencies." See
   Note 9 for discussion of our significant loss contingencies.
   Note 2. Acquisitions and Dispositions Magic Earth acquisition. In November 2001, we acquired Magic Earth, Inc., a leading 3-D visualization and interpretation technology company with broad applications in the area of data mining. Under the agreement, Halliburton issued 4.2 million shares of common stock from treasury stock valued at $ 100 million. Magic Earth became a wholly owned subsidiary and is reported within our Energy Services Group. We preliminarily recorded intangible assets of $ 19 million and goodwill of $ 71 million, all of which is nondeductible for tax purposes, subject to the final valuation of intangible assets and other costs. The intangible assets will be amortized based on a five year life. PGS Data Management acquisition. In March 2001 we acquired the PGS Data Management division of Petroleum Geo-Services ASA (PGS) for $ 164 million. The agreement also calls for Landmark to provide, for a fee, strategic data management and distribution services to PGS for three years. We preliminarily recorded intangible assets of $ 16 million and goodwill of $ 148 million, $ 9 million of which is nondeductible for tax purposes, subject to the final valuation of intangible assets and other costs. The goodwill amortization for 2001 was based on a 15 year life and the intangible assets are being amortized based on a three year life. PES acquisition. In February 2000, we acquired the remaining 74% of the shares of PES (International) Limited that we did not already own. PES is based in Aberdeen, Scotland, and has developed technology that complements Halliburton Energy Services' real-time reservoir solutions. To acquire the remaining 74% of PES, we issued 1.2 million shares of Halliburton common stock. We also issued rights that will result in the issuance of up to 2.1 million additional shares of Halliburton common stock between February 2001 and February 2002. We issued 1 million shares in February 2001; 400,000 in June 2001; and the remaining 700,000 shares in February 2002 under these rights. We recorded $ 115 million of goodwill in connection with acquiring the remaining 74%. During the second quarter of 2001, we contributed the majority of PES' assets and technologies, including $ 130 million of goodwill associated with the purchase of PES, to a newly formed joint venture, WellDynamics. We received $ 39
   million in cash as an equity equalization adjustment. The remaining assets and
   goodwill of PES relating to completions and well intervention products have been
   combined with our existing completions product service line. We own 50% of
   WellDynamics and account for this investment using the equity method. Other acquisitions. We acquired other businesses in 2001 for $ 56 million,
   as compared to businesses acquired in 2000 for $ 10 million and $ 13 million in 1999. 2001 acquisitions. None of our 2001 acquisitions had a significant effect
   on revenues or earnings. Subsea joint venture. In October 2001, we signed a letter of intent to form
   a new company by combining our Halliburton Subsea operations with DSND Subsea
   ASA, a Norwegian-based company. The closing of the transaction is subject to the
   execution of a definitive agreement, regulatory approvals and approvals by the
   Board of Directors of each party. We will own 50% of the new company which will
   be accounted for on the equity method. The new company plans to begin operations
   by the end of the first quarter of 2002. European Marine Contractors Ltd. disposition. In October 2001, we signed an
   agreement to sell our 50% interest in European Marine Contractors Ltd., an
   unconsolidated joint venture in the Energy Services Group, to our joint venture
   partner, Saipem. The sale was finalized in January 2002 and we received $ 115 million in cash plus a contingent payment based on a formula linked to the Oil Service Index performance that was exercised in February 2002 for $ 19 million in cash. We expect to record a pretax gain of $ 108 million or $ 0.15 per diluted share after-tax in the first quarter of 2002.
   Dresser Equipment Group divestiture. Between October 1999 and April 2001,
   we disposed of all the businesses in the Dresser Equipment Group. See Note 3.
   LWD divestiture. In March 1999, in connection with the Dresser Industries,
   Inc. merger, we sold the majority of our pre-merger worldwide
   logging-while-drilling business and a portion of the pre-merger
   measurement-while-drilling business. The sale was in accordance with a consent
   decree with the United States Department of Justice. This business was
   previously part of the Energy Services Group. We continue to provide separate
   logging-while-drilling services through our Sperry-Sun Drilling Systems business
   line, which was acquired as part of the merger with Dresser Industries, Inc. and
   is now part of the Energy Services Group. In addition, we will continue to
   provide sonic logging-while-drilling services using technologies we had before
   the merger with Dresser Industries, Inc.
   Note 3. Discontinued Operations In 1999, the Dresser Equipment Group was comprised of six operating
   divisions and two joint ventures that manufactured and marketed equipment used
   primarily in the energy, petrochemical, power and transportation industries. In
   October 1999, we announced the sales of our 49% interest in the
   Ingersoll-Dresser Pump joint venture and our 51% interest in the Dresser-Rand
   joint venture to Ingersoll-Rand. The sales were triggered by Ingersoll-Rand's
   exercise of its option under the joint venture agreements to cause us to either
   buy their interests or sell ours. Both joint ventures were part of the Dresser
   Equipment Group. Our Ingersoll-Dresser Pump interest was sold in December 1999
   for approximately $ 515 million. We recorded a gain on disposition of
   discontinued operations of $ 253 million before tax, or $ 159 million after-tax,
   for a net gain of $ 0.36 per diluted share in 1999 from the sale of
   Ingersoll-Dresser Pump. Proceeds from the sale, after payment of our
   intercompany balance, were received in the form of a $ 377 million promissory
   note with an annual interest rate of 3.5% which was collected on January 14,
   2000. On February 2, 2000, we completed the sale of our 51% interest in
   Dresser-Rand for a price of $ 579 million. Proceeds from the sale, net of
   intercompany amounts payable to the joint venture, were $ 536 million, resulting
   in a gain on disposition of discontinued operations of $ 356 million before tax,
   or $ 215 million after-tax, for a net gain of $ 0.48 per diluted share in the
   first quarter of 2000. These joint ventures represented nearly half of the group's revenues and
   operating profit in 1999. The sale of our interests in the segment's joint
   ventures prompted a strategic review of the remaining businesses within the
   Dresser Equipment Group. As a result of this review, we determined that the
   remaining businesses did not closely fit with our core businesses, long-term
   goals and strategic objectives. In April 2000, our Board of Directors approved
   plans to sell all the remaining businesses within the Dresser Equipment Group.
   We sold these businesses on April 10, 2001. As part of the terms of the
   transaction, we retained a 5.1% equity interest in the Dresser Equipment Group,
   which has been renamed Dresser, Inc. In the second quarter of 2001, we
   recognized a pretax gain on the sale of discontinued operations of $ 498 million,
   or $ 299 million after-tax. Total value under the agreement was $ 1.55 billion,
   less assumed liabilities, and resulted in cash proceeds of $ 1.27 billion from
   the sale. In connection with the sale, we accrued disposition related costs,
   realized $ 68 million of noncurrent deferred income tax assets, and reduced
   employee compensation and benefit liabilities by $ 152 million for liabilities
   assumed by the purchaser. The employee compensation and benefit liabilities were
   previously included in "Employee compensation and benefits" in the consolidated
   balance sheets. The financial results of the Dresser Equipment Group through March 31, 2001
   are presented as discontinued operations in our financial statements. During
   2001, we recorded as expense to discontinued operations $ 99 million, net of
   anticipated insurance recoveries for asbestos claims. This expense primarily
   consisted of $ 91 million relating to Harbison-Walker asbestos claims arising
   after our divestiture of Harbison-Walker in 1992. See Note 9.
Income  (loss) from Operations
of Discontinued Businesses               Years ended December 31
-----------------------------------------  Millions of dollars
        2001        2000          1999
-----------------------------------------------------------------------
--
Revenues                            $  359      $ 1,400       $ 2,585
=======================================================================
==  Operating income                    $   37      $   158
$   249  Other income and expense                 -            -
     (1)  Asbestos litigation claims,
    net of insurance recoveries         (99)           -             -
Tax benefit  (expense)                   20           (60)           (98)
Minority interest                        -            -            (26)
-----------------------------------------------------------------------
--  Net income  (loss)                   $   (42)     $    98
$   124
=======================================================================
==
 
 Gain on disposal of discontinued operations reflects the gain on the sale of the remaining businesses within the Dresser Equipment Group in the second quarter of 2001, the gain on the sale of Dresser-Rand in February 2000 and the gain on the sale of Ingersoll-Dresser Pump in December 1999.
Gain on Disposal of Discontinued Operations
Millions of dollars                                    2001
2000          1999
-----------------------------------------------------------------------
---------------------
               Proceeds from sale, less intercompany settlement
$  1,267       $   536       $   377  Net assets disposed
                        (769)          (180)          (124)
-----------------------------------------------------------------------
---------------------  Gain before taxes
         498           356           253  Income taxes
                            (199)          (141)           (94)
-----------------------------------------------------------------------
---------------------  Gain on disposal of discontinued operations
    $    299       $   215       $   159
=======================================================================
=====================
 
 Net assets of discontinued operations at December 31, 2001 are zero and at December 31, 2000 are composed of the following items:
Millions of dollars                                   2000
-----------------------------------------------------------------
Receivables                                          $  286
Inventories                                             255
Other current assets                                     22
Accounts payable                                        (104)
Other current liabilities                               (161)
-----------------------------------------------------------------
Net current assets of discontinued operations        $  298
=================================================================
Net property, plant and equipment                    $  219
Net goodwill                                            257
Other assets                                             30
Employee compensation and benefits                      (113)
Other liabilities                                         (2)
-----------------------------------------------------------------
Net noncurrent assets of discontinued operations     $  391
=================================================================
 
 Note 4. Business Segment Information We have two business segments - Energy Services Group and Engineering and Construction Group. Dresser Equipment Group is presented as part of discontinued operations through March 31, 2001 as a result of the sale in April 2001 of the remaining businesses within Dresser Equipment Group. See Note 3. Our segments are organized around the products and services provided to our customers. During the fourth quarter of 2000, we announced restructuring plans to combine all engineering, construction, fabrication and project management operations into one company, Halliburton KBR, reporting as our Engineering and Construction Group. This restructuring resulted in some activities moving from the Energy
   Services Group to the Engineering and Construction Group, effective January 1, 2001. Prior periods have been restated for this change. Energy Services Group. The Energy Services Group provides a wide range of discrete services and products and integrated solutions to customers for the exploration, development, and production of oil and gas. The customers for this segment are major, national and independent oil and gas companies. This segment consists of:
          -   Halliburton  Energy  Services  provides  oilfield
services   and  products including discrete  products and services  and
integrated  solutions   for   oil  and  gas   exploration,
development   and  production  throughout  the world.  Products  and
services include  pressure pumping equipment  and services, logging and
perforating,  drilling  systems and  services, drilling  fluids
systems,  drill  bits,  specialized   completion  and   production
equipment  and  services,  well  control,  integrated  solutions,  and
 reservoir  description;
          -   Landmark Graphics  provides integrated exploration  and
production  software   information  systems,  data   management
services  and  professional services to the petroleum industry; and
          -   Other product  service lines  provide  construction,
installation  and servicing  of subsea facilities;  flexible pipe  for
offshore  applications;   pipeline   services    for   offshore
customers;  pipecoating  services;   feasibility,  conceptual   and
front-end  engineering  and   design,  detailed   engineering,
procurement,  construction   site   management,  commissioning,
start-up   and
              debottlenecking of both onshore and offshore facilities;
and
              large  integrated   engineering,  procurement,   and
construction
              projects containing both surface and sub-surface
components.
 
 Engineering and Construction Group. The Engineering and Construction Group
   provides engineering, procurement, construction, project management, and
   facilities operation and maintenance for oil and gas and other industrial and
   governmental customers. The Engineering and Construction Group, operating as
   Halliburton KBR, includes the following five product lines:
          -   Onshore   operations   comprises   engineering   and
construction
              activities,  including liquefied  natural gas,  ammonia,
crude oil
              refineries, and natural gas plants;
          -   Offshore   operations   includes   specialty   offshore
deepwater
              engineering  and  marine  technology  and  worldwide
fabrication
              capabilities;
          -   Government   operations   provides   operations,
maintenance  and
              logistics activities for  government facilities and
installations;
          -   Operations  and maintenance  provides services  for
private sector
              customers,   primarily   industrial,  hydrocarbon  and
commercial
              applications; and
          -   Asia  Pacific  operations,  based  in  Australia,
provides  civil
              engineering and consulting services.
 
 General corporate. General corporate represents assets not included in a
   business segment and is primarily composed of receivables, deferred tax assets
   and other shared assets, including the investment in an enterprise-wide
   information system. Intersegment revenues included in the revenues of the business segments and
   revenues between geographic areas are immaterial. Our equity in pretax earnings
   and losses of unconsolidated affiliates that are accounted for on the equity
   method is included in revenues and operating income of the applicable segment.
   The tables below present information on our continuing operations business
   segments.
Operations by Business Segment
Years ended December 31
------------------------------------------
Millions of dollars                                  2001
      2000          1999
------------------------------------------------------------
------------------------------
Revenues:
Energy Services Group                              $   8,722
     $  6,776     $   5,921
Engineering and Construction Group                     4,324
        5,168         6,392
------------------------------------------------------------
------------------------------
Total                                              $  13,046
     $ 11,944     $  12,313
============================================================
==============================
Operating income:
Energy Services Group                              $   1,015
     $    582     $     250
Engineering and Construction Group                       143
           (42)          175
Special credits                                            -
            -            47
General corporate
(74)           (78)           (71)
------------------------------------------------------------
------------------------------
Total                                              $   1,084
     $    462     $     401
============================================================
==============================
Capital expenditures:
Energy Services Group                              $     705
     $    494     $     413
Engineering and Construction Group                        47
           33            35
General corporate and shared assets                       45
           51            72
------------------------------------------------------------
------------------------------
Total                                              $     797
     $    578     $     520
============================================================
==============================
Depreciation, depletion and amortization:
Energy Services Group                              $     430
     $    403     $     409
Engineering and Construction Group                        44
           53            55
General corporate and shared assets                       57
           47            47
------------------------------------------------------------
------------------------------
Total                                              $     531
     $    503     $     511
============================================================
==============================
Total assets:
Energy Services Group                              $   7,075
     $  6,086     $   5,464
Engineering and Construction Group                     2,674
        2,408         1,985
Net assets of discontinued operations                      -
          690         1,103
General corporate and shared assets                    1,217
        1,008         1,087
------------------------------------------------------------
-------------------------------
Total                                              $  10,966
     $ 10,192     $   9,639
============================================================
===============================
Research and development:
Energy Services Group                              $     226
     $    224     $     207
Engineering and Construction Group                         7
            7             4
------------------------------------------------------------
-------------------------------
Total                                              $     233
     $    231     $     211
============================================================
===============================
Special credits:
Energy Services Group                              $       -
     $      -     $      (41)
Engineering and Construction Group                         -
            -             (4)
General corporate                                          -
            -             (2)
------------------------------------------------------------
-------------------------------
Total                                              $       -
     $      -     $      (47)
============================================================
===============================
 
 
Operations by Geographic Area
Years ended December 31
------------------------------------------
Millions of dollars                                   2001
      2000          1999
-------------------------------------------------------------
------------------------------
Revenues:
United States                                       $   4,911
     $  4,073     $   3,727
United Kingdom                                          1,800
        1,512         1,656
Other areas  (numerous countries)                        6,335
        6,359         6,930
-------------------------------------------------------------
------------------------------
Total                                               $  13,046
     $ 11,944     $  12,313
=============================================================
==============================
Long-lived assets:
United States                                       $   3,030
     $  2,068     $   1,801
United Kingdom                                            617
          525           684
Other areas  (numerous countries)                          744
          776           643
-------------------------------------------------------------
------------------------------
Total                                               $   4,391
     $  3,369     $   3,128
=============================================================
==============================
 
 Note 5. Inventories Inventories to support continuing operations at December 31, 2001 and 2000 are composed of the following:
Millions of dollars                2001          2000
------------------------------------------------------------
Finished products and parts       $  520         $  486
Raw materials and supplies           192            178
Work in process                       75             59
------------------------------------------------------------
Total                             $  787         $  723
============================================================
 
 Inventories on the last-in, first-out method were $ 54 million at December 31, 2001 and $ 66 million at December 31, 2000. If the average cost method had been used, total inventories would have been about $ 20 million higher than reported at December 31, 2001, and $ 28 million higher than reported at December 31, 2000.
   Note 6. Property, Plant and Equipment Property, plant and equipment to support continuing operations at December 31, 2001 and 2000 are composed of the following:
Millions of dollars                          2001          2000
---------------------------------------------------------------------
Land                                       $     82      $     83
Buildings and property improvements             942           968
Machinery, equipment and other                4,926         4,509
---------------------------------------------------------------------
Total                                         5,950         5,560
Less accumulated depreciation                 3,281         3,150
---------------------------------------------------------------------
Net property, plant and equipment          $  2,669      $  2,410
=====================================================================
 
 At December 31, 2001 machinery, equipment and other property includes oil and gas investments of approximately $ 423 million and software developed for an information system of $ 233 million. At December 31, 2000 machinery, equipment and other property includes oil and gas investments of approximately $ 363 million and software developed for an information system of $ 223 million.
   Note 7. Related Companies We conduct some of our operations through various joint ventures which are in partnership, corporate and other business forms, and are principally accounted for using the equity method. Information pertaining to related companies for our continuing operations is set out below.
   The larger unconsolidated entities include European Marine Contractors, Ltd., and Bredero-Shaw which are both part of the Energy Services Group. We sold our 50% interest in European Marine Contractors, Ltd., in January 2002. See Note 2. Bredero-Shaw, which is 50%-owned, specializes in pipecoating. Combined summarized financial information for all jointly owned operations which are not consolidated is as follows:
Combined Operating Results               Years ended December 31
------------------------------------------  Millions of dollars
         2001          2000          1999
-----------------------------------------------------------------------
---
Revenues                            $  1,987      $  3,098
$  3,215
=======================================================================
===  Operating income                    $    231      $    192
$    193
=======================================================================
===  Net income                          $    169      $    169
$    127
=======================================================================
===
Combined Financial Position               December 31
                                  -----------------------------
Millions of dollars                    2001          2000
---------------------------------------------------------------
Current assets                       $  1,818      $  1,604
Noncurrent assets                       1,672         1,307
---------------------------------------------------------------
Total                                $  3,490      $  2,911
===============================================================
Current liabilities                  $  1,522      $  1,238
Noncurrent liabilities                  1,272           947
Minority interests                          2             2
Shareholders' equity                      694           724
---------------------------------------------------------------
Total                                $  3,490      $  2,911
===============================================================
 
 Note 8. Lines of Credit, Notes Payable and Long-Term Debt At December 31, 2001, we had committed lines of credit totaling $ 700 million, of which $ 350 million expires in 2002 and $ 350 million expires in 2006. There were no borrowings outstanding under these lines of credit. These lines are not available if our senior unsecured long-term debt is rated lower than BBB- by Standard & Poor's Ratings Service Group or lower than Baa3 by Moody's Investors' Services. Fees for committed lines of credit were immaterial. Short-term debt consists primarily of $ 25 million in commercial paper with an effective interest rate of 2.9% and $ 19 million of other facilities with
   varying rates of interest. Long-term debt at the end of 2001 and 2000 consists of the following:
Millions of dollars                                         2001
       2000
------------------------------------------------------------------
-----------------
7.6% debentures due August 2096                            $   300
      $   300
8.75% debentures due February 2021                             200
          200
8% senior notes due April 2003                                 139
          139
Medium-term notes due 2002 through 2027                        825
          400
Effect of interest rate swaps                                    3
            -
Term loans at LIBOR  (GBP) plus 0.75% payable in
    semiannual installments through March 2002                   4
           11
Other notes with varying interest rates                         13
            7
-----------------------------------------------------------------------
------------  Total long-term debt
   1,484         1,057  Less current portion
                81             8
-----------------------------------------------------------------------
------------  Noncurrent portion of long-term debt
 $ 1,403       $ 1,049
=======================================================================
============
 
 The 7.6% debentures due 2096, 8.75% debentures due 2021, and 8% senior notes due 2003 may not be redeemed prior to maturity and do not have sinking fund requirements.
   On July 12, 2001, we issued $ 425 million of two and five year notes under our medium-term note program. The notes consist of $ 275 million 6% fixed rate notes due August 2006 and $ 150 million LIBOR + 0.15% floating rate notes due July 2003. At December 31, 2001, we have outstanding notes under our medium-term note program as follows:
      Amount              Due             Rate      Issue Price
-----------------------------------------------------------------
  $  75 million         08/2002          6.30%          Par
  $ 150 million         07/2003        Floating%        Par
  $ 275 million         08/2006          6.00%         99.57%
  $ 150 million         12/2008          5.63%         99.97%
  $  50 million         05/2017          7.53%          Par
  $ 125 million         02/2027          6.75%         99.78%
-----------------------------------------------------------------
 
 Each holder of the 6.75% medium-term notes has the right to require us to
   repay the holder's notes in whole or in part, on February 1, 2007. We may redeem
   the 5.63% and 6.00% medium-term notes in whole or in part at any time. Other
   notes issued under the medium-term note program may not be redeemed prior to
   maturity. The medium-term notes do not have sinking fund requirements. We manage our ratio of fixed variable rate debt and accordingly have
   entered into two interest rate swaps during the second half of 2001 on a portion
   of our newly issued 6% fixed rate medium-term notes and on our 8% senior notes.
   The interest rate swap agreements have notional amounts of $ 150 million and $ 139
   million. The interest rate swaps have been designated as fair value hedges under
   SFAS No. 133. See Note 16. At December 31, 2001 the fair value of the interest
   rate swap on our 6% fixed rate medium-term notes was $ 3.4 million which has been
   classified in "Other assets." The fair value of the interest rate swap on our 8%
   senior notes at December 31, 2001 was a $ 0.2 million liability and has been
   classified in "Other liabilities." The hedged portion of the long-term debt is
   recorded at fair value. We account for these interest rate swaps using the
   short-cut method, as described in SFAS No. 133, and determined there was no
   ineffectiveness for the period ending December 31, 2001. Amounts to be received
   or paid as a result of the swap agreements are recognized as adjustments to
   interest expense. The interest rate swaps resulted in a decrease to interest
   expense of $ 2.6 million for the year ended December 31, 2001. Our debt matures as follows: $ 81 million in 2002; $ 291 million in 2003; $ 2
   million in 2004 and 2005; $ 277 million in 2006; and $ 828 million thereafter.
   Note 9. Commitments and Contingencies Leases. At year end 2001, we were obligated under noncancelable operating leases, expiring on various dates through 2021, principally for the use of land, offices, equipment, field facilities, and warehouses. Total rentals charged to continuing operations, net of sublease rentals, for noncancelable leases in 2001, 2000, and 1999 were as follows:
Millions of dollars      2001          2000         1999
-------------------------------------------------------------
Rental expense          $ 172         $ 149        $ 139
=============================================================
 
 Future total rentals on noncancelable operating leases are as follows: $ 97
   million in 2002; $ 83 million in 2003; $ 59 million in 2004; $ 43 million in 2005;
   $ 30 million in 2006; and $ 97 million thereafter. Asbestos litigation. Several of our subsidiaries, particularly Dresser
   Industries, Inc. and Kellogg Brown & Root, Inc., are defendants in a large
   number of asbestos related lawsuits. The plaintiffs allege injury as a result of
   exposure to asbestos in products manufactured or sold by former divisions of
   Dresser Industries, Inc. or in materials used in construction or maintenance
   projects of Kellogg Brown & Root, Inc. These claims are in three general
   categories:
          -   refractory claims;
          -   other Dresser Industries, Inc. claims; and
          -   construction claims.
 
 Refractory claims Asbestos was used in a small number of products manufactured or sold by the
   refractories business of Harbison-Walker Refractories Company, which Dresser
   Industries, Inc. acquired in 1967. Harbison-Walker was spun-off by Dresser
   Industries, Inc. in 1992. At that time, Harbison-Walker assumed liability for
   asbestos claims filed after the spin-off and it agreed to defend and indemnify
   Dresser Industries, Inc. from liability for those claims. Dresser Industries,
   Inc. retained responsibility for asbestos claims filed before the spin-off.
   After the spin-off, Dresser Industries, Inc. and Harbison-Walker entered into
   coverage-in-place agreements with a number of insurance companies. Those
   agreements provide both Dresser Industries, Inc. and Harbison-Walker access to
   the same insurance coverage to reimburse them for defense costs, settlements and
   court judgments they pay to resolve refractory claims. As of December 31, 2001 there were approximately 7,000 open and unresolved
   pre-spin-off refractory claims against Dresser Industries, Inc. In addition, there were approximately 125,000 post spin-off claims that name Dresser Industries, Inc. as a defendant. Dresser Industries, Inc. has taken up the defense of unsettled post spin-off refractory claims that name it as a defendant in order to prevent Harbison-Walker from unnecessarily eroding the insurance
   coverage both companies can access for these claims. Other Dresser Industries, Inc. claims As of December 31, 2001, there were approximately 110,000 open and
   unresolved claims alleging injuries from asbestos used in several other types of
   products formerly manufactured by Dresser Industries, Inc. Most of these claims
   involve gaskets and packing materials used in pumps and other industrial
   products. Construction claims Our Engineering and Construction Group includes engineering and
   construction businesses formerly operated by The M.W. Kellogg Company and Brown
   & Root, Inc., now combined as Kellogg Brown & Root, Inc. As of December 31, 2001, there were approximately 32,000 open and unresolved claims alleging injuries from asbestos in materials used in construction and maintenance projects, most of which were conducted by Brown & Root, Inc. Less than 1,000 of these claims are asserted against The M.W. Kellogg Company. A prior owner of The M.W. Kellogg Company provides Kellogg Brown & Root, Inc. a contractual indemnification for those claims. Harbison-Walker Chapter 11 bankruptcy Harbison-Walker was spun-off by Dresser Industries, Inc. in 1992. At that time Harbison-Walker agreed to assume liability for asbestos claims filed after the spin-off and it agreed to defend and indemnify Dresser Industries, Inc. from liability for those claims. On February 14, 2002 Harbison-Walker filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the bankruptcy court in Pittsburgh, Pennsylvania. In its bankruptcy-related filings, Harbison-Walker said that it would seek to utilize Sections 524(g) and 105 of the bankruptcy code to propose and have confirmed a plan of reorganization that provides for distributions for all legitimate asbestos pending and future claims against it or for which it has agreed to indemnify and defend Dresser Industries, Inc. If a plan of reorganization is ultimately confirmed, all pending and future Harbison-Walker related asbestos claims against Harbison-Walker or Dresser Industries, Inc. could be channeled to a Section 524(g)/105 trust for resolution and payment. In order for a trust to be confirmed, at least a majority of the equity ownership of Harbison-Walker would have to be contributed to the trust. Creation of a trust would also require the approval of 75% of the asbestos claimant creditors of Harbison-Walker. In connection with the Chapter 11 filing by Harbison-Walker, the bankruptcy court issued a temporary restraining order staying all further litigation of more than 200,000 asbestos claims currently pending against Dresser Industries, Inc. in numerous courts throughout the United States. On February 21, 2002, the bankruptcy court extended the time period of the stay until April 4, 2002, when the bankruptcy court will hold a hearing to decide if the stay will continue or be modified. The stayed asbestos claims are those covered by insurance that both Dresser Industries, Inc. and Harbison-Walker can access to pay defense costs, settlements and judgments attributable to asbestos claims. The stayed claims include approximately 132,000 post-1992 spin-off refractory claims, 7,000 pre-spin-off refractory claims and approximately 96,000 other types of asbestos claims pending against Dresser Industries, Inc. that are covered by the same shared insurance. Approximately 46,000 of the claims in the third category are claims made against Dresser Industries, Inc. based on more than one ground for recovery and the stay affects only the portion of the claim covered by the shared insurance. The stay prevents litigation from proceeding while the stay is in effect and also prohibits the filing of new claims. One of the purposes of the stay is to allow Harbison-Walker and Dresser Industries, Inc. time to develop and propose a plan of reorganization.
   The stay issued on February 14, 2002, and extended on February 21, 2002, is
   temporary until the bankruptcy court completes a hearing currently scheduled for
   April 4, 2002. At the conclusion of that hearing, the bankruptcy court may issue
   a preliminary injunction continuing the stay or it may modify or dissolve the
   stay as it applies to Dresser Industries, Inc. It is also possible that the
   bankruptcy court will schedule future hearings while continuing or modifying
   the stay. At present, there is no assurance that a stay will remain in effect,
   that a plan of reorganization will ultimately be proposed or confirmed, or that
   any plan that is confirmed will provide relief to Dresser Industries, Inc. If a
   plan is not ultimately confirmed that provides relief to Dresser Industries,
   Inc., it will be required to defend all open claims in the courts in which they
   have been filed, possibly with reduced access to the insurance shared with
   Harbison-Walker. Dresser Industries, Inc. has agreed to provide $ 35 million of
   debtor-in-possession financing to Harbison-Walker during the pendency of the
   Chapter 11 proceeding. On February 14, 2002, Dresser Industries, Inc. paid $ 40
   million to Harbison-Walker's U.S. parent holding company, RHI Refractories
   Holding Company which we will charge to discontinued operations in the first
   quarter of 2002. The first payment was made on the filing of the bankruptcy
   petition. Dresser Industries, Inc. had to act to protect its insurance asset
   from dissipation by Harbison-Walker if there was going to be any potential to
   resolve the asbestos claims through the creation of a Section 524(g)/105 trust.
   The payment to RHI Refractories led RHI Refractories to forgive certain
   inter-company debt owed to it by Harbison-Walker, thus increasing the assets of
   Harbison-Walker. Dresser Industries, Inc. will pay another $ 35 million to RHI if
   a plan of reorganization acceptable to Dresser Industries, Inc. is proposed in
   the bankruptcy proceedings. A further $ 85 million will be paid to RHI if a plan
   acceptable to Dresser Industries, Inc. is approved by 75% of the Harbison-Walker
   asbestos claimant creditors and is confirmed by the bankruptcy court. Dresser
   Industries, Inc., Harbison-Walker and RHI and its affiliates have settled all
   litigation among them. Asbestos insurance coverage We have insurance coverage that reimburses us for a substantial portion of
   the costs we incur defending against asbestos claims. This coverage also
   reimburses us for a substantial portion of amounts we pay to settle claims and
   amounts awarded in court judgments. The coverage is provided by a large number
   of insurance policies written by dozens of insurance companies. The insurance
   companies wrote the coverage over a period of more than 30 years for our
   subsidiaries and their predecessors. Large amounts of this coverage are now
   subject to coverage-in-place agreements that resolve issues concerning amounts
   and terms of coverage. The amount of insurance coverage available to us depends
   on the nature and time of the alleged exposure to asbestos, the specific
   subsidiary against which an asbestos claim is asserted and other factors.
   Refractory claims insurance Dresser Industries, Inc. has approximately $ 2.1 billion in aggregate limits
   of insurance coverage for refractory asbestos claims of which over half is with
   Equitas. Many of the issues relating to the majority of this coverage have been
   resolved by coverage-in-place agreements with dozens of companies, including
   Equitas and other London-based insurance companies. Recently, however, Equitas
   and other London-based companies have imposed new restrictive documentation
   requirements on Dresser Industries, Inc. and other insureds. Equitas and the
   other London-based companies have stated that the new requirements are part of
   an effort to limit payment of settlements to claimants who are truly impaired by
   exposure to asbestos and can identify the product or premises that caused their
   exposure. On August 7, 2001 Dresser Industries, Inc. filed a lawsuit in Dallas
   County, Texas, against a number of these insurance companies asserting Dresser
   Industries, Inc.'s rights under existing coverage-in-place agreements. These
   agreements allow Dresser Industries, Inc. to enter into settlements for small
   amounts without requiring claimants to produce detailed documentation to support
   their claims, when we believe settlements are an effective claims management
   strategy. We believe that the new documentation requirements are inconsistent
   with the current coverage-in-place agreements and are unenforceable. The
   insurance companies Dresser Industries, Inc. has sued have not refused to pay
   larger claim settlements where documentation is obtained or where court
   judgments are entered. Also, they continue to pay previously agreed to amounts
   of defense costs Dresser Industries, Inc. incurs defending refractory asbestos
   claims. If a Section 524(g)/105 trust is confirmed as part of the
   Harbison-Walker bankruptcy proceedings, this insurance will be used to fund that
   trust.
   Other Dresser Industries, Inc. claims insurance Dresser Industries, Inc. has insurance that covers other open asbestos
   claims against it. Some of this insurance covers Dresser Industries, Inc.
   entities acquired prior to the 1986 asbestos exclusions. Many of the traditional
   Dresser Industries, Inc. product manufacturing companies or divisions are
   covered under these policies. Other coverage is provided by a number of
   different policies which Dresser Industries, Inc. acquired rights to access for
   coverage of asbestos claims when it acquired businesses from other companies. A
   significant portion of this insurance coverage is shared with Federal-Mogul Corporation, which is now in reorganization under Chapter 11 of the bankruptcy code. The effect of that bankruptcy on Dresser Industries, Inc.'s ability to continue to access this shared insurance is uncertain. On August 28, 2001, Dresser Industries, Inc. filed a separate lawsuit against Equitas and other London-based companies that provide some of this insurance. This lawsuit is similar to the lawsuit described under Refractory Claims Insurance above that seeks to prevent insurance companies from unilaterally modifying the terms of existing coverage-in-place agreements. Construction claims insurance Nearly all of our construction asbestos claims relate to Brown & Root, Inc. operations before the 1980s. Our primary insurance coverage for these claims was
   written by Highlands Insurance Company during the time it was one of our
   subsidiaries. Highlands was spun-off to our shareholders in 1996. At present,
   Highlands is not paying any portion of the settlement or defense costs we incur
   for construction asbestos claims. On April 5, 2000, Highlands filed a lawsuit
   against us in the Delaware Chancery Court. Highlands asserted that the insurance
   it wrote for Brown & Root, Inc. that covered construction asbestos claims was terminated by agreements between Halliburton and Highlands at the time of the 1996 spin-off. Although we do not believe that a termination of this insurance occurred, in March 2001, the Chancery Court ruled that a termination did occur and that Highlands is not obligated to provide coverage for Brown & Root, Inc.'s asbestos claims. A three Justice panel of the Delaware Supreme Court heard oral arguments of our appeal of this decision on September 17, 2001. The appeal will be reargued before the entire Delaware Supreme Court on March 12, 2002. We believe the Chancery Court's decision is wrong and that the Delaware Supreme Court will reverse and return the case to the Chancery Court for a trial on the merits. We expect, based on an opinion from our outside legal counsel, to
   ultimately prevail in this litigation. We anticipate the Delaware Supreme
   Court's decision later this year. In addition, on April 24, 2000, we filed a lawsuit in Harris County, Texas,
   asserting that Highlands has breached its contractual obligations to provide
   coverage for asbestos claims under the policies it wrote for Brown & Root, Inc.
   This lawsuit is stayed pending resolution of the Delaware litigation. We are
   aware that Highland's financial condition has deteriorated since this litigation
   began. A.M. Best has reduced its rating for Highlands to "C-" (weak) and
   Highlands has ceased all of its underwriting operations. However, we believe
   that once the Delaware litigation is successfully concluded in our favor as we
   expect, Highlands has the ability to reimburse us for a substantial portion of
   the defense, settlement and other costs we incur defending Brown & Root, Inc.
   open asbestos claims. If Highlands becomes unable to pay amounts owed to us for
   coverage of Brown & Root, Inc. open asbestos claims, we have the right to seek reimbursement from the Texas Property and Casualty Guaranty Association. This association consists of and is funded by all insurance companies permitted to write insurance in Texas. It provides protection to insured parties and claimants when an insurance company licensed in Texas becomes insolvent. This protection is limited and there are a number of issues that would need to be resolved if we seek to collect from the association if Highlands becomes insolvent. Significant asbestos judgments on appeal During 2001, there were several adverse judgments in trial court proceedings that are in various stages of the appeal process. All of these judgments concern asbestos claims involving Harbison-Walker refractory products. Each of these appeals, however, has been stayed by the bankruptcy court, as described in the Harbison-Walker Chapter 11 bankruptcy section above, until at least April 4, 2002. On November 29, 2001, the Texas District Court in Orange, Texas, entered judgments against Dresser Industries, Inc. on a $ 65 million jury verdict rendered in September 2001 in favor of five plaintiffs. The $ 65 million amount includes $ 15 million of a $ 30 million judgment against Dresser Industries, Inc. and another defendant. Dresser Industries, Inc. is jointly and severally liable for $ 15 million in addition to $ 65 million if the other defendant does not pay its share of this judgment. We believe that during the trial the court committed numerous errors, including prohibiting Dresser Industries, Inc. from presenting evidence that the alleged illness of the plaintiffs was caused by products of
   other companies that had previously settled with the plaintiffs. We intend to appeal this judgment and believe that the Texas appellate courts will ultimately reverse this judgment. On November 29, 2001, the same District Court in Orange, Texas, entered three additional judgments against Dresser Industries, Inc. in the aggregate amount of $ 35.7 million in favor of 100 other asbestos plaintiffs. These judgments relate to an alleged breach of purported settlement agreements signed early in 2001 by a New Orleans lawyer hired by Harbison-Walker, which had been defending Dresser Industries, Inc. pursuant to the agreement by which Harbison-Walker was spun-off by Dresser Industries, Inc. in 1992. These settlement agreements expressly bind Harbison-Walker Refractories Company as the obligated party, not Dresser Industries, Inc. Dresser Industries, Inc. intends to appeal these three judgments on the grounds that it was not a party to the settlement agreements and it did not authorize anyone to settle on its behalf. We believe that these judgments are contrary to applicable law and will be reversed. On December 5, 2001, a jury in the Circuit Court for Baltimore City, Maryland, returned verdicts against Dresser Industries, Inc. and other defendants following a trial involving refractory asbestos claims. Each of the five plaintiffs alleges exposure to Harbison-Walker products. Dresser Industries, Inc.'s portion of the verdicts was approximately $ 30 million. Dresser Industries, Inc. believes that the trial court committed numerous errors and that the trial evidence did not support the verdicts. The trial court has entered judgment on these verdicts. Dresser Industries, Inc. intends to appeal the judgment to the Maryland Supreme Court where we expect the judgment will be significantly reduced, if not totally reversed. On October 25, 2001, in the Circuit Court of Holmes County, Mississippi, a jury verdict of $ 150 million was rendered in favor of six plaintiffs against Dresser Industries, Inc. and two other companies. Dresser Industries, Inc.'s share of the verdict was $ 21.5 million. The award was for compensatory damages. The jury did not award any punitive damages. The trial court has entered judgment on the verdict. We believe there were serious errors during the trial and we intend to appeal this judgment to the Mississippi Supreme Court. We believe the judgment will ultimately be reversed because there was a total lack of evidence that the plaintiffs were exposed to a Harbison-Walker product or that they suffered compensatory damages. Also, there were procedural errors in the selection of the jury. Asbestos claims history. Since 1976, approximately 474,500 asbestos claims have been filed against us. Almost all of these claims have been made in separate lawsuits in which we are named as a defendant along with a number of other defendants, often exceeding 100 unaffiliated defendant companies in total. During the fourth quarter of 2001 we received approximately 14,000 new claims, compared to 16,000 new claims in the third quarter, 27,000 new claims in the second quarter and 18,000 new claims in the first quarter of 2001. Included in these numbers are new Harbison-Walker claims of approximately 4,000 in the fourth quarter and 3,000 in the third quarter. During the fourth quarter of 2001, we closed approximately 7,000 claims, resulting in approximately 36,000 closed claims during 2001. The number of open claims pending against us at the end of each quarter of 2001 and at the end of the two preceding years is as follows:
                               Total Open
      Period Ending              Claims
----------------------------------------------
December 31, 2001               274,000
September 30, 2001              146,000
June 30, 2001                   145,000
March 31, 2001                  129,000
December 31, 2000               117,000
December 31, 1999               107,700
==============================================
 
 The claims reported above at December 31, 2001 include approximately 125,000 Harbison-Walker refractory related claims that name Dresser Industries, Inc. as a defendant. These claims were added to the open claim total during the fourth quarter.
   We manage asbestos claims to achieve settlements of valid claims for reasonable amounts. When that is not possible, we contest claims in court. Since 1976 we have closed approximately 200,500 claims through settlements and court proceedings at a total cost of approximately $ 150 million. We have received or expect to receive from our insurers all but approximately $ 40 million of this cost, resulting in an average net cost per closed claim of less than $ 200. Reserves for asbestos claims. We have accrued reserves for our estimate of our liability for known open asbestos claims. We have not accrued reserves for unknown claims that may be filed against us in the future. Our estimate of the cost of resolving open claims is based on our historical litigation experience on closed claims, completed settlements and our estimate of amounts we will recover from insurance companies. Our estimate of recoveries from insurance companies with which we have coverage-in-place agreements is based on those agreements. In those instances in which agreements are still in negotiation or in litigation, our estimate is based on our expectation of our ultimate recovery from insurance companies. We believe that the insurance companies with which we have signed agreements will be able to meet their obligations under these agreements for the amounts due to us. A summary of our reserves for open claims and corresponding insurance recoveries is as follows:
                                                     December 31
-----------------------------  Millions of dollars
         2001          2000
-----------------------------------------------------------------------
--
Asbestos litigation claims                      $    737      $     80
-----------------------------------------------------------------------
--  Estimated insurance recoveries:
    Highlands Insurance Company                       (45)           (39)
Other insurance carriers                         (567)           (12)
-----------------------------------------------------------------------
--  Insurance for asbestos litigation claims             (612)
(51)
-----------------------------------------------------------------------
--  Net liability for known open asbestos claims    $    125
$     29
=======================================================================
==
 
 These insurance receivables and reserves are included in noncurrent assets and liabilities due to the extended time periods involved to settle claims. In addition to these asbestos reserves, our accounts receivable include $ 35 million we expect to collect from Highlands Insurance Company for settlements and defense costs we have already incurred for construction asbestos claims. If we are ultimately unsuccessful in the Highlands litigation, we will be unable to collect this $ 35 million as well as the $ 45 million estimated recovery from Highlands included in our asbestos reserves summarized above. If this occurs, it may have a material adverse impact on the results of our operations and our financial position at that time. Accounts receivable for billings to other insurance companies for payments made on asbestos claims were $ 18 million at December 31, 200l and $ 13 million at December 31, 2000. We have not accrued reserves for unknown claims that may be asserted against us in the future. We have not had sufficient information to make a reasonable estimate of future claims. However, we recently retained a leading claim evaluation firm to assist us in making an estimate of our potential liability for asbestos claims that may be asserted against us in the future. When the evaluation firm's analysis is completed it is likely that we will accrue a material liability for future claims that may be asserted against us. We expect the analysis will be completed during the second quarter of 2002 and that we will accrue the liability at the end of the quarter. At the same time we will accrue a receivable for related insurance proceeds we expect to collect when future claims are actually paid. The uncertainties of asbestos claim litigation and resolution of the litigation with insurance companies described above make it difficult to accurately predict the results of the ultimate resolution of asbestos claims. That uncertainty is increased by the possibility of adverse court rulings or new legislation affecting asbestos claim litigation or the settlement process. Subject to these uncertainties and based on our experience defending asbestos claims and our estimate of amounts we will recover from insurance, we believe that the open asbestos claims pending against us will be resolved without a material adverse effect on our financial position or the results of our operations. Fort Ord litigation. Brown & Root Services, now operating as Kellogg Brown & Root, has been a defendant in civil litigation pending in federal court in Sacramento, California. The lawsuit alleges that Brown & Root Services violated provisions of the False Claims Act while performing work for the United States Army at Fort Ord in California. This lawsuit was filed by a former employee in 1997. On February 8, 2002, this lawsuit and a related grand jury investigation
   were settled. Kellogg Brown & Root made a $ 2 million payment to the United States government and paid the former employee's legal expenses. Kellogg Brown & Root denied wrongdoing and did not admit liability. The United States agreed to suspend further investigation and forgo any further sanctions with regard to the Ft. Ord contract. Kellogg Brown & Root's ability to perform further work for the United States government has not been impaired. BJ Services patent litigation. On March 17, 2000, BJ Services Company filed a lawsuit against us in the United States District Court in Houston, Texas. The lawsuit alleges that a well fracturing fluid system used by Halliburton Energy Services infringes a patent issued to BJ in January 2000 for a method of well fracturing using a specific fracturing fluid. A jury trial is scheduled for March 2002. We expect BJ will seek several hundred million dollars of damages and an injunction to prevent us from using one of our competing fracturing fluids. We also expect BJ to allege that we intentionally infringed its patent and to seek treble damages. We do not believe we have infringed BJ's patent and we have filed a counterclaim that the patent is invalid and unenforceable. We also believe that BJ's large damage claims are unsupportable. We believe that we have no liability for infringement of the BJ patent. However, if the patent is found to be enforceable and we are found to have infringed it, we could be held liable for damages in an amount that has a material adverse effect on our financial position and the results of our operations. Environmental. We are subject to numerous environmental legal and regulatory requirements related to our operations worldwide. We take a proactive approach to evaluating and addressing the environmental impact of our operations. Each year we assess and remediate contaminated properties in order to avoid future liabilities and comply with legal and regulatory requirements. On occasion we are involved in specific environmental litigation and claims, including the clean-up of properties we own or have operated as well as efforts to meet or correct compliance-related matters. We also incur costs related to compliance with ever-changing environmental, legal and regulatory requirements in the jurisdictions where we operate. It is very difficult to quantify the potential liabilities. We do not expect these expenditures to have a material adverse effect on our consolidated financial position or our results of operations. During the second quarter of 2001, we accrued $ 15 million for environmental matters related to liabilities retained on properties included in the sale of Dresser Equipment Group. Our accrued liabilities for environmental matters were $ 49 million as of December 31, 2001 and $ 31 million as of December 31, 2000. Other. We are a party to various other legal proceedings. We expense the cost of legal fees related to these proceedings. We believe any liabilities we may have arising from these proceedings will not be material to our consolidated financial position or results of operations. Letters of credit. In the normal course of business, we have agreements with banks under which approximately $ 1.4 billion of letters of credit or bank guarantees were issued, including $ 241 million which relate to our joint ventures' operations. In addition, $ 320 million of these financial instruments include provisions that allow the banks to require cash collateralization if debt ratings of either rating agency fall below the rating of BBB by Standard & Poor's or Baa2 by Moody's Investors' Sevices and $ 149 million where banks may require cash collateralization if either debt rating falls below investment grade. These letters of credit and bank guarantees relate to our guaranteed performance or retention payments under our long-term contracts and self-insurance. In the past, no significant claims have been made against these financial instruments. We do not anticipate material losses to occur as a result of these financial instruments.
   Note 10. Income Per Share
Millions of dollars and shares
except per share data                                              2001
         2000          1999
-----------------------------------------------------------------------
----------------------------------
Income from continuing operations before
    change in accounting method, net
$   551       $    188      $    174
=======================================================================
==================================
Basic weighted average shares
428            442           440
Effect of common stock equivalents
2              4             3
-----------------------------------------------------------------------
----------------------------------
Diluted weighted average shares
430            446           443
=======================================================================
==================================
Income per common share from continuing operations
    before change in accounting method, net:
Basic
$  1.29       $   0.42      $   0.40
=======================================================================
==================================
Diluted
$  1.28       $   0.42      $   0.39
=======================================================================
==================================
 
 Basic income per share is 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. Included in the computation of diluted income per share are rights we issued in connection with the PES acquisition for between 850,000 and 2.1 million shares of Halliburton common stock. Excluded from the computation of diluted income per share are options to purchase 10 million shares of common stock in 2001, 1 million shares in 2000 and 2 million shares in 1999. These options were outstanding during these years, but were excluded because the option exercise price was greater than the average market price of the common shares.
   Note 11. Engineering and Construction Reorganization The table below summarizes non-recurring charges of $ 36 million pretax recorded in the Engineering and Construction Group segment in December 2000
   related to the reorganization of our engineering and construction businesses.
                                           Asset
                                          Related
Personnel
Millions of dollars                       Charges       Charges
      Total
---------------------------------------------------------------
---------------
2000 charges                             $   20         $   16
     $   36
Utilized in 2000                             (20)             -
         (20)
---------------------------------------------------------------
---------------
Balance December 31, 2000                     -             16
         16
Utilized in 2001                              -             (11)
         (11)
Adjustments of estimate to actual             -              (4)
          (4)
---------------------------------------------------------------
---------------
Balance December 31, 2001                $    -         $    1
     $    1
===============================================================
===============
 
 These charges were reflected in the following captions of the consolidated statements of income:
                                     Year ended
                                     December 31
                                 --------------------
Millions of dollars                     2000
-----------------------------------------------------
Cost of services                       $   30
General and administrative                  6
-----------------------------------------------------
Total                                  $   36
=====================================================
 
 Asset Related Charges As a result of the reorganization of the engineering and construction
   businesses, we took actions in the fourth quarter of 2000 to rationalize our
   cost structure including write-offs of equipment, engineering reference designs
   and capitalized software. Cost of services includes $ 20 million of charges for
   equipment, licenses and engineering reference designs related to specific
   projects that were discontinued as a result of the reorganization. Equipment and
   licenses with a net book value of $ 10 million were abandoned. Engineering
   reference designs specific to a project with a net book value of $ 4 million were
   written off. Software developed for internal use with a net book value of $ 6 million which we no longer plan to use due to standardization of systems was also written off. Personnel Charges Personnel charges of $ 16 million include severance and related costs incurred for the planned reduction of approximately 30 senior management positions. As of December 31, 2001, payments of $ 11 million had been made and the elimination of personnel was substantially complete. In January 2002, the
   last of the planned personnel actions was completed.
   Note 12. Change in Accounting Method In July 2001, the Financial Accounting Standards Board issued SFAS No. 142
   "Goodwill and Other Intangible Assets." Effective January 1, 2002, goodwill will
   no longer be amortized but will be tested for impairment as set forth in the statement. We have reviewed this new statement and have determined that our reporting units as defined under SFAS No. 142 will be the same as our reportable operating segments; Energy Services Group and Engineering and Construction Group. We have completed our step one goodwill impairment analysis as of January 1, 2002 to estimate the fair value of each of our reporting units and that analysis indicates that we do not have a goodwill impairment as a result of adopting SFAS No. 142. Amortization of goodwill for 2001 totaled $ 42 million pretax and $ 38 million after-tax. In July 2001, the Financial Accounting Standards Board issued SFAS No. 141 "Business Combinations" which requires the purchase method of accounting for business combination transactions initiated after June 30, 2001. The statement requires that goodwill recorded on acquisitions completed prior to July 1, 2001 be amortized through December 31, 2001. Goodwill amortization is precluded on acquisitions completed after June 30, 2001. In June 1998, the Financial Accounting Standards Board issued SFAS No. 133 "Accounting for Derivative Instruments and for Hedging Activities", subsequently amended by SFAS No. 137 and SFAS No. 138. 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 is specified in the standard depending on the intended use of the derivative and other criteria. We adopted SFAS No. 133 effective January 2001 and recorded a gain of $ 1 million after-tax for the cumulative effect of adopting the change in accounting method. We do not expect future measurements at fair value under the new accounting method to have a material effect on our financial condition or results of operations. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities." This Statement requires costs of start-up activities and organization costs to be expensed as incurred. We adopted Statement of Position 98-5 effective January 1, 1999 and recorded expense of $ 30 million pretax or $ 19 million after-tax or $ 0.04 per diluted share. The components of the $ 30 million pretax cost, all contained within the Energy Services Group, that were previously deferred include:
 -   $ 23  million  for
mobilization  costs  associated  with  specific  contracts  and for
installation of  offshore  cementing equipment  onto   third   party
marine   drilling   rigs  or   vessels;  and  -   $ 7  million  for
costs  incurred  opening  a  new  manufacturing  facility in the United
Kingdom.
 
 Note 13. Income Taxes The components of the (provision) benefit for income taxes are:
                                                        Years ended
December 31  -------------------------------------------
Millions of dollars                               2001          2000
       1999
-----------------------------------------------------------------------
-----------------
          Current income taxes:
Federal                                         $    (146)      $    (16)
     $   137  Foreign                                              (157)
         (114)           (64)
State                                                 (20)            (5)
           (2)
-----------------------------------------------------------------------
-----------------
Total                                                (323)          (135)
          71
-----------------------------------------------------------------------
-----------------
Deferred income taxes:
Federal                                               (58)           (20)
         (175)
Foreign and state                                      (3)           26
          (12)
-----------------------------------------------------------------------
-----------------
Total                                                 (61)            6
         (187)
-----------------------------------------------------------------------
-----------------
Total continuing operations                     $    (384)      $   (129)
     $   (116)
-----------------------------------------------------------------------
-----------------
Discontinued operations:
     Current income taxes                             (15)           (60)
          (98)
     Deferred income taxes                            35             -
           -
Disposal of discontinued operations                  (199)          (141)
          (94)
Benefit for change in accounting method                -             -
          11
-----------------------------------------------------------------------
-----------------
Total                                           $    (563)      $   (330)
     $   (297)
=======================================================================
=================
 
 Included in the current (provision) benefit for income taxes are foreign
   tax credits of $ 106 million in 2001, $ 113 million in 2000 and $ 52 million in
   1999. The United States and foreign components of income before income taxes,
   minority interests, discontinued operations, and change in accounting method are
   as follows:
                               Years ended December 31
                        ---------------------------------------
Millions of dollars         2001         2000         1999
---------------------------------------------------------------
United States             $    565      $  128       $  131
Foreign                        389         207          176
---------------------------------------------------------------
Total                     $    954      $  335       $  307
===============================================================
 
 The primary components of our deferred tax assets and liabilities and the related valuation allowances, including federal deferred tax assets of discontinued operations are as follows:
December 31
--------------------------------
Millions of dollars                                    2001
           2000
-----------------------------------------------------------
----------------------
Gross deferred tax assets:
    Employee benefit plans
$    214        $    265
    Capitalized research and experimentation
46              39
    Accrued liabilities
121             118
    Insurance accruals
82              99
    Construction contract accounting methods
100             117
    Inventory
53              43
    Asbestos
44              10
    Intercompany profit
54              44
    Net operating loss carryforwards
44              35
    Intangibles
18              20
    Allowance for bad debt
36              31
    All other
41              57
-----------------------------------------------------------
----------------------
      Total
$    853        $    878
-----------------------------------------------------------
----------------------
Gross deferred tax liabilities:
    Depreciation and amortization
$    106        $    128
    Nonrepatriated foreign earnings
36              36
    All other
101             103
-----------------------------------------------------------
----------------------
      Total
$    243        $    267
-----------------------------------------------------------
----------------------
Valuation allowances:
    Net operating loss carryforwards
$     38        $     28
    All other
8               8
-----------------------------------------------------------
----------------------
      Total
46              36
-----------------------------------------------------------
----------------------
Net deferred income tax asset
$    564        $    575
===========================================================
======================
 
 We have accrued for the potential repatriation of undistributed earnings of our foreign subsidiaries and consider earnings above the amounts on which tax has been provided to be permanently reinvested. While these additional earnings could become subject to additional tax if repatriated, repatriation is not anticipated. Any additional amount of tax is not practicable to estimate. We have net operating loss carryforwards of $ 95 million which expire in 2002 through 2009. We also have net operating loss carryforwards of $ 25 million with indefinite expiration dates. Reconciliations between the actual provision for income taxes and that computed by applying the United States statutory rate to income from continuing operations before income taxes and minority interest are as follows:
Years ended December 31
--------------------------------------
Millions of dollars                                             2001
     2000         1999
-----------------------------------------------------------------------
---------------------------
Provision computed at statutory rate                           $   (334)
    $   (117)     $   (107)
Reductions  (increases) in taxes resulting from:
    Tax differentials on foreign earnings                           (32)
         (14)          (14)
    State income taxes, net of federal income tax benefit           (13)
          (3)           (1)
    Nondeductible goodwill                                          (11)
         (11)          (10)
    Other items, net                                                 6
         16           16
-----------------------------------------------------------------------
---------------------------
    Total continuing operations                                    (384)
        (129)         (116)
Discontinued operations                                             20
         (60)          (98)
Disposal of discontinued operations                                (199)
        (141)          (94)
Benefit for change in accounting method                              -
          -           11
-----------------------------------------------------------------------
---------------------------
    Total                                                      $   (563)
    $   (330)     $   (297)
=======================================================================
===========================
 
 Note 14. Common Stock Our 1993 Stock and Long-Term Incentive Plan provides for the grant of any or all of the following types of awards:
          -   stock options, including incentive stock options and
non-qualified  stock options;
          -   stock  appreciation  rights,  in  tandem  with  stock
options  or  freestanding;
          -   restricted stock;
          -   performance share awards; and
          -   stock value equivalent awards.
 
 Under the terms of the 1993 Stock and Long-Term Incentive Plan as amended, 49 million shares of common stock have been reserved for issuance to key employees. The plan specifies that no more than 16 million shares can be awarded as restricted stock. At December 31, 2001, 22 million shares were available for future grants under the 1993 Stock and Long-Term Incentive Plan of which 11 million shares remain available for restricted stock awards. In connection with the acquisition of Dresser Industries, Inc. in 1998, we assumed the outstanding stock options under the stock option plans maintained by Dresser Industries, Inc. Stock option transactions summarized below include amounts for the 1993 Stock and Long-Term Incentive Plan and stock plans of Dresser Industries, Inc. and other acquired companies. No further awards are being made under the stock plans of acquired companies.
                                         Number of        Exercise
  Weighted Average  Shares          Price per        Exercise Price
Stock Options                           (in millions)        Share
     per Share
-----------------------------------------------------------------------
---------------------
       Outstanding at December 31, 1998             13.8      $  3.10 -
61.50       $  29.37
-----------------------------------------------------------------------
---------------------  Granted                                   5.6
    28.50 - 48.31          36.46  Exercised
    (1.7)        3.10 - 54.50          24.51  Forfeited
               (0.6)        8.28 - 54.50          35.61
-----------------------------------------------------------------------
---------------------  Outstanding at December 31, 1999
17.1      $  3.10 - 61.50       $  32.03
-----------------------------------------------------------------------
---------------------  Granted                                   1.7
    34.75 - 54.00          41.61  Exercised
    (3.6)        3.10 - 45.63          25.89  Forfeited
               (0.5)       12.20 - 54.50          37.13
-----------------------------------------------------------------------
---------------------  Outstanding at December 31, 2000
14.7      $  8.28 - 61.50       $  34.54
-----------------------------------------------------------------------
---------------------  Granted                                   3.6
    12.93 - 45.35          35.56  Exercised
    (0.7)        8.93 - 40.81          25.34  Forfeited
               (0.5)       12.32 - 54.50          36.83
-----------------------------------------------------------------------
---------------------  Outstanding at December 31, 2001
17.1      $  8.28 - 61.50       $  35.10
=======================================================================
=====================
 
 Options outstanding at December 31, 2001 are composed of the following:
                                          Outstanding
                 Exercisable
-----------------------------------------------
--------------------------------
                                             Weighted
                                             Average        Weighted
                           Weighted
                            Number of       Remaining        Average
         Number of         Average
       Range of              Shares        Contractual      Exercise
           Shares          Exercise
    Exercise Prices        (in millions)        Life           Price
         (in millions)       Price
--------------------------------------------------------------------
---------------------------------------
  $  8.28 - 29.06               4.9             5.7         $  25.11
              4.0          $  24.97
    29.07 - 39.06               4.7             6.7            33.42
              2.9             33.58
    39.07 - 39.55               5.3             8.0            39.51
              2.2             39.50
    39.56 - 61.50               2.2             6.7            50.22
              1.6             50.77
--------------------------------------------------------------------
---------------------------------------
  $  8.28 - 61.50              17.1             6.8         $  35.10
             10.7          $  34.08
====================================================================
=======================================
 
 There were 8.8 million options exercisable with a weighted average exercise price of $ 32.81 at December 31, 2000, and 9.5 million options exercisable with a weighted average exercise price of $ 28.96 at December 31, 1999.
   All stock options under the 1993 Stock and Long-Term Incentive Plan, including options granted to employees of Dresser Industries, Inc. since its acquisition, are granted at the fair market value of the common stock at the grant date. The fair value of options at the date of grant was estimated using the Black-Scholes option pricing model. The weighted average assumptions and resulting fair values of options granted are as follows:
                                         Assumptions
---------------------------------------------------------------------
Weighted Average
              Risk-Free         Expected           Expected
Expected        Fair Value of
            Interest Rate    Dividend Yield    Life  (in years)
Volatility      Options Granted
-----------------------------------------------------------------------
------------------------------
2001             4.5%             2.3%                5
58%              $ 19.11
2000             5.2%             1.3%                5
54%              $ 21.57
1999             5.8%             1.3%                5
56%              $ 19.77
=======================================================================
==============================
 
 Stock options generally expire 10 years from the grant date. Stock options under the 1993 Stock and Long-Term Incentive Plan vest ratably over a three or four year period. Other plans have vesting periods ranging from three to 10 years. Options under the Non-Employee Directors' Plan vest after six months. We account for the option plans in accordance with Accounting Principles Board Opinion No. 25, under which no compensation cost has been recognized for stock option awards other than for restricted stock grants. Compensation cost for the stock option programs calculated consistent with SFAS No. 123, "Accounting for Stock-Based Compensation," is set forth on a pro forma basis below:
Millions of dollars
except per share data                2001              2000
           1999
------------------------------------------------------------
----------------------
Net income:
    As reported                     $   809          $   501
          $   438
    Pro forma                           767              460
              406
============================================================
======================
Diluted earnings per share:
    As reported                     $  1.88          $  1.12
          $  0.99
    Pro forma                          1.77             1.03
             0.92
============================================================
======================
 
 Restricted shares awarded under the 1993 Stock and Long-Term Incentive Plan were 1,484,034 in 2001, 695,692 in 2000 and 352,267 in 1999. The shares awarded are net of forfeitures of 170,050 in 2001, 69,402 in 2000 and 72,483 in 1999. The weighted average fair market value per share at the date of grant of shares granted was $ 30.90 in 2001, $ 42.25 in 2000 and $ 43.41 in 1999. Our Restricted Stock Plan for Non-Employee Directors allows for each non-employee director to receive an annual award of 400 restricted shares of common stock as a part of compensation. We reserved 100,000 shares of common stock for issuance to non-employee directors. Under this plan we issued 4,800 restricted shares in 2001, 3,600 restricted shares in 2000 and 4,800 restricted
   shares in 1999. At December 31, 2001, 33,600 shares have been issued to
   non-employee directors under this plan. The weighted average fair market value
   per share at the date of grant of shares granted was $ 34.35 in 2001, $ 46.81 in
   2000 and $ 46.13 in 1999. Our Employees' Restricted Stock Plan was established for employees who are
   not officers, for which 200,000 shares of common stock have been reserved. At
   December 31, 2001, 153,050 shares (net of 42,350 shares forfeited) have been
   issued. Forfeitures were 800 in 2001, 6,450 in 2000 and 8,400 in 1999. No
   further grants are being made under this plan. Under the terms of our Career Executive Incentive Stock Plan, 15 million
   shares of our common stock were reserved for issuance to officers and key
   employees at a purchase price not to exceed par value of $ 2.50 per share. At
   December 31, 2001, 11.7 million shares (net of 2.2 million shares forfeited)
   have been issued under the plan. No further grants will be made under the Career
   Executive Incentive Stock Plan.
   Restricted shares issued under the 1993 Stock and Long-Term Incentive Plan,
   Restricted Stock Plan for Non-Employee Directors, Employees' Restricted Stock
   Plan and the Career Executive Incentive Stock Plan are limited as to sale or
   disposition. These restrictions lapse periodically over an extended period of
   time not exceeding 10 years. Restrictions may also lapse for early retirement
   and other conditions in accordance with our established policies. The fair
   market value of the stock, on the date of issuance, is being amortized and
   charged to income (with similar credits to paid-in capital in excess of par
   value) generally over the average period during which the restrictions lapse. At
   December 31, 2001, the unamortized amount is $ 87 million. We recognized compensation costs of $ 23 million in 2001, $ 18 million in 2000 and $ 11 million in 1999. On April 25, 2000, our Board of Directors approved plans to implement a share repurchase program for up to 44 million shares. We repurchased 1.2 million
   shares at a cost of $ 25 million in 2001 and 20.4 million shares at a cost of
   $ 759 million in 2000.
   Note 15. Series A Junior Participating Preferred Stock We previously declared a dividend of one preferred stock purchase right on
   each outstanding share of common stock. The dividend is also applicable to each
   share of our common stock that was issued subsequent to adoption of the Rights
   Agreement entered into with Mellon Investor Services LLC. Each preferred stock
   purchase right entitles its holder to buy one two-hundredth of a share of our
   Series A Junior Participating Preferred Stock, without par value, at an exercise
   price of $ 75. These preferred stock purchase rights are subject to anti-dilution
   adjustments, which are described in the Rights Agreement entered into with
   Mellon. The preferred stock purchase rights do not have any voting rights and
   are not entitled to dividends. The preferred stock purchase rights become exercisable in limited
   circumstances involving a potential business combination. After the preferred
   stock purchase rights become exercisable, each preferred stock purchase right
   will entitle its holder to an amount of our common stock, or in some
   circumstances, securities of the acquirer, having a total market value equal to
   two times the exercise price of the preferred stock purchase right. The
   preferred stock purchase rights are redeemable at our option at any time before
   they become exercisable. The preferred stock purchase rights expire on December
   15, 2005. No event during 2001 made the preferred stock purchase rights
   exercisable.
   Note 16. Financial Instruments and Risk Management In June 1998, the Financial Accounting Standards Board issued SFAS No. 133
   "Accounting for Derivative Instruments and for Hedging Activities", subsequently
   amended by SFAS No. 137 and SFAS No. 138. This standard requires entities to
   recognize all derivatives on the balance sheet 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. We adopted SFAS No. 133
   effective January 2001 and recorded a $ 1 million after-tax credit for the
   cumulative effect of adopting the change in accounting method. We do not expect
   future measurements at fair value under the new accounting method to have a
   material effect on our financial condition or results of operations. Foreign exchange risk. Techniques in managing foreign exchange risk
   include, but are not limited to, foreign currency borrowing and investing and
   the use of currency derivative instruments. We selectively manage significant
   exposures to potential foreign exchange losses considering current market
   conditions, future operating activities and the associated cost in relation to
   the perceived risk of loss. The purpose of our foreign currency risk management
   activities is to protect us from the risk that the eventual dollar cash flows
   resulting from the sale and purchase of products and services in foreign
   currencies will be adversely affected by changes in exchange rates. We do not
   hold or issue derivative financial instruments for trading or speculative
   purposes. We manage our currency exposure through the use of currency derivative
   instruments as it relates to the major currencies, which are generally the
   currencies of the countries for which we do the majority of our international
   business. These contracts generally have an expiration date of two years or
   less. Forward exchange contracts, which are commitments to buy or sell a
   specified amount of a foreign currency at a specified price and time, are
   generally used to manage identifiable foreign currency commitments. Forward
   exchange contracts and foreign exchange option contracts, which convey the
   right, but not the obligation, to sell or buy a specified amount of foreign
   currency at a specified price, are generally used to manage exposures related to
   assets and liabilities denominated in a foreign currency. None of the forward or
   option contracts are exchange traded. While derivative instruments are subject to fluctuations in value, the fluctuations are generally offset by the value of the underlying exposures being managed. The use of some contracts may limit our ability to benefit from favorable fluctuations in foreign exchange rates. Foreign currency contracts are not utilized to manage exposures in some currencies due primarily to the lack of available markets or cost considerations (non-traded currencies). We attempt to manage our working capital position to minimize foreign currency commitments in non-traded currencies and recognize that pricing for the services and products offered in these countries should cover the cost of exchange rate devaluations. We have historically incurred transaction losses in non-traded currencies. Assets, liabilities and forecasted cash flows denominated in foreign currencies. We utilize the derivative instruments described above to manage the foreign currency exposures related to certain assets and liabilities, which are denominated in foreign currencies; however, we have not elected to account for these instruments as hedges for accounting purposes. Additionally, we utilize the derivative instruments described above to manage forecasted cash flows denominated in foreign currencies generally related to long-term engineering and construction projects. While we enter into these instruments to manage the foreign currency risk on these projects, we have chosen not to seek hedge accounting treatment for these contracts. The fair value of these contracts was immaterial as of the end of 2001 and 2000. Notional amounts and fair market values. The notional amounts of open forward contracts and options for continuing operations were $ 505 million at December 31, 2001 and $ 281 million at December 31, 2000. Amounts related to
   discontinued operations were $ 61 million at December 31, 2000. The notional
   amounts of our foreign exchange contracts do not generally represent amounts
   exchanged by the parties, and thus, are not a measure of our exposure or of the
   cash requirements relating to these contracts. The amounts exchanged are
   calculated by reference to the notional amounts and by other terms of the
   derivatives, such as exchange rates. Credit risk. Financial instruments that potentially subject us to
   concentrations of credit risk are primarily cash equivalents, investments and
   trade receivables. It is our practice to place our cash equivalents and
   investments in high-quality securities with various investment institutions. We
   derive the majority of our revenues from sales and services, including
   engineering and construction, to the energy industry. Within the energy
   industry, trade receivables are generated from a broad and diverse group of
   customers. There are concentrations of receivables in the United States and the
   United Kingdom. We maintain an allowance for losses based upon the expected
   collectibility of all trade accounts receivable. There are no significant concentrations of credit risk with any individual
   counterparty related to our derivative contracts. We select counterparties based
   on their profitability, balance sheet and a capacity for timely payment of
   financial commitments which is unlikely to be adversely affected by foreseeable
   events. Interest rate risk. We have several debt instruments outstanding which have
   both fixed and variable interest rates. We manage our ratio of fixed to
   variable-rate debt through the use of different types of debt instruments and
   derivative instruments. Fair market value of financial instruments. The estimated fair market value
   of long-term debt at year-end 2001 was $ 1.3 billion and in 2000 was $ 1.1 billion
   as compared to the carrying amount of $ 1.5 billion at year-end 2001 and $ 1.1
   billion at year-end 2000. The fair market value of fixed rate long-term debt is
   based on quoted market prices for those or similar instruments. The carrying
   amount of variable rate long-term debt approximates fair market value because
   these instruments reflect market changes to interest rates. See Note 8. The
   carrying amount of short-term financial instruments, cash and equivalents,
   receivables, short-term notes payable and accounts payable, as reflected in the
   consolidated balance sheets approximates fair market value due to the short
   maturities of these instruments. The currency derivative instruments are carried
   on the balance sheet at fair value and are based upon third-party quotes. The
   fair market values of derivative instruments used for fair value hedging and
   cash flow hedging were immaterial.
   Note 17. Retirement Plans Our company and subsidiaries have various plans which cover a significant
   number of their employees. These plans include defined contribution plans, which
   provide retirement contributions in return for services rendered, provide an
   individual account for each participant and have terms that specify how
   contributions to the participant's account are to be determined rather than the
   amount of pension benefits the participant is to receive. Contributions to these
   plans are based on pretax income and/or discretionary amounts determined on an
   annual basis. Our expense for the defined contribution plans for both continuing
   and discontinued operations totaled $ 129 million in 2001 compared to $ 140
   million in 2000 and $ 111 million in 1999. Other retirement plans include defined
   benefit plans, which define an amount of pension benefit to be provided, usually
   as a function of age, years of service or compensation. These plans are funded
   to operate on an actuarially sound basis. Plan assets are primarily invested in
   cash, short-term investments, real estate, equity and fixed income securities of
   entities domiciled in the country of the plan's operation. Plan assets, expenses
   and obligations for retirement plans in the following tables include both
   continuing and discontinued operations.
                                                                2001
                              2000
--------------------------------------------------------------------
Millions of dollars                                United States
International     United States     International
--------------------------------------------------------------------
--------------------------------------------------
Change in benefit obligation
Benefit obligation at beginning of year                $  288
  $  1,670           $   413          $  1,781
Service cost                                                2
        60                 4                57
Interest cost                                              13
        89                20                87
Plan participants' contributions                            -
        14                 -                13
Effect of business combinations                             -
         -                 -                32
Amendments                                                  -
         -                 5                 -
Divestitures                                              (111)
        (90)              (138)               (61)
Settlements/curtailments                                   (46)
         -                 (8)                -
Currency fluctuations                                       -
        15                 -               (168)
Actuarial gain/ (loss)                                       8
       270                13                (13)
Benefits paid                                              (14)
        (60)               (21)               (58)
--------------------------------------------------------------------
--------------------------------------------------
Benefit obligation at end of year                      $  140
  $  1,968           $   288          $  1,670
====================================================================
==================================================
 
 
                                               

PRESIDENT'S LETTER:
  (FROM ANNUAL REPORT TO SHAREHOLDERS)

  The following text was taken directly from an EDGAR filing.

  A Letter to Our Shareholders

  o We're building a faster, smarter, more nimble, integrated and responsive company ... a big company moving, reacting and responding like a small one.

  DEAR FELLOW SHAREHOLDERS, Employee motivation has a direct bearing on financial results. With $ 13 billion in revenue, 2001 was a good year for Halliburton, and I'd like to thank the management team and our highly motivated workforce for their contributions that help continue to position Halliburton as one of the best, most focused and innovative service companies in the world.

  Our Energy Services Group ended 2001 with record operating income while our Engineering & Construction Group, Halliburton KBR, exceeded its revenue and margin commitments and continues to be awarded quality jobs on terms that should enhance future returns on capital.

  Within the Energy Services Group, both Landmark Graphics and Halliburton Energy Services had excellent results, despite the decline in rig activity in the United States toward the end of the year. Both businesses benefited from their strong international presence and broad suite of products and services.

  The pressures facing Halliburton's customers are among our biggest challenges. What drives the oil and gas industry is the same today as it will always be. Our customers have to find and replace the oil and gas they produce every year. They have to do it from increasingly remote and hostile locations, and they have to bring it to market at a cost that's commercially and politically acceptable.

  The future performance of Halliburton strongly depends on technology. In 2001, Halliburton spent just under $ 300 million on technologies aimed at our existing businesses and product lines. We plan to continue our technology spending at approximately this rate in 2002.

  In addition, we are prepared to make equity investments in technologies that are attractive in the marketplace to either expand our current portfolio or to create entirely new businesses. This type of investment is not new to our Company; Halliburton has spent almost $ 600 million on external technology over the past three years. These types of opportunities do not come along every day. Continuing this pace of external investment depends on our ability to identify and acquire new technologies that will create value to our shareholders.

  Halliburton's technology investment will ensure that we increase production, increase reserves, decrease capital and operating costs, reduce uncertainty and improve productivity for our customers.

  The technology challenge for our industry is immense. Most of the promising reservoirs our customers pursue today are in deeper and deeper water. Today, we are drilling wells more than 25,000 feet into the earth in over 10,000 feet of water. Developing oil and gas resources in deep water requires extraordinary technology.

  As well as investing in deepwater and data-management technologies, we're strengthening our focus on Real Time Reservoir Solutions(SM) (RTRS). This means dramatically improving the speed and quality of decisions needed to develop the reservoir. We do this by

  3

  providing accurate, instant information from wells and surface-production systems. Teams observing the data use it to make timely reservoir management decisions during operations. This is changing the way our customers manage production. Geology, engineering and facilities design processes are becoming integrated. Customers will be able to manage their facilities, their maintenance, and their safety and environmental compliance from operational control centers. Specialists will be able to monitor and direct well-site operations for multiple fields from a visualization room mounted on a single platform.

  So, Halliburton is investing in the future. We will have the substantial technological prowess needed for the industry's longer-term challenges. For several years, the finding and development costs of the global energy industry were declining; now they're on the rise again. Our technology is changing the business processes in well construction, well production and asset management. Within a short time, we believe our technologies will help cut well construction costs by 50 percent.

  Also of fundamental importance to our prosperity is management of the Halliburton brand. If our brand is more trusted, relied upon and stronger than the competition's, we will generate superior results. In the fourth quarter of 2001, we launched a brand alignment and positioning program. This followed a comprehensive, globally researched brand identity program carried out to effectively position Halliburton for the future. Despite the emotion felt in different parts of the organization, this was an important evolution for the Company. The name "Halliburton" is synonymous with quality, trust, integrity and technology. The initiative enhances those qualities while respecting the rich heritage of our founding fathers, Erle P. Halliburton, George and Herman Brown, Solomon Dresser and Morris W. Kellogg.

  Our success in business also requires a commitment to social citizenship, business ethics and corporate perspective. This includes having respect for the environment, concern for employee safety and welfare, and giving back to the communities in which we work. I can't overemphasize the importance of Health, Safety & Environment (HSE) to our Company's operations. The health and safety of employees, and those we work with, is vital. HSE is one of our core values, and it will never be sacrificed in the name of profits.

  Investing in the future means different things in different parts of the world. In developing countries, it may mean providing opportunities for training and employment or employees volunteering time to help build schools and hospitals. It certainly includes a willingness to balance the demand for short-term profits with the resources we need for success in the future.  As CEO of Halliburton, I believe one of my responsibilities is to set the tone for our Company's commitment to the right social responsibility and to help us find a way to balance these obligations with the demands of our shareholders.

  One of the most wonderful aspects of our Company, and one of our great challenges, is our diversity. With 85,000 employees, working in about 400 locations in more than 100 countries, when I walk the corridors of any Halliburton facility, I am pleased to see employees of every race, culture and religion, and hear the languages of almost every nation. I also see the pride and the connection our employees have to their country, to our Company, customers and partners.

  o Processes that once took hours now take only minutes, and distance is no longer a factor.

  The terrorist attacks on the United States in September 2001 touched us all in different ways. I am very proud of the way Halliburton employees around the world rallied in support of the victims. The impact of 9/11 on the corporate world has been huge in the short term, but I believe long-term prospects for the worldwide economy remain bright,

  4

  particularly for our industry sector.

  The Halliburton stock price dropped precipitously toward the end of the year. There were several reasons for the drop. First, there was overall uneasiness about the U.S. and global economies and the negative impact on oil and gas prices, and the tragic events of 9/11 heightened those concerns.  But the main reason was reaction to several sizable asbestosrelated jury verdicts against the Company. The lawsuits relate mainly to products manufactured by various divisions of Dresser Inc. and past operations of Brown & Root. The largest category of claims relates to Harbison-Walker, a refractory company that Dresser spun off in 1992.

  Although we've worked hard to explain our strategy, it's likely that the investment community will continue to express concern about our asbestosrelated activities in the face of softening fundamentals in the oilfield services industry. We take the issue very seriously and understand the concerns our shareholders have. Asbestos litigation is a U.S. national problem - many companies are affected - and the civil justice system is producing uneven and inequitable results. We believe asbestos litigation needs serious review by Congress. In the meantime, the Company has substantial insurance, we continue to pursue what I believe is the right litigation strategy, and we are conducting a vigorous defense of asbestos lawsuits.

  While these issues have had a negative impact on our share price in the near term, we will continue to work through this problem without losing sight of our strong global market position and our underlying corporate strategy. We will continue to invest in the people, equipment and technologies that we believe will make us successful. Our businesses are strong and healthy, and our financial disclosure is accurate and complete.

  While the global economic slowdown has hurt the demand for hydrocarbons, the fundamental nature of our industry has not changed. We are driven by supply and demand. Energy prices are cyclical, our business is cyclical, and we have to deal with the current downturn as best we can. Halliburton has a strong history of performance that helps us ride through weak periods.  We continue to introduce new technologies that will give us a competitive advantage even in the face of soft demand. We're always looking for innovative business relationships that will keep us working and keep our customers developing, in spite of short-term price fluctuations. Steering a course through price swings is one of the great management challenges in our business. How well we succeed is an indicator of our overall management quality.

  We can count on one thing. Our industry will always be affected by world events and economics. None of our technologies will change that, and none of them are short-term solutions. They require heavy investment, and they demand that we change the way we think and work. We must pursue the technologies that are best for our Company and our industry tomorrow, next year and for the next generation.

  By most measures, and certainly in light of current industry conditions, we have completed an excellent year. The full year's earnings from continuing operations exceed all prior years combined since the Dresser merger. We are very well positioned for "through the cycle" revenues and earnings, with almost $ 10 billion in backlog and industry-leading people, technology, products and services.

  David J. Lesar

  David J. Lesar Chairman of the Board, President and Chief Executive Officer

  5

  o Halliburton employees everywhere are finding new ways to live, work, communicate and learn.

  06:12

  Real Time Information

  A TIME OF TRANSFORMATION

  We are living in a time of great change. Fueled by population growth, technology and the Internet, our entire society is in a time of rapid and fundamental transformation unlike anything the world has seen.

  In businesses everywhere, new priorities are emerging. Reduced cycle time. Greater speed to market. Justin-time manufacturing. Real time solutions to real business issues.

  Exactly what is real time? Simply put, it's exceptional responsiveness within the shortest possible lapse of time. When this occurs, customer expectations are satisfied instantaneously.

  Today, Halliburton is harnessing its vast resources, innovative technology and unmatched capabilities to deliver the kind of products, services and solutions our customers need - when they need them. While we have the vast resources of a big company, we act like a small one - flexible, innovative, responsive, speedy and trustworthy. A company that responds quickly to a real time business culture.

  REAL TIME AND HALLIBURTON

  The oil and gas industry has always been a volatile business. Skyrocketing prices. Precipitous declines. Companies scrambling to compete. Only now the stakes are even higher. Because costs are higher today, risks of exploration and development are greater and demands for return on capital are louder. Not only do companies have to be smart in managing their businesses, they also have to make timely decisions. And that takes knowledge.

  In the face of these challenges, Halliburton has created a new way of thinking and working and delivering value called Real Time Reservoir Solutions(SM) (RTRS). More than just technology, RTRS is a network of people, processes and products extending throughout both hemispheres and across the globe.

  RTRS is advanced drilling, completion and reservoir concepts that enable customers to increase the value of their asset by reducing capital expenditures and operating costs, delivering production sooner, increasing recoverable reserves and controlling the development cost. All of which helps drive our customers' bottom line. RTRS includes powerful computers and Internet portals linking our people, our customers and our suppliers to improve productivity and

  6

  "In a 24-hour business economy, setting the pace in Real Time is critical. The company that does will command premiums for their products and services and deliver superior results to their shareholders. It's that simple."

  Doug Foshee on Real Time Executive Vice President and Chief Financial Officer

 

MANAGEMENT DISCUSSION:
  The following text was taken directly from an EDGAR filing.
  HALLIBURTON COMPANY Management's Discussion and Analysis of Financial Condition and
  Results of Operations
  In this section, we discuss the operating results and general financial condition of Halliburton Company and its subsidiaries. We explain:
  (TABLE OMITTED)
  BUSINESS ENVIRONMENT
  Our business is organized around two business segments: - Energy Services Group; and - Engineering and Construction Group. We currently operate in over 100 countries throughout the world, providing a comprehensive range of discrete and integrated products and services to the energy industry, and to other industrial and governmental customers. The majority of our consolidated revenues is derived from the sale of services and products, including engineering and construction activities, to large oil and gas companies. These services and products  are used throughout the energy industry, from the earliest phases of exploration and development of oil and gas reserves through the refining and distribution process. The industries we serve are highly competitive  with many substantial competitors for each segment. No country other than the United States or the United Kingdom accounts for more than 10% of our operations. Unsettled political conditions, acts of terrorism, expropriation or other governmental actions, exchange controls or currency devaluation may result in increased business risk in any one country. We believe the geographic diversification of our business activities reduces the risk that loss of business in any one country would be material to our consolidated results of operations. Halliburton Company Spending on exploration and production activities and investments in capital expenditures for refining and distribution facilities by large oil and gas companies have a significant impact on the activity levels within our two business segments. Throughout the first part of 2001, increased spending by large oil and gas companies contributed to higher levels of worldwide drilling activity, especially gas drilling in the United States. General business conditions in the United States began to decline during the third quarter. The events of September 11 accelerated a global economic recession which in turn adversely impacted the energy industry, particularly in the United States. Reduced demand for aviation fuel and increasing natural gas storage levels, due to weakened demand for industrial and residential natural gas, resulted in significant decreases in North American oil and natural gas drilling. Although down, crude oil prices have remained above threshold levels that our customers use to justify their spending on capital and drilling projects. Generally, major oil and gas field development projects, particularly deepwater projects in the Gulf of Mexico, West Africa and Brazil as well as downstream energy projects, have longer lead times. The economics of these projects are based on longer-term commodity prices. Once started, projects of this type are less likely to be delayed due to fluctuating short-term prices. We expect United States gas drilling activity to continue declining into the second quarter of 2002 due to the slow global economy and unseasonably warm winter. We expect gas drilling activity to begin recovering in the latter part of the year. If prices for oil remain stable as compared to year-end prices, we expect major oilfield development projects to continue providing international opportunities. Over the longer-term, we expect increased global demand for oil and natural gas, additional customer spending to replace depleting reserves and our continued technological advances to provide growth opportunities for our products and services.
  Energy Services Group Strong natural gas and crude oil drilling activity during the first nine
  months contributed to increased demand for the products and services provided by
  the Energy Services Group. Activity was especially strong in oilfield services
  within the United States, reflecting increased levels of drilling for natural
  gas. The rotary rig count in the United States continued to increase throughout
  the first half of the year and averaged 1,206 rigs in the first nine months of
  2001. This represents an increase of 40% over the average for the first nine
  months of 2000. In the United States drilling activity for gas remained strong,
  posting a 44% increase over the average for the first nine months of 2000. Henry
  Hub gas prices for the first nine months of 2001 averaged $ 4.62/MCF as compared
  to $ 3.54/MCF average for the first nine months of 2000. Increases in
  international rig activity also continued through the first nine months of 2001,
  up 19% compared to the first nine months of 2000. All geographic regions
  experienced higher activity levels, which allowed us to increase our utilization
  of equipment and personnel. This higher utilization resulted in better
  profitability and opportunities to increase prices, especially within the United
  States. During the latter part of 2001, drilling activity within the United States,
  primarily land-based gas rigs, began to significantly decline. Henry Hub gas
  prices for the fourth quarter of 2001 averaged $ 2.42/MCF, almost 50% lower than
  the average for the first nine months of 2001. For the month of December  2001,
  the United States natural gas rig count averaged 754, down 100 rigs from
  December 2000 and down 304 rigs from the peak in July 2001. United States rotary
  rig count for the fourth quarter of 2001 was down 19% compared to third quarter
  of 2001 and down 6% compared to the fourth quarter of 2000. At the same time,
  the international rig count averaged 748 rigs for the fourth quarter of 2001 and
  was down 1% compared to the third quarter of 2001, and increased 5% compared to
  the fourth quarter of 2000. Natural gas prices for 2002 are expected to continue
  to be weak in the first half of the year due to current high gas storage levels,
  caused by an abnormally warm winter and a slow economy in the United States, but
  then improve in the second half of the year. Timing of the recovery of natural
  gas prices, which will lead to increased drilling activity depends,  upon
  depletion of existing reserves and future gas storage levels. We expect oil prices to range between $ 17 and $ 22 per barrel in 2002. We
  believe this range will support international activity at or just below current
  levels. The outlook for world oil demand growth is highly uncertain due to the
  slowdown in the global economy and the length of the recession in the United
  States. In 2002 worldwide exploration and production spending is expected to
  decrease with most of the decrease occurring in the United States and Canada.
  We expect that recent declines in United States rig counts and economic
  uncertainty within the United States will result in short-term declines in
  revenues and operating income within the segment. The price increases we
  implemented in late 2000 and during 2001 combined with our efforts to manage
  costs should partially offset lower activity levels and pressures by competitors
  and customers to increase discounts. The production enhancement product service
  line, due to its dependence on United States gas drilling, is expected to be
  significantly impacted by the current slow down in natural gas drilling. Our
  drilling systems and completion products product service lines have a large
  percentage of their business outside the United States and are also heavily
  involved in deepwater oil and gas developments. These product service lines are
  expected to remain relatively strong. Engineering and Construction Group Our Engineering and Construction Group did not benefit from the positive
  factors which provided opportunities for growth in the Energy Services Group in
  the first part of 2001. Both groups provide products and services to many of the
  same customers. However, oilfield service activities, especially land-based gas
  drilling activity in the United States, is more short-term focused as compared
  to the long-term nature of most major engineering and construction projects. The
  downturn in the energy industry that began in 1998 led our customers to severely
  curtail many large engineering and construction projects during 2000 and into
  2001. During this time, a series of mergers and consolidations among our major
  customers also reduced our customers' levels of investment in refining and
  distribution facilities as they evaluated and maximized use of combined
  capacities. Due to the lack of opportunities existing throughout 2000, combined
  with an extremely competitive global engineering and construction environment,
  we restructured our Engineering and Construction Group in late 2000 and the
  first quarter of 2001 to facilitate operational efficiencies and reduce costs.
  Engineering, construction, fabrication, and project management capabilities are
  now part of one operating group - Halliburton KBR.
  In the latter part of the third quarter and throughout the fourth quarter
  of 2001 we saw a slowdown of the economy. The current global economic slowdown
  is expected to last until the second half of 2002. Soft demand in the first half
  of 2002 will continue to delay energy related project awards, or reduce the
  scope of existing projects, especially for olefins and chemicals projects.
  Although slower economies and lower oil and gas prices may delay some projects,
  we expect an increasing need for security and government defense  and
  infrastructure projects. Worldwide tightening of sulfur content in gasoline and
  diesel and other new environmental regulations are likely to require changes in
  refinery configurations and the addition of new process units in the long-term.
  We remain optimistic about our opportunities in liquefied natural gas and
  gas-to-liquids. Our optimism is based on anticipated new projects as well as the
  front-end engineering and initial work contracts for liquefied natural gas
  projects we received in late 2001. We expect activity levels within the
  Engineering and Construction Group to remain about the same in 2002 as compared
  with 2001. This expectation is based upon our:
  (TABLE OMITTED)
  RESULTS OF OPERATIONS IN 2001 COMPARED TO 2000
  REVENUES
  (TABLE OMITTED)
  Consolidated revenues for 2001 were $ 13.0 billion, an increase of 9% compared to 2000. International revenues comprised 62% of total revenues in 2001 and 66% in 2000 as activity and pricing increased in our Energy Services Group more rapidly in the United States particularly in the first half of 2001. Our Engineering and Construction Group revenues, which did not benefit from the positive factors contributing to the growth of the Energy Services Group decreased 16%. Engineering and construction projects are long-term in nature and customers continue to delay major projects with the slowdown in the economy occurring in the latter part of 2001. Energy Services Group revenues increased by $ 1.9 billion, or 29%, in 2001 from 2000. International revenues were 58% of the total segment revenues in 2001 compared to 62% in 2000. Revenues in 2001 from our oilfield services product service lines were $ 6.8 billion. Our oilfield services product service lines experienced revenue growth of 29% despite a 14% decline in oil prices and a 3% decrease in natural gas prices between December 2000 and December 2001. The revenue increase was primarily due to higher drilling activity and pricing improvements, particularly in the United States. Revenues increased across all product service lines and geographic regions. Our pressure pumping product service lines experienced growth of 34% in 2001 as compared to 2000. Logging, drilling services and drilling fluids revenues increased approximately 28%, and drill bit revenues were 19% higher in 2001 as compared to 2000. Completion products revenues increased 13%. Logging  and drilling services revenues increases occurred primarily in the United States, as the product service lines benefited from higher prices and increased drilling activity. Geo-Pilot(TM) and other new products introduced in the drilling services product service line further contributed to the improved revenue in 2001. Drilling fluid revenues increased in 2001 with higher activity levels in the Gulf of Mexico. Geographically, all regions within the oilfield service product service lines prospered with North America revenues increasing 37% from 2000 to 2001. Pressure pumping revenues in North America were 48% higher in 2001 compared to 2000 primarily due to higher levels of drilling activity. Revenues from Latin America increased 27% with significant increases in Venezuela and Brazil. Europe/Africa and Middle East revenues were about 20% higher in 2001 than 2000, particularly in Russia and Egypt.  Revenues for the remainder of the segment of $ 1.9 billion increased by $ 400 million, or 27%, primarily due to a large multi-year project in Brazil which began in the third quarter of 2000. Integrated exploration and
  production information systems revenues were higher by 19% partially due to the acquisition of PGS Data Management as well as growth in software  sales and professional services. Engineering and Construction Group revenues decreased $ 844 million, or 16%, from 2000 to 2001. The decline is primarily due to the completion of several large international onshore and offshore projects which have not yet been fully replaced with new project awards and delays in start-ups of new projects. International revenues were approximately 71% in 2001 as compared to 72% in 2000. On a percentage basis, revenues declined about the same inside and outside of North America. Revenues for the Asia/Pacific region were down over 40% due to the effects of completing two major projects, partially offset by a new liquefied natural gas project and the start-up of construction on a railway in Australia. In Europe/Africa, revenues were down 6%. The decline was primarily due to the completion of a major project in Norway and lower activity on the logistical support contract in the Balkans which moved to the sustainment phase in late 2000. The decline was partially offset by increases in activities at our shipyard in the United  Kingdom. North American revenues declined in 2001 partially due to the completion of highway and paving construction jobs and the baseball stadium in Houston. These declines in North America were partially offset by a slight increase in operations and maintenance revenues as our customers focus on maintaining current facilities and plant operations  rather
  than adding new facilities.
  OPERATING INCOME
  (TABLE OMITTED)
  Consolidated operating income increased $ 622 million, or 135%, from 2000 to 2001. In 2000 our results of operations include two significant items: an $ 88 million pretax gain on the sale of marine vessels and a pretax charge of $ 36 million related to the restructuring of the engineering and construction businesses. Excluding these items, operating income increased by more than 160%. Energy Services Group operating income increased $ 433 million, or 74%, in 2001 over 2000. Excluding the sale of marine vessels, operating income increased more than 100% compared to 2000.  Increased operating income reflects increased activity levels, higher equipment utilization and improved pricing, particularly in the United States in the first nine months of 2001. Our oilfield services product service lines operating income in 2001 exceeded $ 1 billion, more than double from 2000. Operating margins for our oilfield services product service lines increased from 8.6% in 2000 to 14.8% in 2001, resulting in an incremental margin of 37%. Operating income was higher in 2001 as compared to 2000 in all product service lines and geographic regions. The largest increase was in pressure pumping in North America, which rose by over 130%. Substantial increases in operating income were also made in the logging, drill bits and drilling services product service lines. Operating income in North America was higher by 78% in 2001 as compared to 2000. International regions, particularly Latin America and Europe/Africa, made significant improvements in operating income. Excluding the sale of marine vessels in 2000, operating income for the remainder of the segment decreased $ 41 million, primarily due to lower operating margins in our Surface/Subsea product service line and revised profit estimates on a major project. Engineering and Construction Group operating income increased $ 185 million from 2000 to 2001. Operating margins improved to 3.3% in 2001. This increase is primarily due to the $ 167 million recorded in the fourth quarter of 2000 as a result of higher than estimated costs on specific jobs and unfavorable claims negotiations  on other jobs. We also recorded a restructuring charge of $ 36 million in the fourth quarter of 2000 related to the reorganization of the engineering and construction businesses under Halliburton KBR. Excluding these fourth quarter 2000 charges, operating income decreased $ 18 million, or 11%, consistent with the decline in revenues. General corporate expenses were $ 74 million for 2001 as compared to $ 78 million in 2000.
  NONOPERATING ITEMS
  Interest expense of $ 147 million in 2001 was $ 1 million higher than in 2000. Our outstanding short-term debt was substantially higher in the first part of 2001 due to repurchases of our common stock in the fourth quarter of 2000 under our repurchase program and borrowings associated with the acquisition of PGS Data Management in March 2001. Cash proceeds of $ 1.27 billion received in April 2001 from the sale of the remaining  businesses within the Dresser Equipment Group were used to repay our short-term borrowings; however, our average borrowings for 2001 were slightly higher than in 2000. The impact of higher average borrowings was mostly offset by lower interest rates on short-term borrowings. Interest income was $ 27 million in 2001, an increase of $ 2 million from 2000. Foreign currency losses were $ 10 million in 2001 as compared to $ 5 million in 2000. Other, net was a loss of $ 1 million in 2000 and less than $ 1 million gain in 2001. Provision for income taxes was $ 384 million for an effective tax rate of 40.3% in 2001 compared to 38.5% in 2000. Minority interest in net income of subsidiaries in 2001 was $ 19 million as compared to $ 18 million in 2000. Income (loss) from discontinued operations in 2001 was a $ 42 million loss, or $ 0.10 per diluted share, due to accrued expenses associated with asbestos claims of disposed businesses. See Note 3. The loss was partially offset by net income for the first quarter of 2001 from Dresser Equipment Group of $ 0.05 per diluted share. Income from discontinued operations of $ 98 million, or $ 0.22 per diluted share, represents the net income of Dresser Equipment Group for the full year of 2000. Gain on disposal of discontinued operations in 2001 was $ 299 million after-tax, or $ 0.70 per diluted share. The 2001 gain resulted from the sale of our remaining businesses within the Dresser Equipment Group in April 2001. The gain of $ 215 million after-tax, or $ 0.48 per diluted share, in 2000 resulted from the sale of our 51% interest in Dresser-Rand, formerly a part of Dresser Equipment Group, in January 2000.  Cumulative effect of accounting change, net of $ 1 million reflects the adoption of SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" in the first quarter of 2001. Net income for 2001 was $ 809 million, or $ 1.88 per diluted share, as compared to net income of $ 501 million, or $ 1.12 per diluted share in 2000.
  RESULTS OF OPERATIONS IN 2000 COMPARED TO 1999
  REVENUES
  (TABLE OMITTED)
  Consolidated revenues for 2000 were $ 11.9 billion, a decrease of 3% from
  1999 revenues of $ 12.3 billion. Lower levels of Engineering and Construction
  Group revenues were partially offset by increased oilfield services revenues
  within the Energy Services Group, particularly in the United States.
  International revenues were 66% of our consolidated revenues in 2000, compared
  with 70% in 1999. Energy Services Group revenues were $ 6.8 billion for 2000, an increase of
  14% from 1999 revenues of $ 5.9 billion. International revenues were 62% of total
  segment revenues in 2000 compared with 68% in 1999. Revenues for the group were
  positively impacted in late 1999 and throughout 2000 by increased rig counts and
  customer spending, particularly within North America, following increases in oil
  and gas prices that began in 1999. After a slight seasonal decline in the first
  quarter of 2000, revenues increased consecutively each quarter across all
  product service lines throughout the year. Revenues from our oilfield services
  product service lines were $ 5.3 billion. Increased demand for natural gas and
  increased drilling activity benefited our oilfield services product service
  lines. The pressure pumping product service line revenues increased 30% compared
  to 1999. The logging product service line revenues increased 26% compared to
  1999. Drilling fluids increased over 20%, while drill bits and completion
  products service lines increased about 14%. Drilling systems product service
  line revenues increased by 9%. Geographically, strong North American activity
  resulted in revenue growth of 43%, with growth experienced across all product
  service lines in that region compared to 1999. North America generated 52% of
  total oilfield service product service line revenues for 2000 compared to 44% in
  1999. Pressure pumping accounted for approximately 50% of the increase in
  revenues within North America, reflecting higher activity levels in all work
  areas, particularly the Gulf of Mexico, South Texas, Canada, and Rocky
  Mountains. Revenues increased by 16% in the Middle East region and 12% in the
  Latin America region compared to 1999. Europe/Africa revenues were up slightly
  while revenues in the Asia Pacific region declined by 3%. Activity was slower to
  increase internationally throughout 2000 despite higher oil and gas prices. The
  turnaround in international rig activity, which started late in the second
  quarter of 2000, continued into the fourth quarter of 2000 when international
  rig counts reached the highest levels since late 1998. Revenues also increased
  across all regions outside North America during the fourth quarter of 2000, as
  customer spending for exploration and production began to increase outside North
  America. Revenues from the remainder of the segment of $ 1.5 billion decreased 7%
  compared to 1999. Lower revenues within the Surface/Subsea product service lines
  were partially offset by record revenues within the integrated exploration and
  production information systems product service line which increased 13% compared
  to 1999. Increases in software and professional services revenues were partially
  offset by lower hardware revenues, which have been de-emphasized. Software sales
  contributed just over 19% in revenue growth, while professional services
  increased over 7% compared to 1999. Engineering and Construction Group  revenues were $ 5.2 billion for 2000,
  down 19% from $ 6.4 billion in 1999. Higher oil and gas prices during 2000 did
  not translate into customers proceeding with new awards of large downstream
  projects. Many other large projects, primarily gas and liquefied natural gas
  projects, were also delayed, continuing a trend that started in 1999. Revenues
  in 1999 benefited from increased logistics support services to military
  peacekeeping efforts in the Balkans and increased activities at the Devonport
  Dockyard in the United Kingdom. The logistics support services to military
  peacekeeping efforts in the Balkans peaked in the fourth quarter of 1999 as the
  main construction and procurement phases of the contract were completed.  These
  increases partially offset lower revenues from onshore and offshore engineering
  and construction projects, particularly major projects in Europe and Africa,
  which were winding down.
  OPERATING INCOME
  (TABLE OMITTED)
  Consolidated operating income was $ 462 million for 2000 compared to $ 401
  million for 1999. Engineering and Construction segment results include
  restructuring charges of $ 36 million in 2000 related to the restructuring of the
  engineering and construction businesses. See Note 11. Excluding  the
  restructuring charge in 2000 and the special credits of $ 47 million in 1999,
  operating income for 2000 increased by 41% from 1999. Energy Services Group operating income in 2000 was $ 582 million, an
  increase of 133% from 1999 operating income of $ 250 million. Operating margins
  were 8.6% in 2000, up from 4.2% in 1999. Operating income from our oilfield
  services product service lines was $ 452 million. During 2000, strengthening
  North American drilling and oilfield activity resulted in increased equipment
  utilization and improved pricing within the oilfield services product service
  lines. Pressure pumping operating income increased about 135% compared to 1999
  levels, while logging services operating income increased by 170% compared to
  1999. Drilling fluids, drilling systems and completion products were impacted by
  slow recovery in international activity. During the fourth quarter of 2000,
  oilfield services recorded an $ 8 million reversal of bad debts related to claims
  settled by the United Nations against Iraq dating from the invasion of Kuwait in
  1990. Geographically, strong oil and gas prices throughout 2000 led to higher
  levels of deepwater and onshore gas drilling within North America. Activity
  increases in the Gulf of Mexico, South Texas, Canada, and Rocky Mountain work
  areas were greater than most other areas. Operating income outside North America
  continued to lag the performance noted within North America, reflecting
  continued delays in international exploration and production for oil and gas.
  However, fourth quarter 2000 operating income increased across all international
  geographic regions compared to the third quarter of 2000, reflecting increased
  international spending by our customers. Operating income in 2000 for the remainder of the segment was $ 130 million.
  Operating income benefited in 2000 from a third quarter $ 88 million pretax gain
  on sale of two semi-submersible vessels and one multipurpose support vessel and
  increasing profitability in the integrated exploration and production
  information systems product service line. Excluding the gain of the sale of the
  vessels, operating income declined in the Surface/Subsea product service lines.
  Lower activity levels in the North Sea United Kingdom sector  and
  under-utilization of manufacturing and subsea equipment and vessels, which carry
  large fixed costs, were the primary factors for the decline in operating income.
  Operating income from integrated exploration and production information systems
  in 2000 increased almost 200% compared to 1999, reflecting higher software and
  professional services revenues. Engineering and Construction Group recorded an operating loss for 2000 of
  $ 42 million compared to operating income of $ 175 million in 1999, a decrease of
  124%. The operating margin was 2.7% in 1999. Operating margins in 2000 declined
  both internationally and in North America due to losses on projects as a result
  of higher than estimated costs on selected jobs and claims negotiations on other
  jobs not progressing as anticipated. Given the number and technical complexity
  of the engineering and construction projects we perform, some project losses are
  normal occurrences. However, the environment for negotiations with customers on
  claims and change orders has become more difficult in the past few years. This
  environment, combined with performance issues on a few large, technically
  complex jobs, contributed to unusually high job losses on large projects of $ 171
  million in 2000, including $ 167 million in the fourth quarter. At the same time,
  the group recorded $ 36 million of restructuring charges. Lower activity due to
  the trend in delayed new projects, which continued through 2000, also negatively
  impacted operating income. Operating income in 1999 benefited from higher
  activity levels supporting United States military peacekeeping efforts in the
  Balkans, offset by reduced engineering and construction project profits due to
  the timing of project awards and revenue recognition. Special credits in 1999 are the result of a change in estimate on some
  components of the 1998 special charges. In the second quarter of 1999, we
  concluded that total costs, particularly for severance and facility exit costs,
  were lower than previously estimated. Therefore, we reversed $ 47 million of the
  $ 959 million special charge that was originally recorded. General corporate expenses for 2000 were $ 78 million, an increase of $ 7
  million from 1999. In 2000 general corporate expenses increased primarily as a
  result of costs related to the early retirement of our previous chairman and
  chief executive officer.
  NONOPERATING ITEMS
  Interest expense was $ 146 million for 2000 compared to $ 141 million in
  1999. Interest expense was up in 2000 due to higher average interest rates on
  short-term borrowings and additional short-term debt used to repurchase $ 759
  million of our common stock under our share repurchase program, mostly during
  the fourth quarter of 2000. These increases offset the benefits from our lower
  borrowings earlier in 2000 due to the use of the proceeds from the sale of
  Ingersoll-Dresser Pump and Dresser-Rand to repay short-term debt. Interest income of $ 25 million in 2000 declined $ 49 million from 1999.
 

FILINGS:

8-K 57         08/23/2002

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SCH 13G        07/10/2002

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10-Q           06/30/2002

REGST S-8      06/24/2002

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10-Q           03/31/2002

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ARS            12/31/2001

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REGST S-4 A00  10/09/2001

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REGST S-4 A00  08/29/2001

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8-K 57         07/25/2001

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REGST S-4      07/17/2001

8-K 57         07/16/2001

PRSPCT         07/13/2001

8-K 57         07/12/2001

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4              07/10/2001

10-Q           06/30/2001

8-K 57         06/28/2001

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3 A00          06/05/2001

144 A00        06/04/2001

8-K 57         06/04/2001

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PROXY          05/15/2001

144            05/15/2001

8-K 57         05/15/2001

144            05/11/2001

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8-K 57         04/10/2001

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10-Q           03/31/2001

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4              02/12/2001

ARS            12/31/2000

LOAD-DATE: August 27, 2002