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Halliburton Company UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2011 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____ to _____ Commission File Number 001-03492 HALLIBURTON COMPANY (a Delaware corporation) 75-2677995 3000 North Sam Houston Parkway East Houston, Texas 77032 (Address of Principal Executive Offices) Telephone Number – Area Code (281) 871-2699 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer [X] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] As of July 15, 2011, 919,636,645 shares of Halliburton Company common stock, $2.50 par value per share, were outstanding. HALLIBURTON COMPANY Index Page No. PART I. FINANCIAL INFORMATION 3 Item 1. Financial Statements 3 - Condensed Consolidated Statements of Operations 3 - Condensed Consolidated Balance Sheets 4 - Condensed Consolidated Statements of Cash Flows 5 - Notes to Condensed Consolidated Financial Statements 6 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk 35 Item 4. Controls and Procedures 37 PART II. OTHER INFORMATION 38 Item 1. Legal Proceedings 38 Item 1(a). Risk Factors 47 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 51 Item 3. Defaults Upon Senior Securities 51 Item 4. Specialized Disclosures 51 Item 5. Other Information 51 Item 6. Exhibits 52 Signatures 53 PART I. FINANCIAL INFORMATION Item 1. Financial Statements HALLIBURTON COMPANY Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended June 30 June 30 Millions of dollars and shares except per share data 2011 2010 2011 2010 Revenue: Services $ 4,727 $ 3,371 $ 8,918 $ 6,216 Product sales 1,208 1,016 2,299 1,932 Total revenue 5,935 4,387 11,217 8,148 Operating costs and expenses: Cost of services 3,659 2,716 7,087 5,184 Cost of sales 1,050 862 2,020 1,648 General and administrative 65 47 135 105 Total operating costs and expenses 4,774 3,625 9,242 6,937 Operating income 1,161 762 1,975 1,211 Interest expense, net of interest income of $2, $3, $3, and $6 (63) (76) (132) (152) Other, net (5) (9) (9) (49) Income from continuing operations before income taxes 1,093 677 1,834 1,010 Provision for income taxes (352) (200) (581) (321) Income from continuing operations 741 477 1,253 689 Income (loss) from discontinued operations, net of income tax (provision) benefit of $1, $(3), $1, and $(0) − 6 (1) 1 Net income $ 741 $ 483 $ 1,252 $ 690 Noncontrolling interest in net income of subsidiaries (2) (3) (2) (4) Net income attributable to company $ 739 $ 480 $ 1,250 $ 686 Amounts attributable to company shareholders: Income from continuing operations $ 739 $ 474 $ 1,251 $ 685 Income (loss) from discontinued operations, net − 6 (1) 1 Net income attributable to company $ 739 $ 480 $ 1,250 $ 686 Basic income per share attributable to company shareholders: Income from continuing operations $ 0.81 $ 0.52 $ 1.37 $ 0.76 Income from discontinued operations, net − 0.01 − − Net income per share $ 0.81 $ 0.53 $ 1.37 $ 0.76 Diluted income per share attributable to company shareholders: Income from continuing operations $ 0.80 $ 0.52 $ 1.36 $ 0.75 Income from discontinued operations, net − 0.01 − 0.01 Net income per share $ 0.80 $ 0.53 $ 1.36 $ 0.76 Cash dividends per share $ 0.09 $ 0.09 $ 0.18 $ 0.18 Basic weighted average common shares outstanding 916 906 915 906 Diluted weighted average common shares outstanding 921 909 920 908 See notes to condensed consolidated financial statements. 3 HALLIBURTON COMPANY Condensed Consolidated Balance Sheets June 30, December 31, 2011 2010 Millions of dollars and shares except per share data (Unaudited) Assets Current assets: Cash and equivalents $ 1,438 $ 1,398 Receivables (less allowance for bad debts of $128 and $91) 4,448 3,924 Inventories 2,235 1,940 Investments in marketable securities 451 653 Current deferred income taxes 258 257 Other current assets 710 714 Total current assets 9,540 8,886 Property, plant, and equipment, net of accumulated depreciation of $6,611 and $6,064 7,626 6,842 Goodwill 1,369 1,315 Other assets 1,421 1,254 Total assets $ 19,956 $ 18,297 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 1,554 $ 1,139 Accrued employee compensation and benefits 706 716 Deferred revenue 260 266 Other current liabilities 646 636 Total current liabilities 3,166 2,757 Long-term debt 3,824 3,824 Employee compensation and benefits 483 487 Other liabilities 825 842 Total liabilities 8,298 7,910 Shareholders’ equity: Common shares, par value $2.50 per share – authorized 2,000 shares, issued 1,072 and 1,069 shares 2,680 2,674 Paid-in capital in excess of par value 360 339 Accumulated other comprehensive loss (237) (240) Retained earnings 13,456 12,371 Treasury stock, at cost – 154 and 159 shares (4,617) (4,771) Company shareholders’ equity 11,642 10,373 Noncontrolling interest in consolidated subsidiaries 16 14 Total shareholders’ equity 11,658 10,387 Total liabilities and shareholders’ equity $ 19,956 $ 18,297 See notes to condensed consolidated financial statements. 4 HALLIBURTON COMPANY Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30 Millions of dollars 2011 2010 Cash flows from operating activities: Net income $ 1,252 $ 690 Adjustments to reconcile net income to net cash flows from operating activities: Depreciation, depletion, and amortization 651 533 Payments related to KBR TSKJ matters (6) (94) Other changes: Receivables (583) (547) Accounts payable 397 296 Inventories (290) (162) Other (33) 92 Total cash flows from operating activities 1,388 808 Cash flows from investing activities: Capital expenditures (1,423) (855) Sales of marketable securities 701 550 Purchases of marketable securities (501) (1,182) Acquisitions of business assets, net of cash acquired (70) (190) Other investing activities 50 82 Total cash flows from investing activities (1,243) (1,595) Cash flows from financing activities: Dividends to shareholders (165) (163) Proceeds from exercises of stock options 93 40 Other financing activities (13) 5 Total cash flows from financing activities (85) (118) Effect of exchange rate changes on cash (20) (17) Increase (decrease) in cash and equivalents 40 (922) Cash and equivalents at beginning of period 1,398 2,082 Cash and equivalents at end of period $ 1,438 $ 1,160 Supplemental disclosure of cash flow information: Cash payments during the period for: Interest $ 136 $ 155 Income taxes $ 536 $ 361 See notes to condensed consolidated financial statements. 5 HALLIBURTON COMPANY Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by generally accepted accounting principles for annual financial statements and should be read together with our 2010 Annual Report on Form 10-K. Our accounting policies are in accordance with United States generally accepted accounting principles. The preparation of financial statements in conformity with these accounting principles 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 revenue and expenses during the reporting period. Ultimate results could differ from our estimates. In our opinion, the condensed consolidated financial statements included herein contain all adjustments necessary to present fairly our financial position as of June 30, 2011, the results of our operations for the three and six months ended June 30, 2011 and 2010, and our cash flows for the six months ended June 30, 2011 and 2010. Such adjustments are of a normal recurring nature. In addition, certain reclassifications of prior period balances have been made to conform to 2011 classifications. The results of operations for the three and six months ended June 30, 2011 may not be indicative of results for the full year. 6 Note 2. Business Segment and Geographic Information We operate under two divisions, which form the basis for the two operating segments we report: the Completion and Production segment and the Drilling and Evaluation segment.
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