AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 22, 2004
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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HALLIBURTON COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 76-2677995
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
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ALBERT O. CORNELISON, JR.
1401 MCKINNEY STREET, SUITE 2400 EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
HOUSTON, TEXAS 77010 HALLIBURTON COMPANY
(713) 759-2600 1401 MCKINNEY STREET, SUITE 2400
(Address, including zip code, and telephone number, HOUSTON, TEXAS 77010
including (713) 759-2600
area code, of registrant's principal executive (Name, address, including zip code, and telephone
offices) number,
including area code, of agent for service)
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COPY TO:
DARRELL W. TAYLOR ANDREW M. BAKER
BAKER BOTTS L.L.P. BAKER BOTTS L.L.P.
910 LOUISIANA STREET 2001 ROSS AVENUE
HOUSTON, TEXAS 77002-4995 DALLAS, TEXAS 75201-2980
(713) 229-1234 (214) 953-6500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED UNIT PRICE(1) REGISTRATION FEE
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Senior Notes due 2007............... $500,000,000 100% $500,000,000 $63,350(2)
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f) under the Securities Act of 1933, as amended.
(2) A registration fee of $63,350 was paid in connection with the Registration
Statement (333-112977) on Form S-4 of Halliburton Company, as filed with the
Commission on February 20, 2004, to register $500,000,000 of Senior Notes
due 2007. The Registration Statement (333-112977) on Form S-4 was
subsequently withdrawn on November 18, 2004, and all of the securities
offered thereunder remain unsold. Pursuant to Rule 457(p) under the
Securities Act, all of the registration fee paid under the Registration
Statement (333-112977) on Form S-4 will be used to offset against the
registration fee due for this registration statement. Accordingly, no
registration fee is being paid with this registration statement.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SECURITYHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED NOVEMBER 22, 2004
PROSPECTUS
(HALLIBURTON LOGO)
$500,000,000
HALLIBURTON COMPANY
SENIOR NOTES DUE JANUARY 26, 2007
This prospectus relates to $500,000,000 aggregate principal amount of our
Senior Notes due January 26, 2007. We originally issued and sold the notes to
Citigroup Global Markets Inc., Goldman, Sachs & Co., J.P. Morgan Securities
Inc., ABN Amro Incorporated, HSBC Securities (USA) Inc., The Royal Bank of
Scotland plc and Merrill Lynch, Pierce, Fenner & Smith Incorporated in a private
placement in January 2004. This prospectus will be used by selling
securityholders to resell their notes.
The notes bear interest at a floating rate equal to three-month LIBOR plus
0.75%. Interest on the notes is payable quarterly on the 26th day of January,
April, July and October of each year, beginning April 26, 2004. The notes are
not guaranteed by any of our subsidiaries.
The notes will mature on January 26, 2007.
On January 26, 2005, or on any interest payment date thereafter, we will
have the option to redeem all or a portion of the notes that have not been
previously repurchased at the redemption prices set forth in this prospectus.
The notes are our senior unsecured obligations and rank equally with all
our other existing and future unsecured senior indebtedness. The notes are
evidenced by one or more global notes deposited with a custodian for, and
registered in the name of, a nominee of The Depository Trust Company. Except as
described in this prospectus, beneficial interests in the global notes will be
shown on, and transfers thereon will be effected only through, records
maintained by The Depository Trust Company and its direct and indirect
participants.
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 5 OF THIS
PROSPECTUS BEFORE INVESTING IN THE NOTES.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NOTES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2004.
YOU SHOULD RELY ONLY ON THE INFORMATION WE HAVE PROVIDED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT
AUTHORIZED ANY PERSON (INCLUDING ANY SALESMAN OR BROKER) TO PROVIDE YOU WITH
ADDITIONAL OR DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE
SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD
ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THAT DOCUMENT AND THAT ANY
INFORMATION WE HAVE INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF THE DATE OF
THE DOCUMENT INCORPORATED BY REFERENCE.
TABLE OF CONTENTS
PAGE
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Forward-Looking Statements.................................. i
Where You Can Find More Information......................... ii
Prospectus Summary.......................................... 1
Risk Factors................................................ 5
Use of Proceeds............................................. 7
Description of Selected Settlement-Related Indebtedness..... 8
Description of Notes........................................ 13
Registration Rights Agreement............................... 25
Selling Securityholders..................................... 27
Material United States Federal Income Tax Consequences...... 28
Plan of Distribution........................................ 32
Legal Matters............................................... 33
Experts..................................................... 33
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FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides safe harbor
provisions for forward-looking information. Forward-looking information is based
on projections and estimates, not historical information. Some statements in
this prospectus and the documents incorporated by reference herein are
forward-looking and use words like "may," "may not," "believe," "do not
believe," "expect," "do not expect," "plan," "does not plan," "anticipate," "do
not anticipate," and other expressions. We may also provide oral or written
forward-looking information in other materials we release to the public.
Forward-looking information involves risks and uncertainties and reflects our
best judgment based on current information. Our results of operations can be
affected by inaccurate assumptions we make or by known or unknown risks and
uncertainties. In addition, other factors may affect the accuracy of our
forward-looking information. As a result, the accuracy of our forward-looking
information cannot be guaranteed. Actual events and the results of operations
may vary materially.
While it is not possible to identify all factors, we continue to face many
risks and uncertainties that could cause actual results to differ from our
forward-looking statements, including the risks described in "Risk Factors," in
our Annual Report on Form 10-K for the year ended December 31, 2003, as amended
by Forms 10-K/A filed on March 15 and May 12, 2004, and in our Quarterly Reports
on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2004.
In addition, future trends for pricing, margins, revenues and profitability
remain difficult to predict in the industries we serve. We do not assume any
responsibility to publicly update any of our forward-looking statements
regardless of whether factors change as a result of new information, future
events or for any other reason. You should review any additional disclosures we
make in our press releases and our reports on Forms 10-K, 10-Q, 8-K and 8-K/A
filed with or furnished to the SEC. We also suggest that you listen to our
quarterly earnings release conference calls with financial analysts.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), pursuant to which we file annual,
quarterly and current reports, proxy statements and other information with the
SEC. You can read and copy any materials we file with the SEC at the SEC's
public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You
also can obtain additional information about the operation of the SEC's public
reference room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a
web site that contains information we file electronically with the SEC, which
you can access over the Internet at www.sec.gov, and our electronic SEC filings
are also available from our web site at www.halliburton.com. Information
contained on our web site or any other web site is not incorporated into this
prospectus and does not constitute a part of this prospectus. You can also
obtain information about us at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005.
The following documents are incorporated into this prospectus by this
reference. They disclose important information that each holder should consider
when deciding whether to invest in the notes.
- Our Annual Report on Form 10-K for the year ended December 31, 2003, as
amended by Forms 10-K/A filed on March 15 and May 12, 2004;
- Our Quarterly Reports on Form 10-Q for the quarters ended March 31, June
30 and September 30, 2004; and
- The Item 5 and 8.01 disclosures in our Current Reports on Form 8-K filed
February 12, February 19, March 19, May 5, May 21, June 14, June 18, June
29, July 19, July 22, July 23, July 28, August 17, August 19, September
2, September 27, October 15 and November 17, 2004; and the Item 5
disclosure in our Current Report on Form 8-K/A filed on July 28, 2004.
All documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering are also incorporated by reference in this
prospectus. Information incorporated by reference is considered to be a part of
this prospectus, and later information filed with the SEC prior to the
termination of the offering will automatically update and supersede this
information.
We will provide without charge to each person, including a beneficial
owner, to whom a copy of this prospectus has been delivered, upon the written or
oral request of such person, a copy of any and all of the documents that have
been or may be incorporated by reference in this prospectus, except that
exhibits to such documents will not be provided unless they are specifically
incorporated by reference into such documents. Requests for copies of any such
document should be directed to:
Halliburton Company
1401 McKinney, Suite 2400
Houston, Texas 77010
Attention: Albert O. Cornelison, Jr.
Executive Vice President and General Counsel
Telephone: (713) 759-2600
ii
PROSPECTUS SUMMARY
The following summary should be read together with the information
contained in other parts of this prospectus and the documents we incorporate by
reference. You should carefully read this prospectus and the documents we
incorporate by reference to fully understand the terms of the notes as well as
the tax and other considerations that are important to you in making a decision
about whether to invest in the notes. In this prospectus, we refer to
Halliburton Company and its subsidiaries as "we," "us," "our" or "Halliburton,"
unless we specifically indicate otherwise or the context clearly indicates
otherwise.
HALLIBURTON COMPANY
We are one of the world's largest oilfield services companies and a leading
provider of engineering and construction services. We had total revenues for the
year ended December 31, 2003 of approximately $16.3 billion and total revenues
for the nine months ended September 30, 2004 of approximately $15.3 billion.
Our five business segments are organized around how we manage our business:
Drilling and Formation Evaluation, Fluids, Production Optimization, Landmark and
Other Energy Services and the Engineering and Construction Group. We sometimes
refer to the combination of Drilling and Formation Evaluation, Fluids,
Production Optimization and Landmark and Other Energy Services segments as the
Energy Services Group. Through our Energy Services Group, we provide a wide
range of services and products, as well as integrated solutions to customers for
the exploration, development and production of oil and gas. The Energy Services
Group serves major, national and independent oil and gas companies throughout
the world. Our Engineering and Construction Group (known as KBR) provides a wide
range of services to energy and industrial customers and government entities
worldwide.
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We are a Delaware corporation. Our principal executive offices are located
at 1401 McKinney, Suite 2400, Houston, Texas 77010, and our telephone number at
that address is (713) 759-2600.
1
THE OFFERING
Issuer........................ Halliburton Company.
Notes Offered................. $500,000,000 aggregate principal amount of
senior notes due January 26, 2007.
Maturity Date................. The notes will mature on January 26, 2007,
unless earlier redeemed by us.
Interest and Interest Payment
Dates......................... The notes bear interest at a floating rate
equal to three-month LIBOR plus 0.75%. Interest
on the notes is payable quarterly on the 26th
day of January, April, July and October of each
year, beginning April 26, 2004.
Optional Redemption........... On January 26, 2005, or on any quarterly
interest payment date thereafter, we will have
the option to redeem for cash all or a portion
of the notes that have not been previously
repurchased upon not less than 30 nor more than
60 days' notice before the redemption date by
mail to the trustee and each holder of notes,
for a price equal to 100% of the aggregate
principal amount of the notes to be redeemed
plus any accrued and unpaid interest and
additional interest amounts owed, if any, to
the redemption date. See "Description of
Notes -- Optional Redemption."
Covenants..................... We issued the notes under an indenture that
contains covenants for your benefit. Among
other things, these covenants restrict our
ability to incur indebtedness secured by liens
under specified circumstances without equally
and ratably securing the notes.
Ranking....................... The notes are our general, senior unsecured
indebtedness and rank equally with all of our
existing and future senior unsecured
indebtedness. The notes effectively rank junior
to any existing or future secured indebtedness,
unless and to the extent the notes are entitled
to be equally and ratably secured. As of the
date of this prospectus, we had no outstanding
advances under our master letter of credit
facility or our revolving credit facilities and
no other outstanding secured indebtedness. In
addition, the notes are effectively
subordinated to the existing and future
indebtedness and other liabilities of our
subsidiaries. At September 30, 2004, the
aggregate indebtedness of our subsidiaries was
approximately $109 million, and other
liabilities of our subsidiaries, including
trade payables, accrued compensation, advanced
billings, income taxes payable and other
liabilities (other than asbestos and
intercompany liabilities) were approximately
$5.7 billion, and accrued asbestos and silica
liabilities were approximately $4.4 billion.
In the fourth quarter of 2003, we entered into
(1) a secured master letter of credit facility
intended to ensure that existing letters of
credit supporting our contracts remain in place
during the Chapter 11 proceedings of some of
our subsidiaries and (2) a secured $700 million
revolving credit facility for general working
capital purposes. In July 2004, we entered into
an additional secured $500 million 364-day
revolving credit facility for general working
capital purposes with terms substantially
similar to our existing $700 million revolving
credit facility (together with the
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master letter of credit facility and the $700
million revolving credit facility, the "credit
facilities"). As of September 30, 2004, we had
issued a letter of credit for approximately
$172 million under the $700 million revolving
credit facility to replace an existing letter
of credit expiring on our Barracuda-Caratinga
project, which reduced the availability under
this revolving credit facility to $528 million.
The terms of the notes and the terms of the
credit facilities provide that the notes and
certain of our outstanding debt securities will
share in collateral pledged to secure
borrowings under the credit facilities if and
when the total of all our Secured Debt (as
defined in the notes) exceeds 5% of the
consolidated net tangible assets of Halliburton
and its subsidiaries. The terms of the credit
facilities currently limit the amount of
indebtedness we can issue in the future that
would be equally and ratably secured with
indebtedness under the credit facilities. The
credit facilities also provide that the
collateral pledged to secure borrowings under
the credit facilities will be released after
(1) completion of the Chapter 11 plan of
reorganization of DII Industries, Kellogg Brown
& Root and our other affected subsidiaries and
(2) satisfaction of the other conditions
described in this prospectus. For additional
information, see "Description of Selected
Settlement-Related Indebtedness."
No Subsidiary Guarantees...... While the notes are not guaranteed by any of
our subsidiaries, borrowings under the credit
facilities are guaranteed by some of our
subsidiaries. Accordingly, the notes are
structurally subordinated to the debt
guaranteed by our subsidiaries for the duration
of the guarantees. The terms of the credit
facilities provide that any of these subsidiary
guarantees will be released after (1)
completion of the Chapter 11 plan of
reorganization of DII Industries, Kellogg Brown
& Root and our other affected subsidiaries and
(2) satisfaction of the other conditions
described in this prospectus. For additional
information, see "Description of Selected
Settlement-Related Indebtedness."
Form and Denomination......... The notes are represented by global notes in
fully registered form, without coupons,
deposited with a custodian for, and registered
in the name of a nominee of, The Depository
Trust Company. Beneficial interests in a global
note are shown on, and transfers of the global
notes will be effected only through, records
maintained by DTC and its participants. See
"Description of Notes -- Book-Entry System."
Governing Law................. The indenture and the notes are governed by,
and construed in accordance with, the laws of
the State of New York.
Trustee....................... JPMorgan Chase Bank.
RISK FACTORS
You should carefully consider all of the information set forth or
incorporated by reference in this prospectus and, in particular, the specific
factors in the section of this prospectus entitled "Risk Factors" for an
explanation of certain risks of investing in the notes.
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RATIO OF EARNINGS TO FIXED CHARGES
We have presented in the table below our historical consolidated ratio of
earnings to fixed charges for the periods shown.
NINE MONTHS ENDED YEARS ENDED DECEMBER 31,
SEPTEMBER 30, --------------------------------
2004 2003 2002 2001 2000 1999
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3.0 4.4 --(a) 5.2 2.4 2.4
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(a) For the year ended December 31, 2002, earnings were inadequate to cover
fixed charges by $269 million.
For purposes of computing the ratio of earnings to fixed charges: (1) fixed
charges consist of interest on debt, amortization of debt discount and expenses
and a portion of rental expense determined to be representative of interest and
(2) earnings consist of income (loss) from continuing operations before income
taxes, minority interest, cumulative effects of accounting changes plus fixed
charges as described above, adjusted to exclude the excess or deficiency of
dividends over income of 50% or less owned entities accounted for by the equity
method.
4
RISK FACTORS
You should carefully consider the risks described below and incorporated by
reference in this prospectus before making an investment decision. Due to the
risks described in the documents incorporated by reference, our business,
financial condition or results of operations could be materially and adversely
affected. See "Where You Can Find More Information" for a description of the
information we have included or incorporated by reference into this prospectus.
In particular, you should consider the information included under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Forward-Looking Information and Risk Factors" in Item 2 of Part I
of our Quarterly Report on Form 10-Q for the quarter ended September 30, 2004,
which information will be updated under similar headings in our future Annual
Reports on Form 10-K and Quarterly Reports on Form 10-Q and by Item 8.01
disclosure in our future Current Reports on Form 8-K.
This prospectus and the documents we incorporate by reference also contain
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of certain factors, including the risks faced by us
described in the documents we incorporate by reference.
OUR FINANCIAL CONDITION IS DEPENDENT ON THE EARNINGS OF OUR SUBSIDIARIES.
We are a holding company and our assets consist primarily of direct and
indirect ownership interests in, and our business is conducted substantially
through, our subsidiaries. Consequently, our ability to repay our debt,
including the notes, depends on the earnings of our subsidiaries, as well as our
ability to receive funds from our subsidiaries through dividends, repayment of
intercompany notes or other payments. The ability of our subsidiaries to pay
dividends, repay intercompany debt or make other advances to us is subject to
restrictions imposed by applicable laws (including bankruptcy laws), tax
considerations and the terms of agreements governing our subsidiaries. Our
foreign subsidiaries in particular may be subject to currency controls,
repatriation restrictions, withholding obligations on payments to us, and other
limits. If we do not receive such funds from our subsidiaries, our financial
condition would be materially adversely affected.
YOU WILL HAVE NO RECOURSE AGAINST OUR SUBSIDIARIES IN THE EVENT OF A DEFAULT ON
THE NOTES.
As a holding company, we rely primarily on dividends from our subsidiaries
to meet our obligations for payment of principal and interest on our outstanding
debt obligations and corporate expenses. See "-- Our financial condition is
dependent on the earnings of our subsidiaries" above. We are a legal entity
separate and distinct from our subsidiaries, and holders of the notes will be
able to look only to us for payments on the notes. In addition, our right to
receive assets of any subsidiaries upon their liquidation or reorganization, and
the rights of the holders of the notes to share in those assets, would be
subject to the satisfaction of claims of the subsidiaries' creditors.
Consequently, the notes will be subordinate to all liabilities, including their
guarantees of our other indebtedness and their trade payables, of any of our
subsidiaries and any subsidiaries that we may in the future acquire or
establish. Borrowings under the credit facilities we entered into in connection
with the proposed plan of reorganization of some of our subsidiaries are
guaranteed by some of our subsidiaries. See "Description of Selected
Settlement-Related Indebtedness."
THE NOTES WILL BE EFFECTIVELY JUNIOR TO ALL SECURED INDEBTEDNESS UNLESS THEY ARE
ENTITLED TO BE EQUALLY AND RATABLY SECURED.
The notes are our unsecured obligations and rank equally with all our other
unsecured indebtedness. However, the notes are structurally subordinated to
indebtedness of our subsidiaries and effectively subordinated to our secured
debt to the extent of the value of the assets securing such debt. In the fourth
quarter of 2003, we entered into (1) a secured master letter of credit facility
intended to ensure that existing letters of credit supporting our contracts
remain in place during the Chapter 11 proceedings of some of our subsidiaries
and (2) a secured $700 million revolving credit facility for general working
capital purposes. In July 2004, we entered into an additional secured $500
million 364-day revolving credit facility for general working capital purposes
with terms substantially similar to our existing $700 million revolving credit
facility. As of September 30, 2004, the availability under this revolving credit
facility had been reduced to
5
$528 million. We have no outstanding advances under the credit facilities and no
other outstanding secured indebtedness. Under the credit facilities, the lenders
have limited the amount of indebtedness we can issue that would be equally and
ratably secured with indebtedness under the credit facilities. See "Description
of Selected Settlement-Related Indebtedness." The indenture governing the notes
permits us to incur an amount of Secured Debt (as defined in the notes) up to 5%
of our consolidated net tangible assets before the notes will be entitled to
equal and ratable security and the notes are effectively junior to any secured
indebtedness until the notes are entitled to be equally and ratably secured. In
addition, certain of our notes, including our 8.75% notes due 2021, our 3 1/8%
convertible senior notes due 2023, our medium-term notes, our 7.6% debentures
due 2096, our senior notes due 2005 and our 5 1/2% senior notes due 2010 will,
and certain new issuances may, be entitled to be secured on the same basis as
the notes.
In the event that we are declared bankrupt, become insolvent or are
liquidated or reorganized, any debt that ranks ahead of the notes will be
entitled to be paid in full from our assets before any payment may be made with
respect to the notes. Holders of the notes will participate ratably with all
holders of our unsecured indebtedness that is deemed to be of the same class as
the notes, and potentially with all of our other general creditors, based upon
the respective amounts owed to each holder or creditor, in our remaining assets.
In any of the foregoing events, we cannot assure you that there will be
sufficient assets to pay amounts due on the notes. As a result, holders of the
notes may receive less, ratably, than holders of secured indebtedness.
BECAUSE WE ARE A HOLDING COMPANY, THE NOTES ARE STRUCTURALLY SUBORDINATED TO ALL
OF THE INDEBTEDNESS OF OUR SUBSIDIARIES.
The notes are a general unsecured obligation of Halliburton. We are a
holding company and our assets consist primarily of direct and indirect
ownership interests in, and our business is conducted substantially through, our
subsidiaries. As a consequence, any of our indebtedness, including the notes,
are structurally subordinated to all of the indebtedness of our subsidiaries. In
addition, because we are a holding company, our right to participate in any
distribution of assets of any subsidiary upon its liquidation or reorganization
or otherwise, and the ability of holders of the notes to benefit indirectly from
that kind of distribution, is subject to the prior claims of creditors of that
subsidiary, except to the extent that we are recognized as a creditor of that
subsidiary. All obligations of our subsidiaries will have to be satisfied before
any of the assets of such subsidiaries would be available for distribution, upon
a liquidation or otherwise, to us. At September 30, 2004, the aggregate
indebtedness of our subsidiaries was approximately $109 million, and other
liabilities of our subsidiaries, including trade payables, accrued compensation,
advanced billings, income taxes payable and other liabilities (other than
asbestos and intercompany liabilities) were approximately $5.7 billion, and
accrued asbestos and silica liabilities were approximately $4.4 billion. In
addition, while the notes are not guaranteed by any of our subsidiaries,
borrowings under our credit facilities are guaranteed by some of our
subsidiaries. We also have joint ventures and subsidiaries in which we own less
than 100% of the equity so that, in addition to the structurally senior claims
of creditors of those entities, the equity interests of our joint venture
partners or other shareholders in any dividend or other distribution made by
these entities would need to be satisfied on a proportionate basis with us.
These joint ventures and less than wholly owned subsidiaries may also be subject
to restrictions on their ability to distribute cash to us in their financing or
other agreements and, as a result, we may not be able to access their cash flow
to service our debt obligations, including in respect of the notes. Accordingly,
the notes are effectively subordinated to all existing and future liabilities of
our subsidiaries and all liabilities of any of our future subsidiaries.
WE MAY INCUR ADDITIONAL INDEBTEDNESS RANKING EQUAL TO THE NOTES.
If we incur any additional debt that ranks equally with the notes,
including trade payables, the holders of that debt will be entitled to share
ratably with you in any proceeds distributed in connection with any insolvency,
liquidation, reorganization, dissolution or other winding-up of us. This may
have the effect of reducing the amount of proceeds paid to you.
6
WE WILL BE ABLE TO INCUR MORE INDEBTEDNESS AND THE RISKS ASSOCIATED WITH OUR
LEVERAGE, INCLUDING OUR ABILITY TO SERVICE OUR INDEBTEDNESS, WILL INCREASE AS WE
INCUR ADDITIONAL INDEBTEDNESS.
As of September 30, 2004, we had approximately $3.955 billion of
indebtedness, representing a total debt to capitalization ratio of 70%. We may
need to incur or issue additional indebtedness to finance the remaining cash
portion of our proposed plan of reorganization of some of our subsidiaries.
Further, the indenture that governs the notes does not restrict us from issuing
additional indebtedness. Our level of debt is substantial, and the risks
associated with our leverage could have important consequences to you, including
the following:
- our ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired;
- we would be obligated to use a substantial portion of our cash flow from
operations to pay interest and principal on the notes and other
indebtedness, which will reduce the funds available to us for other
purposes such as potential acquisitions and capital expenditures;
- we could potentially have a higher level of indebtedness than some of our
competitors, which may put us at a competitive disadvantage and reduce
our flexibility in planning for, or responding to, changing conditions in
our industry, including increased competition; and
- we would be more vulnerable to general economic downturns and adverse
developments in our business.
We expect to obtain money to pay our expenses and to pay the principal and
interest on the notes and other debt from cash flow from distributions from our
subsidiaries. Our ability to meet our expenses depends on our future
performance, which will be affected by financial, business, economic and other
factors. We will not be able to control many of these factors, such as economic
conditions in the markets where we operate and pressure from competitors. The
failure to generate sufficient cash flow could significantly adversely affect
the value of the notes.
THERE IS NO ESTABLISHED TRADING MARKET FOR THE NOTES AND THERE MAY NEVER BE ONE.
There is no established trading market. We do not currently intend to apply
for listing of the notes on any securities exchange. The liquidity of any market
for the notes will depend on the number of holders of the notes, the interest of
securities dealers in making a market in the notes and other factors.
Accordingly, we cannot assure you as to the development of liquidity of any
market for the notes. Further, if markets were to develop, the market price for
the notes may be adversely affected by changes in our financial performance,
changes in the overall market for similar securities and performance or
prospects for companies in our industry.
USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling
securityholders of the notes.
7
DESCRIPTION OF SELECTED SETTLEMENT-RELATED INDEBTEDNESS
In connection with the proposed plan of reorganization of some of our
subsidiaries, in the fourth quarter of 2003, we entered into (1) the Master LC
Facility intended to ensure that existing letters of credit supporting our
contracts remain in place during the Chapter 11 proceedings of some of our
subsidiaries, which allows advances until December 31, 2004, and (2) a secured
$700 million revolving credit facility for general working capital purposes,
which matures in October 2006. As of September 30, 2004, the availability under
this revolving credit facility had been reduced to $528 million. In July 2004,
we entered into an additional secured $500 million 364-day revolving credit
facility for general working capital purposes with terms otherwise substantially
similar to our existing secured $700 million revolving credit facility maturing
in October 2006. The notes will share in the collateral pledged to secure the
credit facilities at times when the threshold for Secured Debt (as defined in
the notes) is exceeded by advances and letter of credit drawings under the
credit facilities.
The following discussion is a summary of selected provisions of the
facilities described in the first paragraph of this "Description of Selected
Settlement-Related Indebtedness." It does not restate the facilities in their
entirety and this summary is qualified in its entirety by reference to the full
and complete text of the credit facilities.
MASTER LC FACILITY
In connection with the proposed plan of reorganization of some of our
subsidiaries, Halliburton (and to the extent that they are account parties in
respect of specified existing letters of credit, DII Industries and Kellogg
Brown & Root) entered into a senior secured master letter of credit facility
with a syndicate of banks made up of those banks holding at least 90% of the
face amount of certain of our then existing letters of credit. The Master LC
Facility is now effective. The Master LC Facility covers at least 90% of the
face amount of certain of our then existing letters of credit, such credit to be
provided by each lender to the extent of any draw on an existing letter of
credit issued by it. In addition, the Master LC Facility provides a
discretionary facility for the issuance of new letters of credit, so long as the
total facility does not exceed an amount equal to the amount of the facility at
closing plus $250 million. The existing letters of credit issued by the lenders
entering into the Master LC Facility and any additional letters of credit issued
under the facility are referred to herein as the "Facility LCs."
For so long as the Master LC Facility is secured by any collateral, as
defined in the Master LC Facility, Halliburton Energy Services and certain
domestic subsidiaries of Halliburton and Halliburton Energy Services will
guaranty the obligations under the Master LC Facility. In any event, we shall
remain at all times during the term of the Master LC Facility an obligor with
respect to any LC Advance (as defined below) in respect of which we are not the
account party. As used herein, "subsidiaries" of us and Halliburton Energy
Services is determined after giving effect to the restructuring that occurred
immediately prior to the Chapter 11 filing and excludes DII Industries and its
subsidiaries during the period before the plan of reorganization has been
confirmed and the related court orders have been entered (the "Exit Date").
The purpose of the Master LC Facility is to provide a term-out for any
draws prior to December 31, 2004, but no later than the Exit Date (the "Term-Out
Date") on Facility LCs, as well as to provide collateral for the reimbursement
obligations in respect thereof. During the term of the Master LC Facility prior
to the Term-Out Date, any draw on a Facility LC will be funded by the lender
that issued such Facility LC (each such funding, an "LC Advance"). Until the
Term-Out Date, the terms of the Master LC Facility will override any
reimbursement, cash collateral or other agreements or arrangements between any
individual lender and the account party or any of its affiliates relating to the
Facility LCs, whether or not drawn, and until such advance is repaid, the terms
of the Master LC Facility will override any such agreement or arrangement
relating to any Facility LC which is drawn prior to the Term-Out Date. Each
lender has permanently waived any right that it might otherwise have pursuant to
any such agreement or arrangement to demand cash collateral as a result of the
filing of Chapter 11 proceedings of some of our subsidiaries.
8
On the occurrence of the Term-Out Date, all LC Advances outstanding under
the Master LC Facility on the Term-Out Date, if any, will become term loans
payable in full on June 30, 2005 (unless prepaid prior to such date) and all
undrawn Facility LCs shall cease to be subject to the terms of the Master LC
Facility.
We may, upon at least five business days' notice and at the end of any
applicable interest period, prepay any portion of the LC Advances as follows:
(1) before the occurrence of the Exit Date, ratably among all lenders, with such
prepayment being used to prepay the outstanding LC Advances at such time and to
cash collateralize obligations at such time, and (2) after the occurrence of the
Exit Date, to prepay outstanding LC Advances ratably among all lenders that have
made LC Advances, in each case, without penalty.
Prior to the occurrence of the Collateral Release Date (as defined below),
the Master LC Facility must be cash collateralized with the net proceeds of any
sales of collateral and the net cash proceeds of any sales of other assets,
subject to certain exceptions. Such cash collateral will be shared pro rata
among the lenders and the lenders under the Revolving Credit Facilities (as
defined below). To the extent that the aggregate principal amount of all LC
Advances and borrowings under the Revolving Credit Facilities exceed 5% of the
consolidated net tangible assets of Halliburton and its subsidiaries, such cash
collateral will also be shared pro rata with the holders of Halliburton's 8.75%
notes due 2021, 3 1/8% convertible senior notes due 2023, medium term notes,
7.6% debentures due 2096, senior notes due 2005, 5 1/2% senior notes due 2010,
the senior notes due 2007 (whether registered or unregistered) and any other
issue of debt securities of Halliburton that Halliburton may effect prior to the
Exit Date (a "New Issuance") to the extent that such New Issuance includes a
requirement that the holders thereof be equally and ratably secured with
Halliburton's other creditors (provided that the amount of such New Issuance
which may be so secured does not exceed $500 million). After the Exit Date, if
the conditions to release of collateral have been satisfied, any cash collateral
held pursuant to the preceding sentence, subject to certain exceptions, will be
applied to ratably prepay outstanding LC Advances at such time.
Until the date of satisfaction of the conditions for release of the
collateral identified below, the Master LC Facility will be secured by a
perfected, first-priority lien on (1) 100% of the stock of Halliburton Energy
Services, (2) 100% of the stock or other equity interests owned by us and
Halliburton Energy Services of the first-tier domestic subsidiaries of
Halliburton and Halliburton Energy Services (other than Halliburton Affiliates
LLC), (3) 66% of the equity interests of Halliburton Affiliates LLC and (4) 66%
of the stock or other equity interests owned by us or Halliburton Energy
Services of the first-tier foreign subsidiaries of Halliburton and Halliburton
Energy Services (excluding, in each case, dormant subsidiaries). In addition, if
at any time prior to the Collateral Release Date our long-term senior unsecured
debt is rated lower than BBB- by Standard & Poor's or lower than Baa3 by
Moody's, then we shall, within 20 days in the case of personal property and
within 45 days in the case of real property, take all action necessary to ensure
that the Master LC Facility is also secured by a perfected, first priority lien
on (a) the tangible and intangible assets (with customary exceptions) of
Halliburton and Halliburton Energy Services and (b) the tangible and intangible
assets (with customary exceptions) of certain of Halliburton Energy Services'
directly or indirectly, wholly-owned domestic subsidiaries (except Halliburton
Affiliates LLC, DII Industries LLC and each of their respective subsidiaries)
(excluding, in each case, dormant subsidiaries). Such collateral will be shared
pro rata with the lenders under the Revolving Credit Facilities and, to the
extent that the aggregate principal amount of all LC Advances under the Master
LC Facility and borrowings under the Revolving Credit Facilities exceed 5% of
the consolidated net tangible assets of Halliburton and its subsidiaries, such
collateral would also be shared pro rata with the holders of Halliburton's 8.75%
notes due 2021, 3 1/8% convertible senior notes due 2023, medium term notes,
7.6% debentures due 2096, senior notes due 2005, 5 1/2% senior notes due 2010,
the senior notes due 2007 (whether registered or unregistered) as well as any
New Issuance to the extent that such New Issuance includes a requirement that
the holders thereof be equally and ratably secured with Halliburton's other
creditors (provided that the amount of such New Issuance which may be so secured
does not exceed $500 million). Upon the occurrence of the Exit Date and the
satisfaction of certain conditions, the Master LC Facility will be unsecured
(the "Collateral Release Date"). The granting and perfection of collateral
(including, without limitation, collateral consisting of foreign subsidiary
stock pledges) will be subject to cost efficiency determinations reasonably made
by the co-lead arrangers in consultation
9
with us, taking into account, among other things, adverse tax consequences,
administrative procedures required by local law or practice, and other
parameters to be agreed.
The interest rate per annum (calculated on a 360-day basis) applicable to
the LC Advances is the London interbank offered rate for deposits in U.S.
dollars at 11:00 A.M. (London time) for the two business days before the first
day of any interest period for a period equal to such interest period, plus the
greater of (x) the sum of the per annum rate used to calculate any fee on
undrawn letters of credit payable pursuant to the original documents governing
the relevant Facility LC plus 0.50% or (y) a margin ranging from 1.00% to 2.00%,
which margin will be based on the lower of our credit rating by Standard &
Poor's and Moody's (the "Applicable LC Facility Margin").
We may select interest periods of one, two, three or six months for LIBOR
rate advances. Interest based on the LIBOR rate would be payable in arrears at
the end of the selected interest period, but no less frequently than quarterly.
During the continuance of any default under the loan documentation, the
interest rate on all advances owing under the loan documentation would increase
by 2% per annum.
REVOLVING CREDIT FACILITIES
In the fourth quarter of 2003, in connection with the proposed plan of
reorganization of some of our subsidiaries, we entered into a secured revolving
credit facility, which matures in October 2006 and provides for a total
commitment of up to $700 million, and, in July 2004, we entered into a secured
revolving credit facility, which matures in July 2005 and provides for a total
commitment of up to $500 million (together, the "Revolving Credit Facilities").
As of September 30, 2004, we had issued a letter of credit for
approximately $172 million under the $700 million revolving credit facility to
replace an existing letter of credit expiring on our Barracuda-Caratinga
project, which reduced the availability under this revolving credit facility to
$528 million. Aside from the letter of credit discussed above, the entire
commitment under each of the Revolving Credit Facilities is available for
standby and trade letters of credit (the "Letters of Credit").
For so long as the Revolving Credit Facilities are secured by any
collateral as set forth below, Halliburton Energy Services and certain domestic
subsidiaries of Halliburton and Halliburton Energy Services will guaranty the
obligations under the Revolving Credit Facilities. As used herein,
"subsidiaries" of Halliburton and Halliburton Energy Services is determined
after giving effect to the restructuring that occurred immediately prior to the
Chapter 11 filing and excludes DII Industries and its subsidiaries during the
period prior to the Exit Date.
During the period from the closing date until satisfaction of the
conditions for release of the collateral identified below, the advances and
reimbursement obligations in respect of letters of credit will be secured by a
perfected, first priority lien on (1) 100% of the stock of Halliburton Energy
Services, (2) 100% of the stock or other equity interests owned by Halliburton
or Halliburton Energy Services in certain first-tier domestic subsidiaries of
Halliburton and Halliburton Energy Services (other than Halliburton Affiliates
LLC), (3) 66% of the stock or other equity interests of Halliburton Affiliates
LLC and (4) 66% of the stock or other equity interests owned by Halliburton or
Halliburton Energy Services of the first-tier foreign subsidiaries of
Halliburton and Halliburton Energy Services (excluding, in each case, dormant
subsidiaries). In addition, if at any time prior to the Collateral Release Date
our long-term senior unsecured debt is rated lower than BBB- by Standard &
Poor's or lower than Baa3 by Moody's, then we shall, within 20 days in the case
of personal property and within 45 days in the case of real property, take all
action necessary to ensure that the Revolving Credit Facilities are also secured
by a perfected, first priority lien on (a) the tangible and intangible assets
(with customary exceptions) of Halliburton and Halliburton Energy Services and
(b) the tangible and intangible assets (with customary exceptions) of all of
Halliburton Energy Services' directly or indirectly wholly-owned domestic
subsidiaries (except Halliburton Affiliates LLC, DII Industries and their
respective subsidiaries) (excluding, in each case, dormant subsidiaries). Prior
to the occurrence of the Collateral Release Date, the Revolving Credit
Facilities will be required to be cash collateralized with the net proceeds of
any
10
sales of collateral, subject to certain exceptions. All collateral will be
shared pro rata with the lenders under the Master LC Facility and, to the extent
that the aggregate principal amount of all loans under the Revolving Credit
Facilities and advances under the Master LC Facility exceeds 5% of the
consolidated net tangible assets of Halliburton and its subsidiaries such
collateral will also be shared pro rata with the holders of Halliburton's 8.75%
notes due 2021, 3 1/8% convertible senior notes due 2023, medium term notes,
7.6% debentures due 2096, senior notes due 2005, 5 1/2% senior notes due October
2010, the senior notes due 2007 (whether registered or unregistered) and the
notes as well as any other New Issuance to the extent that such New Issuance
includes a requirement that the holders thereof be equally and ratably secured
with Halliburton's other creditors (provided that the amount of such New
Issuance which may be so secured does not exceed $500 million). Upon the
occurrence of the Collateral Release Date, the Revolving Credit Facilities will
be unsecured.
The interest rate per annum (calculated on a 360-day basis) applicable to
the advances is (1) the London interbank offered rate for deposits in U.S.
dollars at 11:00 A.M. (London time) for the two business days before the first
day of any interest period for a period equal to such interest period, plus a
margin ranging from prior to the Exit Date 1.00% to 2.00% and after the Exit
Date 0.875% to 1.875%, which margin will be based on the lower of our credit
rating by Standard & Poor's and Moody's (the "Applicable Revolving Facility
Margin") or (2) at our option, the highest of (a) the base rate of Citibank,
N.A., (b) the Federal Funds rate plus 0.50% and (c) the latest three-week moving
average of secondary market morning offering rates for three-month certificates
of deposit, as determined by Citibank and adjusted for the cost of reserves and
FDIC insurance assessments plus 0.50%, plus, in each case, a margin ranging from
0% to 0.875% based on the lower of our credit rating by Standard & Poor's and
Moody's, (the "Base Rate").
We may select interest periods of one, two, three or six months for LIBOR
rate advances. Interest based on the LIBOR rate would be payable in arrears at
the end of the selected interest period, but no less frequently than quarterly.
Interest based on the Base Rate would be payable monthly in arrears.
During the continuance of any default under the loan documentation, the
interest rate on all advances owing under the loan documentation would increase
by 2% per annum.
CONDITIONS TO RELEASE OF COLLATERAL
As described above under "-- Master LC Facility" and "-- Revolving Credit
Facilities," borrowings under the Master LC Facility and the Revolving Credit
Facilities are secured by a perfected, first-priority lien, on certain of our
assets. Any such liens will be released upon satisfaction of all the following
conditions:
- completion of the Chapter 11 plan of reorganization of DII Industries,
Kellogg Brown & Root and our other affected subsidiaries.
- there is no proceeding pending or threatened in any court or before any
arbitrator or governmental instrumentality that (1) could reasonably be
expected to have a material adverse effect on our business, condition
(financial or otherwise), operations, performance, properties or
prospects on a consolidated basis except for litigation that is pending
or threatened prior to the effective date of the Revolving Credit
Facilities and Master LC Facility and disclosed to the lenders under the
Revolving Credit Facilities and the Master LC Facility or (2) purports to
affect the legality, validity or enforceability of our obligations or the
rights and remedies of any of the lenders under the Revolving Credit
Facilities and the Master LC Facility, and there shall have been no
material adverse change in the status or financial effect on us on a
consolidated basis of the disclosed litigation;
- our long-term senior unsecured debt is rated BBB or higher (stable
outlook) by Standard & Poor's and Baa2 or higher (stable outlook) by
Moody's and these ratings have been recently confirmed by Standard &
Poor's and Moody's;
11
- there is no material adverse change (which term shall not be deemed to
refer to the commencement of the Chapter 11 filing) since December 31,
2002 in our business, condition (financial or otherwise), operations,
performance, properties or prospects, except as disclosed in our June 30,
2003 quarterly report on Form 10-Q and except for the accounting charges
to be taken directly in connection with the plan of reorganization
payments; and
- we are not in default under either of the Revolving Credit Facilities or
the Master LC Facility.
12
DESCRIPTION OF NOTES
We issued the notes under an indenture dated as of October 17, 2003,
between us and JP Morgan Chase Bank, as trustee (the "base indenture"), as
supplemented by the Third Supplemental Indenture thereto, dated as of January
26, 2004, establishing the terms of the notes between Halliburton and the
trustee (the "third supplemental indenture" and together with the base
indenture, the "indenture"). The terms of the notes include those stated in the
indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. We issued the notes on January 26, 2004.
The following description is a summary of the material provisions of the
indenture. It does not restate the indenture in its entirety and this summary is
qualified in its entirety by reference to the full and complete text of the
indenture. We urge you to read the indenture and the notes because they, and not
this description, define your rights as holders of the notes. You may request
copies of those documents in substantially the form in which they have been or
will be executed by writing or telephoning us at our address and telephone
number shown under the caption "Where You Can Find More Information."
The definitions of capitalized terms used in this section without
definition are set forth below under "-- Definitions." In this description, the
word "Halliburton," "we" or "us" means only Halliburton Company and not any of
its subsidiaries.
GENERAL
The notes are our senior unsecured obligations and rank equally with all
our other existing and future senior unsecured indebtedness. In addition, except
as otherwise provided herein, the notes are effectively subordinated to any
secured indebtedness to the extent of the value of the assets securing such
indebtedness and to any indebtedness of our subsidiaries to the extent of the
assets of those subsidiaries.
The indenture does not contain any financial covenants. In addition, we are
not restricted under the indenture from paying dividends or issuing or
repurchasing our securities. The indenture does not restrict our ability to
incur additional indebtedness in the future. Halliburton may, without notice to
or consent of the holders or beneficial owners of the notes, issue additional
notes having the same ranking, interest rate, maturity and other terms as the
notes. Any such additional notes issued could be considered part of the same
series of notes under the indenture as the notes.
You will not be afforded protection in the event of a highly leveraged
transaction, or a change in control of us under the indenture.
Holders are not required to pay a service charge for registration or
transfer of their notes. We may, however, require holders to pay any tax or
other governmental charge in connection with the transfer. We are not required
to register the transfer of any notes or portion of any notes surrendered for
redemption or repurchase by us but not withdrawn.
PRINCIPAL; MATURITY; INTEREST
We issued $500,000,000 aggregate principal amount of notes. The notes were
issued only in fully registered form without coupons, in denominations of $1,000
and whole multiples of $1,000.
The notes will mature on January 26, 2007 unless earlier redeemed by us.
The notes bear interest at a floating rate. Interest on the notes is
payable in cash quarterly on the 26th day of January, April, July and October of
each year, beginning April 26, 2004. Interest on the notes is payable to holders
of record of the notes on the immediately preceding 1st day of January, April,
July and October, as the case may be.
The notes bear interest for each interest period at a rate determined by
JPMorgan Chase Bank, acting as calculation agent. The interest rate on the notes
for a particular interest period will be a per annum rate equal to LIBOR as
determined on the interest determination date plus 0.75%. The interest
determination date for an interest period will be the second London business day
preceding the commencement of such interest period.
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The interest determination date for the notes for the first interest period was
January 26, 2004. Promptly upon determination, the calculation agent will inform
the trustee and Halliburton of the interest rate for the next interest period.
Absent manifest error, the determination of the interest rate by the calculation
agent shall be binding and conclusive on the holders of notes, the trustee and
Halliburton.
"LIBOR" means the London interbank offered rates. London business day is a
day on which dealings in deposits in U.S. dollars are transacted in the London
interbank market.
On any interest determination date, LIBOR will be equal to the offered rate
for deposits in U.S. dollars having an index maturity of three months, in
amounts of at least $1 million, as such rate appears on Telerate Page 3750 at
approximately 11:00 a.m., London time, on such interest determination date. If
Telerate Page 3750 is replaced by another service or ceases to exist, the
calculation agent will use the replacing service or such other service that may
be nominated by the British Bankers' Association for the purpose of displaying
LIBOR for U.S. dollar deposits.
If no offered rate appears on Telerate Page 3750 on an interest
determination date at approximately 11:00 a.m., London time, then the
calculation agent (after consultation with Halliburton) will select four major
banks in the London interbank market and shall request each of their principal
London offices to provide a quotation of the rate at which three-month deposits
in U.S. dollars in amounts of at least $1 million are offered by it to prime
banks in the London interbank market, on that date and at that time, that is
representative of single transactions at that time. If at least two quotations
are provided, LIBOR will be the arithmetic average of the quotations provided.
Otherwise, the calculation agent will select three major banks in New York City
and shall request each of them to provide a quotation of the rate offered by
them at approximately 11:00 a.m., New York City time, on the interest
determination date for loans in U.S. dollars to leading European banks having an
index maturity of three months for the applicable interest period in an amount
of at least $1 million that is representative of single transactions at that
time. If three quotations are provided, LIBOR will be the arithmetic average of
the quotations provided. Otherwise, the rate of LIBOR for next interest period
will be set equal to the rate of LIBOR for the then-current interest period.
Upon request from any noteholder, the calculation agent will provide notice
of the interest rate in effect on the notes for the current interest period and,
if it has been determined, the interest rate to be in effect for the next
interest period.
Interest on the notes will be calculated on the basis of the actual number
of days in an interest period and a 360-day year. Dollar amounts resulting from
such calculation will be rounded to the nearest cent, with one-half cent being
rounded upward.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest on the notes will be payable in arrears on the next scheduled interest
payment date and on the date the notes mature. If interest is payable on, or if
the date of maturity is, a date that is not a business day, that interest
payment, or the payment of principal, as applicable, will be paid on the next
succeeding business day and no interest will accrue on that payment during the
period between the scheduled payment date and the next succeeding business day.
We will maintain an office in Dallas, Texas, for the payment of interest,
which shall initially be an office or agency of the trustee.
We will pay interest either by check mailed to your address as it appears
in the note register or, at our option, with respect to global notes, by wire
transfer in immediately available funds. Payments to The Depository Trust
Company, New York, New York, which we refer to as DTC, or its nominee will be
made by wire transfer of immediately available funds to the account of DTC or
its nominee.
OPTIONAL REDEMPTION
No sinking fund is provided for the notes, which means that the indenture
will not require us to redeem or retire the notes periodically. However, the
notes will be redeemable at our option, in whole or in part, on each quarterly
interest payment date occurring on or after January 26, 2005, in principal
amounts of $1,000
14
or any integral multiple of $1,000 for an amount equal to 100% of the principal
amount of the notes to be redeemed, plus accrued and unpaid interest to the date
of redemption.
We will mail notice of a redemption not less than 30 days nor more than 60
days before the redemption date to the trustee and holders of notes to be
redeemed.
If we are redeeming less than all the notes, the trustee will select the
particular notes to be redeemed pro rata, by lot or by another method the
trustee deems fair and appropriate. Unless there is a default in payment of the
redemption amount, on and after the redemption date, interest will cease to
accrue on the notes or portions thereof called for redemption. We will pay 100%
of the principal amount of the notes at the maturity of those notes.
Except as described above, the notes will not be redeemable by us prior to
maturity.
RANKING
The notes are our senior unsecured obligations and rank equally with all of
our existing and future unsecured senior indebtedness. In addition, except as
otherwise provided herein, the notes are effectively subordinated to any secured
indebtedness to the extent of the value of the assets securing such indebtedness
and to any indebtedness of our subsidiaries to the extent of the assets of those
subsidiaries.
As of September 30, 2004, we had outstanding approximately $3.955 billion
of unsecured indebtedness, no secured indebtedness and no subordinated
indebtedness. As of the date of this prospectus, we had no outstanding advances
under our Master LC Facility, our $700 million revolving credit facility or our
$500 million 364-day revolving credit facility and no other outstanding secured
indebtedness. As of September 30, 2004, availability under our $700 million
revolving credit facility had been reduced to $528 million. At September 30,
2004, the aggregate indebtedness of our subsidiaries was approximately $109
million, and other liabilities of our subsidiaries, including trade payables,
accrued compensation, advanced billings, income taxes payable, other liabilities
(other than asbestos and intercompany liabilities) were approximately $5.7
billion, and accrued asbestos and silica liabilities were approximately $4.4
billion. As of September 30, 2004, our subsidiaries had no secured indebtedness
and no subordinated indebtedness outstanding.
In the fourth quarter of 2003, we entered into (1) the Master LC Facility
intended to ensure that existing letters of credit supporting our contracts
remain in place during the Chapter 11 proceedings of some of our subsidiaries,
which allows advances until December 31, 2004, and (2) a secured $700 million
revolving credit facility for general working capital purposes, which matures in
October 2006. In July 2004, we entered into an additional secured $500 million
364-day revolving credit facility for general working capital purposes with
terms substantially similar to our $700 million revolving credit facility. The
terms of the notes and the credit facilities provide that the notes and certain
of our previously issued debt securities and limited amounts of new issuances of
debt, if similarly entitled, will share in collateral pledged to secure
borrowings under the credit facilities if and when the total of all the Secured
Debt (as defined in the notes) exceeds 5% of the consolidated net tangible
assets of Halliburton and its subsidiaries. The terms of the credit facilities
limit the amount of indebtedness we can issue that would be equally and ratably
secured with indebtedness under the credit facilities. The terms of the credit
facilities provide that collateral pledged to secure borrowings under the credit
facilities will be released after (1) completion of the Chapter 11 plan of
reorganization of DII Industries, Kellogg Brown & Root and our other affected
subsidiaries, and (2) satisfaction of other conditions described in this
prospectus. For additional information, see "Description of Selected
Settlement-Related Indebtedness."
The notes are not be guaranteed by any of our subsidiaries. Borrowings
under the credit facilities are guaranteed by some of our subsidiaries.
Accordingly, the notes are structurally subordinated to the debt guaranteed by
our subsidiaries. The terms of the credit facilities provide that any of these
subsidiary guarantees will be released after (1) completion of the Chapter 11
plan of reorganization of DII Industries, Kellogg Brown & Root and our other
affected subsidiaries, and (2) satisfaction of the other conditions
15
described in this prospectus. For additional information, see "Description of
Selected Settlement-Related Indebtedness."
The notes are our exclusive obligation. Our cash flow and our ability to
service our indebtedness, including the notes, is dependent upon the earnings of
our subsidiaries. In addition, we are dependent on the distribution of earnings,
loans or other payments by our subsidiaries to us. Our subsidiaries are separate
and distinct legal entities. Our subsidiaries will not guarantee the notes or
have any obligation to pay any amounts due on the notes or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans or
other payments. In addition, any payment of dividends, distributions, loans or
advances by our subsidiaries to us could be subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations. Our right to receive any
assets of any subsidiary upon its liquidation or reorganization, and, therefore,
our right to participate in those assets, will be effectively subordinated to
the claims of that subsidiary's creditors, including trade creditors. In
addition, even if we were a creditor of any of our subsidiaries, our right as a
creditor would be subordinate to any security interest in the assets of our
subsidiaries and any indebtedness of our subsidiaries senior to that held by us.
We are obligated to pay reasonable compensation to the trustee and
calculation agent and to indemnify the trustee and calculation agent against
certain losses, liabilities or expenses incurred by the trustee and calculation
agent in connection with its duties relating to the notes. The trustee's claims
for these payments will generally be senior to those of holders of notes in
respect of all funds collected or held by the trustee.
For more information regarding the indebtedness and subsidiary guarantees
described above, see "Description of Selected Settlement-Related Indebtedness."
COVENANTS
Under the indenture, there are no covenants restricting our ability to
incur additional debt, issue additional securities, maintain any asset ratios or
create or maintain any reserves. See "Risk Factors -- We will be able to incur
more indebtedness and the risks associated with our leverage, including our
ability to service our indebtedness, will increase as we incur additional
indebtedness." However, the indenture does contain other covenants for your
protection, including those described below. The covenants summarized below will
apply to the notes (unless waived or amended) as long as the notes are
outstanding.
RESTRICTIONS ON SECURED DEBT
Except as provided below, we will not, and will not cause, suffer or permit
any of our Restricted Subsidiaries to, create, incur or assume any Secured Debt
without equally and ratably securing the notes. In that circumstance, we must
also equally and ratably secure any of our other indebtedness or any
indebtedness of such Restricted Subsidiary then similarly entitled. However, the
foregoing restrictions will not apply to:
- specified purchase money mortgages;
- specified mortgages to finance construction on unimproved property;
- mortgages existing on property at the time of its acquisition by us or a
Restricted Subsidiary;
- mortgages existing on the property or on the outstanding shares or
indebtedness of a corporation at the time it becomes a Restricted
Subsidiary;
- mortgages on property of a corporation existing at the time the
corporation is merged or consolidated with us or a Restricted Subsidiary;
- mortgages in favor of governmental bodies to secure payments of
indebtedness; or
- extensions, renewals or replacement of the foregoing; provided that their
extension, renewal or replacement must secure the same property and does
not create Secured Debt in excess of the principal amount then
outstanding.
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We and any Restricted Subsidiaries may create, incur or assume Secured Debt
not otherwise permitted or excepted without equally and ratably securing the
notes if the sum of:
- the amount of the Secured Debt (not including Secured Debt permitted
under the foregoing exceptions), plus
- the aggregate value of Sale and Leaseback Transactions in existence at
the time (not including Sale and Leaseback Transactions the proceeds of
which are or will be applied to the retirement of the notes or other
funded indebtedness of us and our Restricted Subsidiaries as described
below),
does not at the time exceed 5% of Consolidated Net Tangible Assets.
LIMITATIONS ON SALE AND LEASEBACK TRANSACTIONS
The indenture also prohibits Sale and Leaseback Transactions unless:
- Halliburton or the Restricted Subsidiary owning the Principal Property
would be entitled to incur Secured Debt equal to the amount realizable
upon the sale or transfer secured by a mortgage on the property to be
leased without equally and ratably securing the notes; or
- Halliburton or a Restricted Subsidiary apply an amount equal to the value
of the property so leased to the retirement (other than mandatory
retirement), within 120 days of the effective date of any such
arrangement, of indebtedness for money borrowed by Halliburton or any
Restricted Subsidiary (other than such indebtedness owned by Halliburton
or any Restricted Subsidiary) which was recorded as funded debt as of the
date of its creation and which, in the case of such indebtedness of
Halliburton, is not subordinate and junior in right of payment to the
prior payment of the notes.
Provided, however, that the amount to be so applied to the retirement of such
indebtedness shall be reduced by:
- the aggregate principal amount of any notes delivered within 120 days of
the effective date of any such arrangement to the trustee for retirement
and cancellation; and
- the aggregate principal amount of such indebtedness (other than the
notes) retired by Halliburton or a Restricted Subsidiary within 120 days
of the effective date of such arrangement.
As of the date of this prospectus, our board of directors has not
designated any property of Halliburton or of any Restricted Subsidiary as a
Principal Property because, in the opinion of our management, no single property
or asset is of material importance to the total business of our company and our
Restricted Subsidiaries taken as a whole. As a result, unless a Principal
Property is designated by our board of directors, the limitation on Sale and
Leaseback Transactions would not limit or prohibit any Sale and Leaseback
Transactions by us or a Restricted Subsidiary.
RESTRICTIONS ON CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Halliburton will not, in any transaction or series of transactions,
consolidate with or merge with or into, or sell, convey, transfer, lease or
otherwise dispose of all or substantially all its assets to, any person, unless:
(1) either (a) Halliburton shall be the continuing person or (b) the person
(if other than Halliburton) formed by such consolidation or into which
Halliburton is merged, or to which such sale, lease, conveyance,
transfer or other disposition shall be made is organized and validly
existing under the laws of the United States, any political subdivision
thereof or any State of the United States or the District of Columbia
and the successor company (if not Halliburton) will expressly assume,
by supplemental indenture, the due and punctual payment of the
principal of, premium (if any) and interest on the notes and the
performance of all the obligations of Halliburton under the notes and
the indenture;
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(2) immediately after giving effect to such transaction or series of
transactions, no default or event of default (as described below) shall
have occurred and be continuing or would result from the transaction;
and
(3) Halliburton delivers to the trustee the certificates and opinions
required by the indenture.
For purposes of this covenant, the sale, lease, conveyance, assignment,
transfer or other disposition of all or substantially all of the properties and
assets of one or more subsidiaries of Halliburton, which properties and assets,
if held by Halliburton instead of such subsidiaries, would constitute all or
substantially all of the properties and assets of Halliburton on a consolidated
basis, shall be deemed to be the transfer of all or substantially all of the
properties and assets of Halliburton.
The successor company will succeed to, and be substituted for, and may
exercise every right and power of, Halliburton under the indenture. In the case
of a sale, conveyance, transfer or other disposition (other than a lease) of all
or substantially all its assets, Halliburton will be released from all of the
obligations under the indenture and the notes.
Although there is a limited body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, in certain circumstances there may be a
degree of uncertainty as to whether a particular transaction would involve "all
or substantially all" of the property or assets of a person.
EVENTS OF DEFAULT
The following are events of default with respect to the notes:
- failure to pay any interest or additional interest amounts, if any, when
due, continued for 30 days;
- failure to pay principal or premium, if any, when due;
- breach or failure to perform any other covenant or agreement in the
indenture applicable to the notes (other than any agreement or covenant
that has been included in the base indenture and any other supplement
thereto solely for the benefit of other series of debt securities issued
under the base indenture and any other supplement thereto), continued for
60 days after written notice of such failure by the trustee or the
holders of at least 25% in aggregate principal amount of the affected
notes then outstanding;
- failure to make any payment at maturity on any indebtedness, upon
redemption or otherwise, in the aggregate principal amount of $125
million or more, after the expiration of any applicable grace period, and
such amount has not been paid or discharged within 30 days after notice
is given in accordance with the terms of such indebtedness;
- a default by us on any indebtedness that results in the acceleration of
any such indebtedness in the aggregate principal amount of $125 million
or more so that it becomes due and payable prior to the date on which it
would otherwise become due and payable and such acceleration is not
rescinded within 30 days after notice is given in accordance with the
terms of such indebtedness;
- specific events relating to our bankruptcy, insolvency or reorganization,
whether voluntary or not.
A default under one series of notes will not necessarily be a default under
any other series of debt securities issued under the indenture.
If any event of default occurs for the notes and continues for the required
amount of time, the trustee or the holders of not less than 25% of the principal
amount of the then-outstanding notes (or, in some cases, 25% in principal amount
of all securities issued under the base indenture and any supplement thereto
that are affected, voting as one class) may declare the notes due and payable,
together with all accrued and unpaid interest, if any, immediately by giving
notice in writing to us (and to the trustee, if given by the holders).
Notwithstanding the preceding, in the case of an event of default arising from
certain events of bankruptcy, insolvency or reorganization with respect to
Halliburton, all outstanding notes will become due and payable
18
without further action or notice. The holders of a majority in principal amount
of the then-outstanding notes (or, in some cases, of all securities issued under
the base indenture and any supplement thereto that are affected, voting as one
class), may rescind the declaration under circumstances specified in the
indenture.
No holder of a note then outstanding may institute any suit, action or
proceeding with respect to, or otherwise attempt to enforce, the indenture,
unless:
- the holder has given to the trustee written notice of the occurrence and
continuance of a default for the notes;
- the holders of at least 25% in principal amount of the then-outstanding
notes have made a written request to the trustee to institute the suit,
action or proceeding and have offered to the trustee the reasonable
indemnity it may require; and
- the trustee for 60 days after its receipt of the notice, request and
offer of indemnity has neglected or refused to institute the requested
action, suit or proceeding, and during that 60 day period the holders of
a majority in principal amount of the then-outstanding notes do not give
the trustee a direction inconsistent with the request.
The right of each holder of a note to receive payment of the principal of,
premium, if any, or interest on a note on or after the respective due dates and
the right to institute suit for enforcement of any payment obligation may not be
impaired or affected without the consent of that holder.
The holders of a majority in aggregate principal amount of the
then-outstanding notes (or of all debt securities issued under the base
indenture and any other supplement thereto that are affected, voting as a class)
may direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust power conferred on the
trustee if that direction is not in conflict with applicable law and would not
involve the trustee in personal liability.
We will be required to furnish to the trustee annually a statement as to
the fulfillment of all of our obligations under the indenture.
DEFEASANCE
When we use the term defeasance, we mean discharge from some or all of our
obligations under the indenture. If any combination of funds or government
securities are deposited with the trustee sufficient to make payments on the
notes on the dates those payments are due and payable, then, at our option,
either of the following will occur:
- we will be discharged from our obligations with respect to the notes
("legal defeasance"); or
- we will no longer have any obligation to comply with the restrictive
covenants, the merger covenant and other specified covenants under the
indenture, and the related events of default will no longer apply
("covenant defeasance").
If notes are defeased, the holders of the notes will not be entitled to the
benefits of the indenture, except for obligations to register the transfer or
exchange of notes, replace stolen, lost or mutilated notes or maintain paying
agencies and hold moneys for payment in trust. In the case of covenant
defeasance, our obligation to pay principal, premium and interest on the notes
will also survive.
We will be required to deliver to the trustee an opinion of counsel that
the deposit and related defeasance would not cause the holders of the notes to
recognize income, gain or loss for United States federal income tax purposes and
that holders will be subject to federal income tax in the same amount and in the
same manner and at the same times as would have been the case if such defeasance
had not occurred. If we elect legal defeasance, that opinion of counsel must be
based upon a ruling from the United States Internal Revenue Service or a change
in law to that effect.
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MODIFICATIONS
We and the trustee may amend or supplement the indenture if holders of a
majority in principal amount of the then-outstanding notes and all other series
of securities issued under the base indenture and any other supplement thereto
that are affected by the amendment or supplement (acting as one class) consent
to it. Without the consent of each holder of a note, however, no modification
may:
- reduce the percentage stated above of the holders who must consent to an
amendment or supplement to or waiver of the indenture;
- reduce the rate or change the time of payment of interest on the notes;
- extend the stated maturity of the principal of the notes;
- reduce the amount of the principal of or premium, if any, on the notes;
- reduce any premium payable on the redemption of any note or change the
time at which any note may be redeemed;
- change the coin or currency in which principal, premium, if any, and
interest are payable to the holder;
- impair or affect the right to institute suit for the enforcement of any
payment of principal of or interest on any note;
- make any change in the percentage of principal amount of notes necessary
to waive compliance with specified provisions of the indenture; or
- waive a continuing default or event of default in payment of principal or
premium, if any.
From time to time, we and the trustee may enter into supplemental
indentures without the consent of the holders of the notes to, among other
things:
- cure any ambiguity, omission, defect or any inconsistency in the
indenture;
- evidence the assumption by a successor entity of our obligations under
the indenture;
- provide for uncertificated notes in addition to or in place of
certificated notes;
- secure the notes or add guarantees of or additional obligors on, the
notes;
- comply with any requirement in order to effect or maintain the
qualification of the indenture under the Trust Indenture Act;
- add covenants or new events of default for the protection of the holders
of the notes;
- amend the indenture in any other manner that we may deem necessary or
desirable and that will not adversely affect the interests of the holders
of outstanding notes of any series of notes; or
- evidence the acceptance of appointment by a successor trustee.
GOVERNING LAW
The indenture and the notes are governed by, and construed in accordance
with, the laws of the State of New York.
DEFINITIONS
"Consolidated Net Tangible Assets" means the aggregate amount of assets
included on a consolidated balance sheet of Halliburton and its Restricted
Subsidiaries, less:
- applicable reserves and other properly deductible items;
- all current liabilities; and
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- all goodwill, trade names, trademarks, patents, unamortized debt discount
and expense and other like intangibles;
all in accordance with generally accepted accounting principles consistently
applied.
"Principal Property" means any real property, manufacturing plant,
warehouse, office building or other physical facility, or any item of marine,
transportation or construction equipment or other like depreciable assets of
Halliburton or of any Restricted Subsidiary, whether owned at or acquired after
the date of the indenture, other than any pollution control facility, that in
the opinion of our Board of Directors is of material importance to the total
business conducted by us and our Restricted Subsidiaries as a whole. As of the
date of this prospectus, our Board of Directors has not designated any property
of Halliburton or any Restricted Subsidiary as a Principal Property because, in
the opinion of our management, no single property or asset is of material
importance to the total business of Halliburton and its Restricted Subsidiaries
taken as a whole.
"Restricted Subsidiary" means:
- any Subsidiary of ours existing at the date of the indenture the
principal assets and business of which are located in the United States
or Canada, except sales financing, real estate and other Subsidiaries so
designated; and
- any other Subsidiary we designate as a Restricted Subsidiary.
"Sale and Leaseback Transaction" means the sale or transfer by Halliburton
or a Restricted Subsidiary (other than to Halliburton or any one or more of our
Restricted Subsidiaries, or both) of any Principal Property owned by it that has
been in full operation for more than 120 days prior to the sale or transfer with
the intention of taking back a lease on such property, other than a lease not
exceeding 36 months, and where the use by Halliburton or the Restricted
Subsidiary of the property will be discontinued on or before the expiration of
the term of the lease.
"Secured Debt" means indebtedness (other than indebtedness among
Halliburton and Restricted Subsidiaries) for money borrowed by Halliburton or a
Restricted Subsidiary, or any other indebtedness of Halliburton or a Restricted
Subsidiary on which interest is paid or payable, which in any case is secured
by:
- a mortgage or other lien on any Principal Property of Halliburton or a
Restricted Subsidiary; or
- a pledge, lien or other security interest on any shares of stock or
indebtedness of a Restricted Subsidiary.
"Subsidiary" of any person means (a) any corporation, association or other
business entity (other than a partnership, joint venture, limited liability
company or similar entity) of which more than 50% of the total ordinary voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof (or persons performing similar functions) or (b) any partnership, joint
venture, limited liability company or similar entity of which more than 50% of
the capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, is, in the case of
clauses (a) and (b), at the time owned or controlled, directly or indirectly, by
(1) such person, (2) such person and one or more Subsidiaries of such person or
(3) one or more Subsidiaries of such person. Unless otherwise specified herein,
each reference to a Subsidiary will refer to a Subsidiary of Halliburton. As
used herein, "Capital Stock" of any person means any and all shares (including
ordinary shares or American Depositary Shares), interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) of capital stock or other equity participations of such
person and any rights (other than debt securities convertible or exchangeable
into an equity interest), warrants or options to acquire an equity interest in
such person.
INFORMATION CONCERNING THE TRUSTEE
JPMorgan Chase Bank is the trustee under the indenture, the paying agent,
the registrar and the custodian with regard to the notes. The trustee or its
affiliates may from time to time in the future provide banking and other
services to us in the ordinary course of their business.
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BOOK-ENTRY SYSTEM
The notes were originally issued in the form of global certificates
registered in the name of the depositary or its nominee. Upon issuance, all
book-entry certificates were represented by one or more fully registered global
certificates, without coupons. Each global certificate has been deposited with,
or on behalf of, the depositary, a securities depositary, and has been
registered in the name of the depositary or a nominee of the depositary. The
depositary will thus be the only registered holder of the notes.
Notes that are issued as described below under "-- Certificated Notes" will
be issued in definitive form. Upon the transfer of notes in definitive form,
such notes will, unless the global securities have previously been exchanged for
notes in definitive form, be exchanged for an interest in the global securities
representing the principal amount of notes being transferred.
Purchasers of notes may hold interests in the global certificates through
the depositary if they are participants in the depositary system. Purchasers may
also hold interests through a securities intermediary -- banks, brokerage houses
and other institutions that maintain securities accounts for customers -- that
has an account with the depositary. The depositary will maintain accounts
showing the security holdings of its participants, and these participants will,
in turn, maintain accounts showing the security holdings of their customers.
Some of these customers may themselves be securities intermediaries holding
securities for their customers. Thus, each beneficial owner of a book-entry
certificate will hold that certificate indirectly through a hierarchy of
intermediaries, with the depositary at the "top" and the beneficial owner's own
securities intermediary at the "bottom."
The notes of each beneficial owner of a book-entry certificate will be
evidenced solely by entries on the books of the beneficial owner's securities
intermediary. The actual purchaser of notes will generally not be considered the
owner under the indenture. The book-entry system for holding securities
eliminates the need for physical movement of certificates and is the system
through which most publicly traded securities are held in the United States.
However, the laws of some jurisdictions require some purchasers of securities to
take physical delivery of their securities in definitive form. These laws may
impair the ability of a beneficial owner to transfer book-entry notes.
Investors who purchased notes in offshore transactions in reliance on
Regulation S under the Securities Act may hold their interests in the global
certificate indirectly through Euroclear Bank, S.A./N.V., as operator of the
Euroclear System ("Euroclear"), and Clearstream Banking, societe anonyme
("Clearstream"), if they are participants in such systems, or indirectly through
organizations that are participants in such systems. Euroclear and Clearstream
will hold interests in the global certificate on behalf of their participants
through their respective depositaries, which, in turn, will hold such interests
in the global certificate in the depositaries' names on the books of the
depositary.
Transfers between participants in Euroclear and Clearstream will be
effected in the ordinary way in accordance with their respective rules and
operating procedures. If a holder requires physical delivery of a definitive
certificate for any reason, including to sell certificates to persons in
jurisdictions that require delivery of such certificates or to pledge such
certificates, such holder must transfer its interest in the global certificate
in accordance with the normal procedures of the depositary and the procedures
set forth in the indenture.
Cross-market transfers between the depositary, on the one hand, and
directly or indirectly through Euroclear or Clearstream participants, on the
other, will be effected in the depositary in accordance with the depositary's
rules on behalf of Euroclear or Clearstream, as the case may be, by its
respective depositary; however, such cross-market transactions will require
delivery of instructions to Euroclear or Clearstream, as the case may be, by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines (Brussels time). Euroclear or Clearstream, as
the case may be, will, if the transaction meets its settlement requirements,
deliver instructions to its respective depositary to take action to effect final
settlement on its behalf by delivering or receiving interests in the global
certificate in the depositary, and making or receiving payment in accordance
with normal procedures for same- day funds settlement applicable
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to the depositary. Euroclear participants and Clearstream participants may not
deliver instructions directly to the depositaries for Euroclear or Clearstream.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in the global certificate from a
depositary participant will be credited during the securities settlement
processing day (which must be a business day for Euroclear or Clearstream, as
the case may be) immediately following the depositary settlement date and such
credit or any interests in the global certificate settled during such processing
day will be reported to the relevant Euroclear or Clearstream participant on
such day. Cash received in Euroclear or Clearstream as a result of sales of
interests in the global certificate by or through a Euroclear or Clearstream
participant to a depositary participant will be received with value on the
depositary settlement date, but will be available in the relevant Euroclear or
Clearstream cash account only as of the business day following settlement in the
depositary.
A beneficial owner of book-entry notes represented by a global certificate
may exchange the notes for definitive, certificated notes only if the conditions
for such an exchange, as described under "-- Certificated Notes" are met.
In this prospectus, references to actions taken by a holder of notes will
mean actions taken by the depositary upon instructions from its participants,
and references to payments means payments to the depositary, as registered
holder.
We expect that the depositary or its nominee, upon receipt of any payment
will credit immediately participants' accounts with payments in amounts
proportionate to their respective beneficial interest in the principal amount of
the relevant global note as shown on the records of the depositary or its
nominee. We also expect that payments by participants to owners of beneficial
interests in a global note held through these participants will be governed by
standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street
name," and will be the responsibility of the participants.
We will not have any responsibility or liability for any aspect of the
records relating to, or payments made on account of, beneficial ownership
interests in the book-entry securities or for maintaining, supervising or
reviewing any records relating to beneficial ownership interests.
In order to ensure that the depositary's nominee will timely exercise a
right conferred by the notes, the beneficial owner of that note must instruct
the broker or other direct or indirect participant through which it holds an
interest in that note to notify the depositary of its desire to exercise that
right. Different firms have different deadlines for accepting instructions from
their customers. Each beneficial owner should consult the broker or other direct
or indirect participant through which it holds an interest in the notes in order
to ascertain the deadline for ensuring that timely notice will be delivered to
the depositary.
The depositary is a limited purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered under Section 17A of the Exchange Act. The rules
applicable to the depositary and its participants are on file with the SEC.
The depositary may discontinue providing its services as securities
depositary at any time by giving reasonable notice. Under those circumstances,
in the event that a successor securities depositary is not appointed, definitive
certificates are required to be printed and delivered.
The information in this section concerning the depositary and the
depositary's book-entry system has been obtained from sources that we believe to
be reliable, but we do not take responsibility for the accuracy of that
information.
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CERTIFICATED NOTES
The notes represented by the global securities are exchangeable for
certificated notes in definitive form of like tenor as such notes if:
- the depositary notifies us that it is unwilling or unable to continue as
depositary for the global securities or if at any time the depositary
ceases to be a clearing agency registered under the Exchange Act and, in
either case, a successor depositary is not appointed by us within 90 days
after the date of such notice;
- an event of default has occurred and is continuing, and the depositary
requests the issuance of certificated notes; or
- we determine not to have the notes represented by a global note.
Any notes that are exchangeable pursuant to the preceding sentence are
exchangeable for certificated notes issuable in authorized denominations and
registered in such names as the depositary shall direct. Subject to the
foregoing, the global securities are not exchangeable, except for global
securities of the same aggregate principal amount to be registered in the name
of the depositary or its nominee.
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REGISTRATION RIGHTS AGREEMENT
The following description is a summary of the material provisions of the
registration rights agreement. It does not restate the registration rights
agreement in its entirety, and this summary is qualified in its entirety by
reference to the full and complete text of the registration rights agreement. We
urge you to read the registration rights agreement because it, and not this
description, defines your rights as holders of the notes. You may request copies
of the registration rights agreement by writing or telephoning us at our address
and telephone number shown under the caption "Where You Can Find More
Information."
EXCHANGE OFFER REGISTRATION STATEMENT
We issued the notes on January 26, 2004. In connection with the issuance of
the notes, we and the initial purchasers entered into a registration rights
agreement. In the registration rights agreement, we agreed to file an exchange
offer registration statement with the SEC as soon as practicable, but no later
than 120 days following the date the notes are first issued, and use our
reasonable best efforts to have it declared effective as soon as practicable,
but in no event later than 210 days following the date the notes are first
issued. We also agreed to use our reasonable best efforts to cause the exchange
offer registration statement to be effective continuously, to keep the exchange
offer for the notes open for a period of at least 30 days and cause the exchange
offer to be consummated no later than the 45th business day after the exchange
offer registration statement is declared effective by the SEC. We were unable to
have the exchange offer registration statement declared effective within 210
days following the date the notes were first issued.
SHELF REGISTRATION STATEMENT
If:
- on or prior to the time the exchange offer is completed, existing SEC
interpretations are changed such that the notes received in the exchange
offer would not be transferable without restriction under the Securities
Act;
- the exchange offer has not been completed within 255 days following the
date the notes are first issued; or
- the exchange offer is not available to any holder of the notes,
then we will:
- file with the SEC as soon as practicable, but not later than 60 days
after the time such obligation to file arises, a registration statement
(a "shelf registration statement") providing for the registration of, and
the sale on a continuous or delayed basis by the holders of, all of the
registrable securities held by any such holder;
- use our reasonable best efforts to cause the shelf registration statement
to become or be declared effective no later than 120 days after such
shelf registration statement is filed; and
- use our reasonable best efforts to keep the shelf registration statement
continuously effective until the earliest of two years after the shelf
registration is declared effective and the date when there are no
outstanding registrable securities.
We did not complete the exchange offer within 255 days following the date
the notes were first issued. As a result, we have filed the shelf registration
statement, of which this prospectus is a part.
A holder who sells notes pursuant to the shelf registration statement
generally will be required to be named as a selling security holder in the
related prospectus and to deliver a prospectus to purchasers, will be subject to
certain of the civil liability provisions under the Securities Act in connection
with such sales and will be bound by the provisions of the registration rights
agreement which are applicable to such a holder (including certain
indemnification obligations).
25
To be named as a selling securityholder in the shelf registration statement
when it first becomes effective, holders must complete and deliver a
questionnaire, the form of which can be obtained from Halliburton upon request,
before the effectiveness of the shelf registration statement. If we receive from
a holder of registrable securities a completed questionnaire, together with such
other information as may be reasonably requested by us, after the effectiveness
of the shelf registration statement, we will include the registrable securities
covered thereby in the shelf registration statement, subject to restrictions on
the timing provided in the registration rights agreement. Any holder that does
not complete and deliver a questionnaire or provide such other information will
not be named as a selling securityholder in this prospectus and therefore will
not be permitted to sell any registrable securities under the shelf registration
statement.
For the purposes of the registration rights agreement, "Registrable
Securities" means:
- each note until the earliest to occur of:
-- the date on which such note is exchanged in a registered exchange
offer,
-- the date on which such note has been disposed of pursuant to and in a
manner contemplated by the shelf registration statement,
-- the date on which such note is sold pursuant to Rule 144 under the
Securities Act under circumstances in which any legend borne by such
note relating to restrictions on transferability thereof is removed,
-- the note is eligible to be sold pursuant to Rule 144(k) under the
Securities Act, or
-- the note is no longer outstanding; and
- each exchange note issued to a broker-dealer in a registered exchange
offer until resale of such exchange note by the broker-dealer within the
180-day period contemplated by the registration rights agreement.
ADDITIONAL INTEREST AMOUNTS
The registration rights agreement also provides that:
- if we fail to file any registration statement on or prior to the
applicable deadline;
- if such registration statement is not declared effective by the SEC on or
before the applicable deadline;
- if the exchange offer is not consummated within 45 business days after
the exchange offer registration statement is declared effective; or
- if any registration statement is declared effective but thereafter ceases
to be effective or useable in connection with resales of the Registrable
Securities during the periods specified in the registration rights
agreement, for such time of non-effectiveness or non-usability (each, a
"Registration Default Period"),
we will pay to each holder of Registrable Securities affected thereby additional
interest amounts in an amount equal to 0.25% per annum for the first 90 days of
the Registration Default Period and an additional 0.25% per annum from and after
the 91st day following the Registration Default Period. In no event shall
additional interest amounts exceed 0.50% per annum. We shall not be required to
pay additional interest amounts for more than one registration default at any
given time. Following the cure of all registration defaults, the accrual of
additional interest amounts will cease.
We will pay all accrued additional interest amounts to holders entitled
thereto in the same manner and at the same time as interest on the notes is
paid. We are currently paying additional interest amounts.
26
SELLING SECURITYHOLDERS
We originally issued the notes in a private placement. The notes were
resold by the initial purchasers to qualified institutional buyers within the
meaning of Rule 144A under the Securities Act in transactions exempt from
registration under the Securities Act. The notes that may be offered under the
prospectus will be offered by the selling securityholders, which includes their
transferees, pledgees or donees or their successors. The following table sets
forth certain information concerning the principal amount at maturity of notes
beneficially owned by each selling securityholder that may be offered from time
to time pursuant to the prospectus, as supplemented.
The table below has been prepared based solely upon the information
furnished to us by the selling securityholders named therein. Information
concerning the selling securityholders may change from time to time and, if
necessary, we will supplement the prospectus accordingly.
The selling securityholders listed below may offer and sell, transfer or
otherwise dispose of, from time to time, some or all of their notes. No offer or
sale, transfer or other disposition under this prospectus may be made by a
holder of the notes unless that holder is listed in the table below or until
that holder has notified us and a supplement to this prospectus has been filed
or an amendment to the related registration statement has become effective.
However, a selling securityholder may offer and sell, transfer or otherwise
dispose of some or all of its notes in transactions exempt from the registration
requirements of the Securities Act without notifying us. As a result, the same
restricted notes may be included in the table below as being held by more than
one holder, and the total amount of the notes listed in the column titled
"Principal Amount at Maturity of Notes Beneficially Owned That May be Sold" may
represent an amount of notes in excess of the $500,000,000 we issued. However,
the total principal amount at maturity of notes that may be sold hereunder will
not exceed the $500,000,000 we issued. Further, we cannot give an estimate as to
the amount of the notes that will be held by the selling securityholders upon
the termination of this offering because the selling securityholders may offer
some or all of their notes pursuant to the offering contemplated by the
prospectus or otherwise in transactions exempt from the registration
requirements of the Securities Act. See "Plan of Distribution."
PRINCIPAL AMOUNT AT
MATURITY OF NOTES PERCENTAGE OF
BENEFICIALLY OWNED NOTES
NAME THAT MAY BE SOLD OUTSTANDING
---- ------------------- -------------
(1) (1) (1)
---------------
(1) Information concerning selling securityholders of notes will be set forth in
a pre-effective amendment and may be supplemented as needed through
prospectus supplements, from time to time.
27
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of the notes. Unless
otherwise stated, this summary deals only with holders who hold the notes as
capital assets and who acquire the notes from a selling securityholder as
described under "Selling Securityholders" pursuant to an offering of such notes
under this prospectus in the first sale of such notes by such selling
securityholder after the notes are first registered with the SEC. As used in
this summary, "U.S. Holders" are any beneficial owners of the notes, that are,
for United States federal income tax purposes: (1) citizens or residents of the
United States, (2) corporations created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, (3) estates, the
income of which is subject to United States federal income taxation regardless
of its source or (4) trusts if (a) a court within the United States is able to
exercise primary supervision over the administration of the trust and (b) one or
more United States persons have the authority to control all substantial
decisions of the trust. As used in this summary, "Non-U.S. Holders" means
holders of the notes that are individuals, corporations, estates or trusts that
are not U.S. Holders. If a partnership (including for this purpose any entity
treated as a partnership for United States federal income tax purposes) is a
beneficial owner of notes, the treatment of a partner in the partnership will
generally depend upon the status of the partner and upon the activities of the
partnership. Holders of notes that are a partnership or partners in such
partnership should consult their tax advisors about the United States federal
income tax consequences of holding and disposing of the notes. This summary is
based on the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury regulations promulgated thereunder and administrative and judicial
interpretations thereof, all as of the date hereof, and all of which are subject
to change and differing interpretations, possibly on a retroactive basis. There
can be no assurance that the Internal Revenue Service (the "IRS") will not
challenge one or more of the conclusions described in this prospectus.
This summary does not deal with special classes of holders such as banks,
thrifts, real estate investment trusts, regulated investment companies,
insurance companies, dealers in securities or currencies, or tax-exempt
investors and does not discuss notes held as part of a hedge, straddle,
"synthetic security" or other integrated transaction. This summary also does not
address the tax consequences to certain former citizens or former long-term
residents of the United States, U.S. Holders that have a functional currency
other than the U.S. dollar or to shareholders, partners, members or
beneficiaries of a holder of the notes. Further, it does not include any
description of any alternative minimum tax consequences, United States federal
estate or gift tax laws or the tax laws of any state or local government or of
any foreign government that may be applicable to the notes.
YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR REGARDING THE UNITED STATES
FEDERAL, STATE, LOCAL AND FOREIGN INCOME, FRANCHISE, PERSONAL PROPERTY, AND ANY
OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES.
U.S. HOLDERS
INTEREST PAYMENTS
The interest paid on the notes will be taxable to a U.S. Holder as ordinary
interest income, as received or accrued, in accordance with the holder's United
States federal income tax method of accounting.
ADDITIONAL INTEREST AMOUNTS
We intend to take the position that the possibility that holders of the
notes will be paid additional interest amounts as described under "Registration
Rights Agreement" is a remote and incidental contingency as of the issue date of
the notes within the meaning of the applicable Treasury regulations.
Accordingly, any such additional interest amounts should be taxable to a U.S.
Holder as ordinary income only at the time it accrues or is received in
accordance with such U.S. Holder's regular method of tax accounting. Our
determination that the payment of additional interest amounts is a remote and
incidental contingency is binding upon all holders of the notes, unless a holder
properly discloses to the IRS that it is taking a contrary position.
28
SALE, EXCHANGE OR REDEMPTION
Generally, the sale, exchange or redemption of notes will result in taxable
gain or loss to a U.S. Holder. The amount of gain or loss on a taxable sale,
exchange or redemption will be equal to the difference between (a) the amount of
cash plus the fair market value of any other property received by the U.S.
Holder in the sale, exchange or redemption (other than amounts attributable to
accrued but unpaid interest) and (b) the U.S. Holder's adjusted tax basis in the
notes. A U.S. Holder's adjusted tax basis in notes will generally be equal to
the holder's original purchase price for the notes.
Gain or loss recognized on the disposition of a note generally will be
capital gain or loss, and will be long-term capital gain or loss if, at the time
of such disposition, the U.S. Holder's holding period for the note is more than
one year. A reduced tax rate on capital gain generally will apply to an
individual U.S. Holder if such holder's holding period for the note is more than
one year at the time of disposition. The deductibility of net capital losses by
individuals and corporations is subject to limitations.
NON-U.S. HOLDERS
The rules governing United States federal income taxation of Non-U.S.
Holders are complex and no attempt will be made in this offering circular to
provide more than a summary of such rules. Non-U.S. Holders should consult with
their own tax advisors to determine the effect of United States federal, state,
local and foreign income tax laws, as well as treaties, with regard to an
investment in the notes, including any reporting requirements and, in
particular, the proper application of the United States federal withholding tax
rules.
INTEREST PAYMENTS
Except as described below, United States federal withholding tax will not
apply to interest paid on the notes to a Non-U.S. Holder, provided that: (1) the
Non-U.S. Holder does not own, actually or constructively, 10% or more of the
total combined voting power of all classes of stock entitled to vote within the
meaning of section 871(h)(3) of the Code and Treasury regulations promulgated
thereunder; (2) the Non-U.S. Holder is not a controlled foreign corporation
related, directly or indirectly, to us or any of our constituent partners; (3)
the Non-U.S. Holder is not a bank which acquired the notes in consideration for
an extension of credit made pursuant to a loan agreement entered into in the
ordinary course of business; and (4) either (a) the beneficial owner of notes
certifies to us or our paying agent on IRS Form W-8BEN (or successor form),
under penalties of perjury, that it is not a United States person and provides
its name, address and certain other information or (b) the beneficial owner
holds its notes through certain foreign intermediaries or certain foreign
partnerships and such holder satisfies certain certification requirements.
To the extent a Non-U.S. Holder for any reason does not qualify for the
withholding exemption described above, payments of interest will be subject to
United States federal withholding tax unless the Non-U.S. Holder provides us or
our agent with a properly executed (1) IRS Form W-8BEN (or successor form)
claiming an exemption from or reduction in withholding under an applicable tax
treaty or (2) IRS Form W-8ECI (or successor form) stating that interest paid on
the notes is not subject to withholding tax because it is effectively connected
with the Non-U.S. Holder's conduct of a trade or business in the United States.
If a Non-U.S. Holder of the notes is engaged in a trade or business in the
United States, and if interest on the notes is effectively connected with the
conduct of such trade or business (and, if required by a tax treaty, the
interest is attributable to a permanent establishment maintained in the United
States), the Non-U.S. Holder, although exempt from the withholding tax discussed
in the preceding paragraphs, will generally be subject to regular United States
federal income tax on interest and any gain realized on the sale or exchange of
the notes in the same manner as if it were a U.S. Holder. In addition, if such a
Non-U.S. Holder is a foreign corporation, such Non-U.S. Holder may be subject to
a branch profits tax equal to 30% (or such lower tax rate provided by an
applicable treaty) of its effectively connected earnings and profits for the
taxable year, subject to certain adjustments.
29
SALE, EXCHANGE OR REDEMPTION
A Non-U.S. Holder will generally not be subject to United States federal
income or withholding tax with respect to gain upon the sale, exchange,
redemption or other disposition of notes, unless: (1) the income or gain is
effectively connected with the conduct by the Non-U.S. Holder of a trade or
business in the United States (and, if required by a tax treaty, the interest is
attributable to a permanent establishment maintained in the United States); or
(2) such Non-U.S. Holder is an individual who is present in the United States
for 183 days or more in the taxable year of disposition and certain other
conditions are met.
Income or gain effectively connected with a Non-U.S. Holder's conduct of a
U.S. trade or business will generally be subject to regular United States
federal income tax in the same manner as if it were realized by a U.S. Holder.
Non-U.S. Holders that realize such income or gain with respect to the notes
should consult their tax advisors as to the treatment of such income or gain. In
addition, if such a Non-U.S. Holder is a foreign corporation, such Non-U.S.
Holder may be subject to a branch profits tax equal to 30% (or such lower tax
rate provided by an applicable treaty) of its effectively connected earnings and
profits for the taxable year, subject to certain adjustments.
BACKUP WITHHOLDING AND INFORMATION REPORTING
U.S. HOLDERS
Payments of interest made by us on, or the proceeds of the sale or other
disposition of, the notes will generally be subject to information reporting.
Additionally, United States federal backup withholding tax may apply if the
recipient of such payment fails to supply an accurate taxpayer identification
number or otherwise fails to comply with applicable United States information
reporting or certification requirements. Any amount withheld from a payment to a
U.S. Holder under the backup withholding rules is allowable as a credit against
the holder's United States federal income tax, if any, or will be otherwise
refundable, provided that the required information is furnished to the IRS in a
timely manner.
NON-U.S. HOLDERS
Generally, we must report annually to the IRS and to each Non-U.S. Holder
the amount of each payment of interest and the amount of tax, if any, that is
withheld with respect to such payments. Copies of these information returns may
also be made available under the provisions of a specific treaty or agreement to
the tax authorities of the country in which the Non-U.S. Holder resides.
Generally, information reporting and backup withholding of United States
federal income tax at the applicable rate may apply to payments made by us or
our agent to a Non-U.S. Holder if such holder fails to make the appropriate
certification that the holder is a non-U.S. person or if we or our agent has
actual knowledge or reason to know that the payee is a United States person.
Payments of the proceeds of the sale of a note to or through a foreign
office of a U.S. broker or of a foreign broker that is a "controlled foreign
corporation" within the meaning of the Code, a foreign person, 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment was effectively connected with
the conduct of a trade or business within the United States, or, in certain
cases, a foreign partnership will be subject to information reporting
requirements, but not backup withholding, unless the payee is an exempt
recipient or such broker has evidence in its records that the payee is a
Non-U.S. Holder. Both backup withholding and information reporting will apply to
the proceeds of such dispositions if the broker has actual knowledge or reason
to know that the payee is a U.S. Holder.
Payments of the proceeds of a sale of a note to or through the United
States office of a broker will be subject to information reporting and possible
backup withholding unless the payee certifies under penalties of perjury as to
his or her status as a Non-U.S. Holder and satisfies certain other
qualifications (and no agent of the broker who is responsible for receiving or
reviewing such statement has actual knowledge or reason to know that it is
incorrect) and provides his or her name and address or the payee otherwise
establishes an exemption.
30
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder of a note will be allowed as a credit against such holder's
United States federal income tax, if any, or will be otherwise refundable,
provided that the required information is furnished to the IRS in a timely
manner.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME
CONSEQUENCES IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
YOU SHOULD CONSULT YOUR OWN TAX ADVISER AS TO PARTICULAR TAX CONSEQUENCES TO YOU
OF PURCHASING, HOLDING AND DISPOSING OF THE NOTES, INCLUDING THE APPLICABILITY
AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS, AND OF ANY PROPOSED CHANGES
IN APPLICABLE LAWS.
31
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes offered by
this prospectus. The aggregate proceeds to the selling securityholders from the
sale of the notes will be the purchase price of the notes less any discounts and
commissions. A selling securityholder reserves the right to accept and, together
with their agents, to reject, any proposed purchases of notes to be made
directly or through agents.
The notes may be sold from time to time to purchasers:
- directly by the selling securityholders and their successors, which
includes their transferees, pledgees or donees or their successor; or
- through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from
the selling securityholders or the purchasers of the notes. These
discounts, concessions or commissions may be in excess of those customary
in the types of transactions involved.
The selling securityholders and any underwriters, broker-dealers or agents
who participate in the distribution of the notes may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. As a result,
any profits on the sale of the notes by selling securityholders and any
discounts, commissions or concessions received by any such broker-dealers or
agents may be deemed to be underwriting discounts and commissions under the
Securities Act. Selling securityholders who are "underwriters" within the
meaning of the Securities Act will be subject to prospectus delivery
requirements of the Securities Act. If the selling securityholders were deemed
to be underwriters, the selling securityholders may be subject to certain
statutory liabilities of the Securities Act and the Securities Exchange Act of
1934. If the notes are sold through underwriters, broker-dealers or agents, the
selling securityholders will be responsible for underwriting discounts or
commissions or agent's commissions.
The notes may be sold in one or more transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- prices related to such prevailing market prices;
- varying prices determined at the time of sale; or
- negotiated prices.
These sales may be effected in transactions:
- on any national securities exchange or quotation service on which the
notes may be listed or quoted at the time of the sale;
- in the over-the-counter market;
- in transactions otherwise than on such exchanges or services or in the
over-the-counter market;
- through the writing and exercise of options, whether such options are
listed on an options exchange or otherwise; or
- through the settlement of short sales.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with the sales of the notes or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers or other
financial institutions. These broker-dealers or other financial institutions may
in turn engage in short sales of the notes in the course of hedging their
positions. The selling securityholders may also sell the notes short and deliver
notes to close out short positions, or loan or pledge notes to broker-dealers
that in turn may sell the notes.
32
To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the notes by the selling
securityholders.
We do not intend to apply for listing of the notes on any securities
exchange or for inclusion of the notes in any automated quotation system.
Accordingly, no assurances can be given as to the development of liquidity or
any trading market for the notes. See "Risk Factors -- There is no established
trading market for the notes and there may never be one."
There can be no assurance that any selling securityholder will sell any or
all of the notes pursuant to this prospectus. Further, we cannot assure you that
any such selling securityholder will not transfer, devise or gift the notes by
other means not described in this prospectus. In addition, any notes covered by
this prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the
Securities Act may be sold under Rule 144 or Rule 144A rather than under this
prospectus. The notes may be sold in some states only through registered or
licensed brokers or dealers. In addition, in some states the notes may not be
sold unless they have been registered or qualified for sale or an exemption from
registration or qualification is available and complied with.
The selling securityholders and any other person participating in the sale
of notes will be subject to the Exchange Act. The Exchange Act rules include,
without limitation, Regulation M, which may limit the timing of purchases and
sales of any of the notes by the selling securityholders and any other such
person. In addition, Regulation M may restrict the ability of any person engaged
in the distribution of the notes to engage in marketmaking activities with
respect to the particular notes being distributed. This may affect the
marketability of the notes and the ability of any person or entity to engage in
market-making activities with respect to the notes.
We have agreed to indemnify the selling securityholders against certain
liabilities, including liabilities under the Securities Act.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the notes to the public other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
LEGAL MATTERS
Baker Botts L.L.P., Houston, Texas, our outside counsel, will issue
opinions about certain legal matters in connection with the offering of the
notes.
EXPERTS
The consolidated financial statements of Halliburton Company as of December
31, 2003 and 2002 and for the years then ended, have been incorporated by
reference in this prospectus in reliance on the reports of KPMG LLP, independent
registered public accounting firm, incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
KPMG's report dated February 18, 2004 refers to a change in the composition
of Halliburton's reportable segments in 2003. The amounts in the 2002 and 2001
consolidated financial statements related to reportable segments have been
restated to conform to the 2003 composition of reportable segments.
CHANGE IN INDEPENDENT AUDITORS
The consolidated financial statements of Halliburton for December 31, 2001
incorporated by reference in this prospectus were audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto.
On April 17, 2002, we dismissed Arthur Andersen LLP as our independent
auditors and engaged KPMG LLP to serve as our independent auditors for the year
ended December 31, 2002. The Arthur Andersen
33
dismissal and the KPMG LLP engagement were approved by our Board of Directors
upon the recommendation of our audit committee.
Arthur Andersen's reports on our consolidated financial statements for the
year ended December 31, 2001 did not contain an adverse opinion or disclaimer of
opinion, nor were such reports qualified or modified as to uncertainty, audit
scope or accounting principles.
During the fiscal year ended December 31, 2001 and through April 17, 2002,
there were no disagreements with Arthur Andersen on any matter of accounting
principles or practices, financial statement disclosure or auditing scope or
procedure, which if not resolved to Arthur Andersen's satisfaction would have
caused Arthur Andersen to make a reference to the subject matter in connection
with Arthur Andersen's report.
Arthur Andersen ceased to practice before the SEC effective August 31,
2002. Because of Arthur Andersen's current financial position, you may not be
able to recover against Arthur Andersen for any claims you may have under
securities or other laws as a result of Arthur Andersen's activities during the
period in which it acted as our independent public accountants.
34
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
$500,000,000
HALLIBURTON COMPANY
SENIOR NOTES DUE JANUARY 26, 2007
(HALLIBURTON LOGO)
------------------------
PROSPECTUS
------------------------
, 2004
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses payable by
Halliburton Company, a Delaware corporation ("Halliburton"), in connection with
the offering described in this Registration Statement. The selling stockholder
will not pay any of the following expenses:
SEC registration fee........................................ $ 63,350
Printing expenses........................................... 50,000
Accounting fees and expenses................................ 75,000
Legal fees and expenses..................................... 100,000
Miscellaneous............................................... 3,000
--------
Total..................................................... $291,350
========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware or
DGCL, provides that a Delaware corporation has the power, under specified
circumstances, to indemnify its directors, officers, employees, and agents.
Indemnification is allowed in connection with threatened, pending, or completed
actions, suits, or proceedings, whether civil, criminal, administrative, or
investigative, other than an action by or in right of the corporation, brought
against them by reason of the fact that they were or are directors, officers,
employees, or agents, for:
- expenses, judgments, and fines; and
- amounts paid in settlement actually and reasonably incurred in any
action, suit, or proceeding.
Article X of Halliburton's restated certificate of incorporation together
with Section 47 of its by-laws provide for mandatory indemnification of each
person who is or was made a party to any actual or threatened civil, criminal,
administrative, or investigative action, suit, or proceeding because:
- the person is or was an officer or director of the registrant; or
- is a person who is or was serving at the request of Halliburton as a
director, officer, employee, or agent of another corporation or of a
partnership, joint venture, trust, or other enterprise,
to the fullest extent permitted by the DGCL as it existed at the time the
indemnification provisions of Halliburton's restated certificate of
incorporation and the by-laws were adopted or as each may be amended. Section 47
of Halliburton's by-laws and Article X of its restated certificate of
incorporation expressly provide that they are not the exclusive methods of
indemnification.
Section 145 of the DGCL provides that a Delaware corporation has the power
to purchase and maintain insurance on behalf of its directors, officers,
employees or agents against liabilities asserted against such person in his or
her capacity or arising out of his or her status as a director, officer,
employee or agent of the company. A Delaware corporation has this power whether
or not the corporation has the power to indemnify such person against the
liability under Section 145 of the DGCL.
Section 47 of the by-laws provides that Halliburton may maintain insurance,
at its own expense, to protect itself and any director or officer of Halliburton
or of another entity against any expense, liability, or loss. This insurance
coverage may be maintained regardless of whether Halliburton would have the
power to indemnify the person against the expense, liability, or loss under the
DGCL.
Section 102(b)(7) of the DGCL provides that a certificate of incorporation
may contain a provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary
II-1
damages for breach of fiduciary duty as a director. However, that provision
shall not eliminate or limit the liability of a director:
- for any breach of the director's duty of loyalty to the corporation or
its stockholders;
- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
- under Section 174 of the DGCL, relating to liability for unauthorized
acquisitions or redemptions of, or dividends on, capital stock; or
- for any transaction from which the director derived an improper personal
benefit.
Article XV of Halliburton's restated certificate of incorporation contains
this type of provision.
The foregoing statements are subject to the detailed provisions of Sections
145 and 102 of the DGCL and Halliburton's certificate of incorporation and
by-laws.
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
-------- ----------------------
4.1* Senior Indenture dated as of October 17, 2003 between
Halliburton and JPMorgan Chase Bank, as Trustee
(incorporated by reference to Exhibit 4.1 to Halliburton's
Form 10-Q for the quarter ended September 30, 2003, File No.
1-3492).
4.2* Third Supplemental Indenture dated as of January 26, 2004
between Halliburton and JPMorgan Chase Bank, as Trustee
(incorporated by reference to Exhibit 4.1 to Halliburton's
Registration Statement on Form S-4, Registration No.
333-112977).
4.3 Form of Senior Notes due 2007 (included as Exhibit A to
Exhibit 4.2 above).
4.4* Registration Rights Agreement dated as of January 26, 2004
among Halliburton and J.P. Morgan Securities Inc., Citigroup
Global Markets, Inc. and Goldman, Sachs & Co., as
representatives of the several Purchasers named in Schedule
I of the Purchase Agreement dated as of January 21, 2004
(incorporated by reference to Exhibit 4.4 to Halliburton's
Registration Statement on Form S-4, Registration No.
333-112977).
5.1 Opinion of Baker Botts L.L.P.
12.1 Statement of computation of ratio of earnings to fixed
charges.
23.1 Consent of KPMG LLP.
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney.
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of the Trustee on Form T-1.
---------------
* Incorporated by reference as indicated.
ITEM 17. UNDERTAKINGS.
(a) Reg. S-K, Item 512(a) Undertaking: The undersigned registrant hereby
undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any
II-2
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) of the Securities Act of 1933 if, in the
aggregate, the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the SEC by the
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at 555 the
termination of the offering.
(b) Reg. S-K, Item 512(b) Undertaking: The undersigned registrant hereby
undertakes that, for purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Reg. S-K, Item 512(h) Undertaking: Insofar as indemnification for
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
(d) Reg. S-K, Item 512(i) Undertaking: The undersigned registrant hereby
undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on November 19, 2004.
HALLIBURTON COMPANY
By: /s/ DAVID J. LESAR
------------------------------------
David J. Lesar
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated and on November 19, 2004.
/s/ DAVID J. LESAR Chairman of the Board, President, Chief Executive
-------------------------------------- Officer and Director (Principal Executive Officer)
David J. Lesar
/s/ C. CHRISTOPHER GAUT Executive Vice President and Chief Financial
-------------------------------------- Officer (Principal Financial Officer)
C. Christopher Gaut
/s/ MARK A. MCCOLLUM Senior Vice President and Chief Accounting Officer
-------------------------------------- (Principal Accounting Officer)
Mark A. McCollum
* Director
--------------------------------------
Robert L. Crandall
* Director
--------------------------------------
Kenneth T. Derr
* Director
--------------------------------------
Charles J. DiBona
* Director
--------------------------------------
W.R. Howell
* Director
--------------------------------------
Ray L. Hunt
* Director
--------------------------------------
Aylwin B. Lewis
* Director
--------------------------------------
J. Landis Martin
* Director
--------------------------------------
Jay A. Precourt
* Director
--------------------------------------
Debra L. Reed
* Director
--------------------------------------
C.J. Silas
*By: /s/ MARGARET E. CARRIERE
------------------------------
Margaret E. Carriere
Attorney-in-Fact
II-4
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
-------- ----------------------
4.1* Senior Indenture dated as of October 17, 2003 between
Halliburton and JPMorgan Chase Bank, as Trustee
(incorporated by reference to Exhibit 4.1 to Halliburton's
Form 10-Q for the quarter ended September 30, 2003, File No.
1-3492).
4.2* Third Supplemental Indenture dated as of January 26, 2004
between Halliburton and JPMorgan Chase Bank, as Trustee
(incorporated by reference to Exhibit 4.1 to Halliburton's
Registration Statement on Form S-4, Registration No.
333-112977).
4.3 Form of Senior Notes due 2007 (included as Exhibit A to
Exhibit 4.2 above).
4.4* Registration Rights Agreement dated as of January 26, 2004
among Halliburton and J.P. Morgan Securities Inc., Citigroup
Global Markets, Inc. and Goldman, Sachs & Co., as
representatives of the several Purchasers named in Schedule
I of the Purchase Agreement dated as of January 21, 2004
(incorporated by reference to Exhibit 4.4 to Halliburton's
Registration Statement on Form S-4, Registration No.
333-112977).
5.1 Opinion of Baker Botts L.L.P.
12.1 Statement of computation of ratio of earnings to fixed
charges.
23.1 Consent of KPMG LLP.
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney.
25.1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of the Trustee on Form T-1.
---------------
* Incorporated by reference as indicated.