Exhibit 1.1
HALLIBURTON COMPANY
Medium-Term Notes
Due 9 Months or More from Date of Issue
TERMS AGREEMENT
November 19, 1998
Halliburton Company
0000 Xxxxxxx Xxxxx
000 X. Xxxxx Xxxxxx
Xxxxxx, Xxxxx 00000-0000
Attention: Vice President and Secretary
Subject in all respects to the terms and conditions of the Distribution
Agreement dated January 13, 1997 among Xxxxxxx Xxxxx & Co., Xxxxxxx Lynch,
Xxxxxx, Xxxxxx & Xxxxx Incorporated, Xxxxxx Brothers Inc., Xxxxxx Xxxxxxx & Co.
Incorporated, NationsBanc Capital Markets, Inc. and you (the "Agreement"), the
undersigned (collectively, the "Purchasers") agree to purchase the Notes
described below of Halliburton Company (the "Company").
THE NOTES
Aggregate Principal Amount: $150,000,000
Purchase Price: 99.326% of Principal Amount
Priority: Senior
Issue Price: 99.976% of Principal Xxxxxx
Currency or Currency Unit: United States Dollars
Interest Rate or 5-5/8% per annuam, accruing
Method of Determining: from November 24, 1998
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Date of Maturity: December 1, 2008
Interest Payment Dates: December 1 and June 1 of each
year, except as provided in
the Pricing Supplement
Closing Date: November 24, 1998
Method of Payment: Immediately available funds
Trustee: Texas Commerce Bank, National
Association
Registrar, Paying Agent The Chase Manhattan Bank
and Authenticating Agent: (National Association)
Modification, if any, Each of the documents
in the requirements to specified in Sections 7(b),
deliver the documents (c) and (d)of the Agreement
specified in Sections shall be dated as of, and
7 (b) , (c) and (d) of delivered to the undersigned
the Agreement: on, the Closing Date
Other terms: The Notes shall have such
additional terms as are
specified in the form of
Pricing Supplement, attached
hereto as Annex A
Allocation among Each of the purchasers
Purchasers: severally agrees to purchase
the respective principal
amount of Notes set forth
next to its name in Annex B
Default of Purchasers: The provisions set forth in
Annex-C hereto are
incorporated herein by
reference
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XXXXXXX XXXXX,
XXXXXX, FENNE &
XXXXX INCORPORATED
XXXXXX BROTHERS INC.
XXXXXX XXXXXXX &
CO. INCORPORATED
By: Xxxxxxx Xxxxx, Xxxxxx,
Xxxxxx & Xxxxx Incorporated
By:
--------------------------
Title:
Accepted:
HALLIBURTON COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
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ANNEX A
PRICING SUPPLEMENT
(To prospectus dated December 19, 1996 and
prospectus supplement dated August 1, 1997)
$150,000,000
5 5/8 % Notes Due December 1, 2008
The notes bear interest at a rate of 5 5/8% per year. Interest on the notes
is payable on June 1 and December 1 of each year, commencing June 1, 1999. The
notes will mature on December 1, 2008.
The notes will be redeemable prior to maturity, in whole or in part, as
described in this pricing supplement. The notes do not have the benefit of any
sinking fund.
The notes will be issued in book entry form through the facilities of The
Depository Trust Company in minimum denominations of $1,000 and integral
multiples thereof. We do not intend to list the notes on any securities
exchange.
Investing in the notes involves risks which are described in the "Risk
Factors" section beginining on page S-2 of the accompanying Prospectus
Supplement.
Price to Underwriting Proceeds to
------------ ------------ -----------
Public Discount Halliburton Company
------ -------- -------------------
Per Note (1).... 99.976% .65% 99.326%
Total........... $149,964,000 $975,000 $148,989,000
(1) Purchasers will also be required to pay accrued interest from November
24, 1998, if settlement occurs after that date.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
pricing supplement and the accompanying prospectus supplement and prospectus are
truthful or complete. Any representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery in New York, New York,
on or about November 24, 1998.
Xxxxxxx Xxxxx & Co.
Xxxxxx Brothers
---------------
Xxxxxx Xxxxxxx Xxxx Xxxxxx
The date of this pricing supplement is November 19, 1998.
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TABLE OF CONTENTS
Pricing Supplement
Page
----
Recent Developments.......................................... PS-3
Use of Proceeds.............................................. PS-3
Ratio of Earnings to Fixed Charges........................... PS-4
Certain Terms of the Notes................................... PS-4
Supplemental Plan of Distribution............................ PS-5
Prospectus Supplement
Risk Factors................................................. S-2
Description of Notes......................................... S-4
Certain United States Federal Income Tax Considerations...... S-19
Plan of Distribution......................................... S-26
Prospectus
Available Information........................................ 2
Incorporation of Certain Documents By Reference.............. 3
The Company.................................................. 4
Use of Proceeds.............................................. 5
Ratio of Earnings to Fixed Charges........................... 5
Description of Debt Securities............................... 5
Description of Capital Stock................................. 15
Distribution................................................. 18
Legal Matters................................................ 18
Experts...................................................... 18
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this pricing supplement or
the accompanying prospectus supplement and prospectus. You must not rely on any
unauthorized information or representations. This pricing supplement and the
accompanying prospectus supplement and prospectus is an offer to sell or to buy
only the notes offered hereby, but only under circumstances and in jurisdictions
where it is lawful to do so. The information contained in this pricing
supplement is current only as of the date hereof.
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RECENT DEVELOPMENTS
Acquisition of Dresser Industries, Inc.
On September 29, 1998, the Company completed the acquisition of Dresser
Industries, Inc. ("Dresser") pursuant to the Agreement and Plan of Merger dated
as of February 25, 1998 by and among the Company, Halliburton N.C., Inc., a
wholly owned direct subsidiary of Halliburton ("Merger Sub"), and Dresser (the
"Merger Agreement"). Pursuant to the Merger Agreement, Merger Sub was merged
(the "Merger") with and into Dresser, with Dresser surviving as a subsidiary of
the Company. In the aggregate, the Company issued approximately 176 million
shares of Common Stock in the Merger. In addition, as part of the Merger,
Halliburton is reserving approximately 7.3 million shares of Common Stock in
exchange for certain rights relating to Xxxxxxx's employee and directors plans.
The Company sold its 36% ownership interest in M-I L.L.C. ("M-I") to Xxxxx
International, Inc. ("Xxxxx") on August 31, 1998. This transaction completed the
Company's commitment to the United States Department of Justice ("DOJ") to sell
its M-I interest in connection with the Merger. The purchase price of $265
million was paid by Xxxxx in the form of a non-interest bearing promissory note
due 240 days from the date of the closing. All of M-I's debt remains an
obligation of M-I. In connection with the Merger, the Company entered into a
consent decree with the DOJ requiring divestiture of the Company's current
worldwide logging-while-drilling ("LWD") business. In 1997 the affected business
had revenues of less than $50 million, or approximately 0.4% of the combined
revenues of the Company and Dresser. The Company's existing directional drilling
service line and Dresser's Sperry-Sun division are not impacted by the decree.
While the Company agreed in the consent decree to divest one-half of its sonic
LWD tools, it will continue to provide customers with sonic LWD services using
its existing sonic technologies. The consent decree requires the Company to
divest such LWD business by March 28, 1999.
Dresser, which was previously publicly traded, is a leading global supplier
to the total hydrocarbon energy stream. Dresser's product and service offerings
encompass sophisticated drilling and well construction systems as well as
technologies, engineered equipment and project management for the transportation
and conversion of oil and natural gas. The Company currently intends to continue
Xxxxxxx's business activities.
Results of Operations
Before recognition of special charges, the Company earned $195 million
($0.44 per share of Common Stock on a fully diluted basis) in the quarter ended
September 30, 1998 as compared to $218 million ($0.50 per share of Common Stock
on a fully diluted basis) in the quarter ended September 30, 1997. FInancial
results for both years have been restated to reflect the combined results of
operation of the Company and Dresser on a pooling of interests basis. Revenues
for the third quarter of 1998 were $4,224 million, approximately one percent
greater than the $4,177 million in revenues of the combined companies in the
third quarter of 1997.
The results of operations of the Company for the third quarter of 1998
include a special charge of $945 million ($722 million after tax or $1.64 per
share of Common Stock on a fully diluted basis) to provide for consolidation,
restructuring and merger related expenses. Components of the special charge
include $509 million of asset related writeoffs, writedowns and charges; $205
million related to personnel reduction costs; $121 million of facility
consolidation charges; $64 million of merger transaction costs; and $46 million
of other merger related costs.
After the special charge, the Company reported a net loss for the third
quarter of 1998 of $527 million or $1.20 per share of Common Stock on a fully
diluted basis.
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USE OF PROCEEDS
The net proceeds from the sale of the notes offered xxxxxx will be added to
the Company's general funds and used for general corporate purposes, which may
include repayment of debt, acquisitions by the Company and loans and advances
to, and investments in, subsidiaries of the Company to provide funds for working
capital, repayment of debt and capital expenditures. Until the net proceeds are
utilized, it is expected that such net proceeds will be placed in interest
bearing time deposits or invested in short-term marketable securities.
RATIO OF EARNINGS TO FIXED CHARGES (a)
Nine Months
Ended
Years Ended December 31, September 30,
---------------------------------------------- -------------
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
1.1 6.3 5.6 6.3 8.0 1.2
(a) Includes the effect of the acquisition of Dresser on September 29, 1998,
which was accounted for as a pooling of interests. Historical restated
financial statements have been issued and filed with the Securities and
Exchange Commission in a Current Report on Form 8-K/A dated September 29,
1998.
For purposes of computing the ratio of earnings to fixed charges: (i) fixed
charges consist of interest on debt (whether expensed or capitalized),
amortization of debt discount and expense and a portion of rental expense
determined to be representative of interest and (ii) earnings consist of income
(loss) from continuing operations before provision for income taxes, minority
interest, cumulative effects of accounting changes and extraordinary items plus
fixed charges as described above, adjusted to exclude capitalized interest and
by the excess or deficiency of dividends over income of 50 percent or less owned
entities accounted for by the equity method.
CERTAIN TERMS OF THE NOTES
The following description of the particular terms of the notes offered
hereby supplements, and to the extent inconsistent therewith, replaces, the
description of the general terms and provisions of the Medium-Term Notes as set
forth and described in the accompanying prospectus and prospectus supplement, to
which description reference is hereby made.
General
The notes are Fixed Rate Notes (as defined in the accompanying prospectus
supplement) and are part of a series of Medium-Term Notes Due Nine Months or
More From Date of Issue, Series A, of the Company described in the accompanying
prospectus and prospectus supplement. The notes will bear interest at the rate
per annum shown on the cover page of this pricing supplement from November 24,
1998, or from the most recent date to which interest has been paid. Interest
will be payable semiannually on June 1 and December 1 of each year (each, an
"Interest Payment Date"), commencing on June 1, 1999, to the persons in whose
names the notes are registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined in the accompanying
prospectus supplement) immediately preceding such Interest Payment Date.
Interest payable at maturity will be payable to the person to whom principal
shall be payable. The notes will mature on December 1, 2008, and will be subject
to redemption at the option of the Company prior to maturity.
The notes will be issued in book-entry form through the facilities of The
Depository Trust Company in minimum denominations of $1,000 and integral
multiples thereof.
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Redemption
The notes will be redeemable as a whole or in part, at the option of the
Company at any time, at a redemption price equal to the greater of (i) 100% of
the principal amount of such notes and (ii) the sum of the present values of the
remaining scheduled payments of principal and interest thereon discounted to the
redemption date on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Treasury Rate plus 15 basis points, plus in each
case accrued interest thereon to the date of redemption.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of a comparable maturity to the
remaining term of such notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with the
Company.
"Comparable Treasury Price" means, with respect to any redemption date, (A)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (B) if the Trustee obtains fewer than four such Reference
Treasury Dealer Quotations, the average of all such quotations. "Reference
Treasury Dealer Quotations" means, with respect to each Reference Treasury
Dealer and any redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer at 3:30 p.m. New York time on the third
business day preceding such redemption date.
"Reference Treasury Dealer" means each of Xxxxxxx, Xxxxx & Co., Xxxxxx
Brothers Inc., Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx Incorporated, Xxxxxx
Xxxxxxx & Co. Incorporated and Xxxxxxx Xxxxx Xxxxxx Inc. and their respective
successors; provided, however, that if any of the foregoing or their affiliates
shall cease to be a primary U.S. Government securities dealer in The City of New
York (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of notes to be redeemed.
Unless the Company defaults in payment of the redemption price, on and
after the redemption date interest will cease to accrue on the notes or portions
thereof called for redemption.
All questions regarding the validity, form, eligibility (including time of
receipt) and acceptance of any Note for repayment will be determined by the
Company, whose determination will be final and binding.
For further information regarding the terms of the notes, see "Description
of Notes" in the accompanying Prospectus Supplement.
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Terms Agreement dated
November 19, 1998, which incorporates provisions from the Distribution Agreement
dated January 13, 1997, the Company has agreed to sell to each of the
Underwriters named below (the "Underwriters"), and each of the Underwriters has
severally agreed to purchase, the respective principal amount of the notes set
forth opposite its name below:
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Principal Amount
Underwriter of Notes
----------- ----------------
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated.......................... $ 90,000,000
Xxxxxx Brothers Inc................................. 30,000,000
Xxxxxx Xxxxxxx & Co. Incorporated................... 30,000,000
--------------
Total $ 150,000,000
==============
The Underwriters have advised the Company that they propose initially to
offer the notes to the public at the public offering price set forth on the
cover page of this pricing supplement, and to certain dealers at such price less
a concession not in excess of .4 % of the principal amount per note. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of .25 % of the principal amount per note to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the notes but are not obligated to do so and may discontinue any
market making at any time without notice. The notes will not be listed on any
stock exchange, and there can be no assurance that there will be a secondary
market for the notes or that there will be liquidity in such market if one
develops.
The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
See "Distribution" in the accompanying prospectus and "Plan of Distribution" in
the accompanying prospectus supplement.
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ANNEX B
Purchaser Principal Amount
--------- ----------------
Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx &
Xxxxx Incorporated.......................... $ 90,000,000
Xxxxxx Brothers Inc.................................. $ 30,000,000
Xxxxxx Xxxxxxx & Co.
Incorporated................................ $ 30,000,000
------------
Total $150,000,000
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ANNEX C
If any Purchaser or Purchasers default in their obligations to purchase
Notes agreed to be purchased by such Purchaser or Purchasers hereunder and the
aggregate principal amount of Notes which such defaulting Purchaser or
Purchasers agreed but failed to purchase does not exceed 10% of the total
principal amount of Notes, the Purchasers may make arrangements satisfactory to
the Company for the purchase of such Notes by other persons, including any of
the Purchasers, but if no such arrangements are made by the Closing Date, the
nondefaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Notes which such defaulting
Purchasers agreed but failed to purchase. If any Purchaser or Purchasers so
default and the aggregate principal amount of Notes with respect to which such
default or defaults occur exceeds 10% of the total principal amount of Notes and
arrangements satisfactory to the Purchasers and the Company for the purchase of
such Notes by other persons are not made within 36 hours after such default,
this Terms Agreement will terminate without liability on the part of any
nondefaulting Purchaser or the Company. As used herein, the term "Purchaser"
includes any person substituted for a Purchaser under the terms of this
paragraph. Nothing herein will relieve a defaulting Purchaser from liability for
its default.
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