HALLIBURTON LOSES ROUND

As a result of an order issued recently by the Delaware Supreme Court, the Halliburton Company of Dallas will write-off receivables in first quarter 2002. Halliburton announced that the Delaware high court affirmed without opinion the judgement of the Court of Chancery in litigation between the Texas energy concern and Highlands Insurance Company, which it formerly owned. The Chancery Court had ruled that fixed-cost insurance policies provided by Highlands to Halliburton subsidiary Brown & Root Inc. between 1958 and 1986 expired Jan. 23, 1996, when Highlands was spun off from the energy company. The Highlands policies covered about 30,000 Brown & Root asbestos claims mentioned in Halliburton’s 2002 annual report and 10-K. The coverage is merely a portion of all insurance covering the Brown & Root claims—an additional $2 billion in excess coverage exists beyond the Highlands coverage. Halliburton decided, based on outside legal counsel, to carry some $80 million in claim receivables against the Highlands policies for settlement and defense costs, as well as pending asbestos litigation. The receivables will probably be written off in the first quarter of 2002, which would result in an after tax income reduction of $0.11 per diluted share. Approximately 45 percent of these receivables relate to payments of settlement and defense costs already made by Halliburton. The remainder is management’s estimate of insurance recoveries against future settlement payments on existing Brown & Root asbestos claims.