SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 11-K
/X/ Annual Report pursuant to Section 15(d) of The Securities Exchange Act of
1934.
For the fiscal year ended December 31, 2001
or
/ / Transition Report pursuant to Section 15(d) of The Securities Exchange
Act of 1934.
For the transition period from _____________ to ___________.
Commission file number 1-3492
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
Halliburton Retirement and Savings Plan
4100 Clinton Drive
Building 3, Room 1018
Houston, TX 77020
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Halliburton Company, Inc.
3600 Lincoln Plaza
500 N. Akard
Dallas, Texas 75201
REQUIRED INFORMATION
The following financial statements prepared in accordance with the financial
reporting requirements of ERISA and exhibits are filed for the Halliburton
Retirement and Savings Plan:
FINANCIAL STATEMENTS AND SCHEDULES
Independent Auditors' Report - KPMG LLP
Independent Auditors' Report - Arthur Andersen LLP
Statements of Net Assets Available for Plan Benefits as of December 31,
2001 and 2000
Statement of Changes in Net Assets Available for Plan Benefits for the
Year Ended December 31, 2001
Notes to Financial Statements
Supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of
Year) as of December 31, 2001
EXHIBITS
Independent Auditors' Consent - KPMG LLP (Exhibit 23.1)
Notice Regarding Consent of Arthur Andersen LLP (Exhibit 23.2)
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Benefits Committee of the Halliburton Retirement and Savings Plan has duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: June 28, 2002
By /s/ Michele Mastrean
----------------------------------------
Michele Mastrean, Chairperson of the Halliburton
Company Benefits Committee
HALLIBURTON RETIREMENT AND SAVINGS PLAN
TABLE OF CONTENTS
PAGE
Independent Auditors' Reports 1 - 2
Statements of Net Assets Available for Plan Benefits as of December 31, 2001 and 2000 3
Statement of Changes in Net Assets Available for Plan Benefits for the Year Ended December 31, 2001 4
Notes to Financial Statements 5 - 11
Supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 12
INDEPENDENT AUDITORS' REPORT
The Benefits Committee of the
Halliburton Retirement and Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Halliburton Retirement and Savings Plan (the Plan) as of
December 31, 2001, and the related statement of changes in net assets available
for plan benefits for the year then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001 and the changes in its net assets available for benefits for
the year then ended in conformity with accounting principles generally accepted
in the United States of America.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The supplemental Schedule H, Line 4i - Schedule of
Assets (Held at End of Year) is presented for the purpose of additional analysis
and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule has been subjected to the
auditing procedures applied in our audit of the basic financial statements and,
in our opinion, is fairly stated, in all material respects, in relation to the
basic financial statements taken as a whole.
KPMG LLP
Houston, Texas
June 26, 2002
[This is a copy of the audit report previously issued by Arthur Andersen LLP in
connection with the Plan's filing on Form 11-K for the year ended December 31,
2000. This audit report has not been reissued by Arthur Andersen LLP in
connection with this filing on Form 11-K. See Exhibit 23.2 for further
discussion.]
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Benefits Committee of the
Halliburton Retirement and Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Halliburton Retirement and Savings Plan (the "Plan") as of
December 31, 2000 and 1999, and the related statement of changes in net assets
available for plan benefits for the year ended December 31, 2000. These
financial statements and the supplemental schedule referred to below are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements and supplemental schedule based on our
audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2000 and 1999, and the changes in its net assets available for
plan benefits for the year ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Arthur Andersen LLP
Dallas, Texas,
April 25, 2001
2
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
------------------ ------------------
Assets:
Cash $ 2,937,648 $ 1,390,856
Company contributions receivable 55,893,096 14,264,426
Plan participants' contributions receivable 4,293,969 2,325,565
Participation in Master Trust, at fair value 3,400,232,865 3,834,641,353
Participant loans 81,529,596 82,027,397
------------------ ------------------
Total assets 3,544,887,174 3,934,649,597
------------------ ------------------
Liabilities:
Payable to other plan 0 (4,475,405)
------------------ ------------------
Net assets available for plan benefits $ 3,544,887,174 $ 3,930,174,192
================== ==================
See accompanying notes to financial statements.
3
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Additions:
Contributions:
Company $ 113,509,665
Plan participants 115,207,931
Transfers from other plans 3,801,014
Investment activity:
Allocation of Master Trust net investment activity (169,840,113)
Interest and dividends 2,199,761
Interest on loans to participants 6,975,137
------------------
Total additions 71,853,395
------------------
Deductions:
Benefits paid to participants (265,065,415)
Divestitures (176,098,292)
Forfeitures expense (1,345,747)
Administrative expenses and other (14,630,959)
------------------
Total deductions (457,140,413)
------------------
Net decrease in net assets available for plan benefits (385,287,018)
Net assets available for plan benefits, beginning of year 3,930,174,192
------------------
Net assets available for plan benefits, end of year $ 3,544,887,174
==================
See accompanying notes to financial statements.
4
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) DESCRIPTION OF PLAN
The Halliburton Retirement and Savings Plan (the Plan) is a defined
contribution profit sharing pension plan for certain qualified employees
of Halliburton Company and subsidiaries (the Company). The Plan was
established in accordance with Sections 401(a) and 401(k) of the Internal
Revenue Code (IRC) and is subject to the provisions of the Employee
Retirement Income Security Act of 1974. The following description of the
Plan provides only general information. Participants should refer to the
plan document or summary plan description for a more complete description
of the Plan's provisions.
(a) ELIGIBILITY
Certain employees of the Company are eligible for participation in
the Plan upon their date of hire.
(b) CONTRIBUTIONS
Participants may elect to contribute to the tax deferred savings
and/or after-tax features of the Plan through periodic payroll
deductions. These contributions are limited to an aggregate of 15%
of the participant's eligible earnings of up to $170,000; the
total amount of participant tax deferred savings contributions is
limited to $10,500 for 2001 and 2000. Any contributions in excess
of the $10,500 limit are automatically made to the participant's
after-tax account. The Plan participants who contribute also
receive Company matching contributions equal to 100% of the first
4% of a participant's compensation. The Company may make annual
profit sharing contributions to participants on a tax deferred
basis, based on Company performance. Participants are not required
to have contributed to the Plan to be eligible for such a
contribution. The participant's share of any discretionary profit
sharing contribution is based on a percentage of their eligible
pay for the year. For the plan years 2001 and 2000, discretionary
profit sharing contribution receivables totaled approximately
$55.2 million and $13.4 million, respectively.
Eligible employees who participated in a qualified savings or
retirement plan of a former employer, may be able to roll over tax
deferred contributions and earnings from their former plan into
the Plan.
Upon attainment of either the normal retirement age (65) or early
retirement age (55 or 50 during specified periods), participants
in the Halliburton Retirement Plan (a defined benefit pension plan
sponsored by the Company) may elect to transfer their vested
benefits to the Plan. Such transfers are restricted as to the
investment elections in which they may be invested. The amount of
the benefit that may be rolled over is the actuarially determined
amount to be received by the participant. Transfers may be made
during any month of the year.
(c) CASH ACCOUNTS
The Plan maintains cash accounts to facilitate the payment of
benefits and receipt of contributions.
(d) INVESTMENT ELECTIONS
Contributions and participant account balances may be directed to
one of eleven funds or a combination of funds. The assets of the
funds are held in the Halliburton Company Employee Benefit Master
Trust (the Master Trust, see note 3). One of the investment funds
invests primarily in Halliburton Company stock, the Halliburton
Stock Fund (the HSF). Participants' contributions to the HSF are
limited to 15% of their total contributions. The Plan allows
participants to make daily transfers of their account balances
among the funds. The amount of the transfer may be all or any
portion of the participant's account balance, subject to certain
limitations on transfers to the HSF.
5
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(e) PARTICIPANT LOANS
A participant may borrow from their vested account balance a
minimum of $1,000 up to a maximum equal to the lesser of $50,000
or 50% of their vested account balance. A participant may have up
to two loans outstanding at any time. Loans bear interest at the
current prime rate plus 1% as published in the Wall Street
Journal. Loans must be repaid within five years (10 years for
primary residence loan) through payroll deductions and are
collateralized by the participant's account balance.
(f) VESTING
Participants' contributions to their accounts and the earnings
thereon are fully vested when made or earned. Participants
employed by the Company on December 31, 1998 are fully vested in
all Company matching and profit sharing contributions.
Participants hired after December 31, 1998 are fully vested in all
Company matching and profit sharing contributions after completing
one year of service. Participants who terminate prior to obtaining
one year of service forfeit their nonvested balances.
The nonvested portion of account balances of participants who
terminated prior to December 31, 1998 is forfeitable. The
nonvested portion is forfeited at the end of the fifth year
following termination unless the participant is rehired within
five years of termination. Such forfeitures are used to reduce
future Company matching contributions. As of December 31, 2001,
the forfeitures were $1,345,747; forfeitures were used to reduce
Company contributions receivable in 2001.
(g) DISTRIBUTIONS
Each participant, or their designated beneficiary, may elect to
receive a distribution upon retirement, termination, disability,
or death. Certain participants' balances related to prior plan
mergers may be withdrawn at any time. Direct rollovers to an IRA
or other qualified plan are permitted. All distributions are made
in lump-sum amounts or in periodic installments, at the
participant's election. Distributions from the HSF may be made in
the form of shares of stock or cash. Each participant may elect to
receive an in-service withdrawal of their after-tax contributions.
(h) ADMINISTRATION
State Street Bank and Trust Company (State Street) is the Plan's
trustee, and Hewitt Associates LLC is the recordkeeper.
(i) INVESTMENT EARNINGS
Investment earnings on participants' accounts are allocated
proportionately based on their relative account balance in each
investment fund. Such earnings are taxable to participants at the
time of distribution from the Plan.
(j) PLAN TERMINATION
The Board of Directors of the Company may amend, modify, or
terminate the Plan at any time. No such termination is
contemplated, but if it should occur, the accounts of all
participants would be immediately fully vested and paid in
accordance with the terms of the Plan.
6
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The accompanying financial statements are prepared using the
accrual basis of accounting.
(b) INVESTMENT IN MASTER TRUST
Assets of the Plan are combined with the assets of certain other
benefit plans of affiliated companies in the Master Trust. The
assets of the Master Trust are segregated into thirteen funds in
which the plans may participate. The Plan participates in eleven
of these funds. The combination of the plans' assets is only for
investment purposes, and each plan continues to be operated under
its current plan document. All investments of the Master Trust are
held by State Street.
The funds within the Master Trust hold bank, insurance, and
investment contracts providing a fully benefit-responsive feature.
These investments are stated at contract value, which approximates
fair value. Where the Master Trust owns the underlying securities
of asset-backed investment contracts, the contracts are stated at
fair market value of the underlying securities plus an adjustment
for the difference between fair market value of the underlying
securities and contract value. Contract value represents the
principal balance of the investment plus accrued interest at the
stated contract rate, less payments received, and contract charges
by the insurance company or bank.
Cash equivalents, derivative financial instruments, stock
securities bonds and notes, and all other debt securities are
presented at their quoted market value. Realized and unrealized
changes in market values are recognized in the period in which the
changes occur.
Real estate related investments consist of real estate mortgages
and investments in Real Estate Investment Trusts. Real estate
mortgages are stated at cost plus accrued interest less payments
received which approximates fair value.
All investment transactions are accounted for on the trade-date
basis in accordance with accounting principles generally accepted
in the United States.
(c) ALLOCATION OF MASTER TRUST NET INVESTMENT ACTIVITY
The allocation of Master Trust net investment activity represents
the Plan's share of the net investment income or loss on
investments held by the Master Trust determined by the Plan's
allocable share of the net assets of the Master Trust. Net
investment income or loss is the realized net gain or loss from
investments sold, change in the unrealized net gain or loss on
investments, dividend income, and interest income of the Master
Trust.
(d) ADMINISTRATIVE EXPENSES
Administrative expenses which are related to compliance and
operational activities as defined by the Department of Labor may
be charged against the Plan assets at the discretion of the Plan
administrator and in accordance with the terms of the Plan.
7
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(e) PAYMENT OF BENEFITS
Benefits are recorded when paid.
(f) USE OF ESTIMATES
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, and changes therein,
and disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
(3) MASTER TRUST
The following are the statements of net assets as of December 31, 2001
and 2000 and the statement of changes in net assets of the Master Trust
for the year ended December 31, 2001 (dollar amounts in thousands):
STATEMENTS OF NET ASSETS 2001 2000
-------------------- --------------------
Cash and equivalents $ 298,416 $ 359,903
Receivables 28,249 40,740
Asset-backed investment contracts (29,495) (5,819)
U.S. corporate and government bonds and notes 1,890,763 2,154,126
Non-U.S. bonds and notes 293,638 255,764
Non-U.S. stock 377,376 525,642
Halliburton Company stock 100,757 153,963
Insurance investment contracts 23,698 17,244
Pooled equity index funds 22,720 7,232
Other U.S. stock 1,046,738 1,231,674
Pooled bond funds 4,579 50,798
Real estate related investments 4,748 5,347
Investments in mutual funds 511,038 735,210
Payables (315,725) (557,896)
-------------------- --------------------
Net assets of the Master Trust $ 4,257,500 $ 4,973,928
==================== ====================
Plan dollar value interest $ 3,400,233 $ 3,834,641
Plan percent interest 79.86% 77.09%
8
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
YEAR ENDED
STATEMENT OF CHANGES IN NET ASSETS DECEMBER 31, 2001
--------------------
Participating plans' net assets, beginning of year $ 4,973,928
Net realized loss (41,496)
Net change in unrealized gain (loss) (320,995)
Net investment income 158,392
Receipts from participating plans 2,330,234
Withdrawals by participating plans (2,842,563)
--------------------
Participating plans' net assets, end of year $ 4,257,500
====================
YEAR ENDED
NET APPRECIATION (DEPRECIATION) BY TYPE DECEMBER 31, 2001
--------------------
Cash and equivalents $ 1,594
U.S. corporate and government bonds and notes 19,552
Non-U.S. bonds and notes (5,066)
Non-U.S. stock (83,678)
Halliburton Company stock (108,241)
Real estate related investments 140
Pooled equity index funds 290
Other U.S. stock (121,879)
Investments in mutual funds (53,207)
Other investments (11,996)
--------------------
Total depreciation $ (362,491)
====================
The Master Trust makes use of several investment strategies involving
limited use of derivative investments. The Master Trust's management, as
a matter of policy and with risk management as their primary objective,
monitors risk indicators such as duration and counter-party credit risk,
both for the derivatives themselves and for the investment portfolios
holding the derivatives. Investment managers are allowed to use
derivatives for such strategies as portfolio structuring, return
enhancement, and hedging against deterioration of investment holdings
from market and interest rate changes. Derivatives are also used as a
hedge against foreign currency fluctuations. The Master Trust's
management does not allow investment managers for the Master Trust to use
leveraging for any investment purchase. Derivative investments are stated
at estimated fair market values as determined by quoted market prices.
Gains and losses on such investments are included in the statement of
changes in net assets of the Master Trust.
9
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(4) PLAN MERGERS, SPIN-OFFS, AND DIVESTITURES
In April 2000, the Company's Board of Directors approved plans to sell
the business within the Dresser Equipment Group (DEG) which specializes
in the manufacturing and marketing of equipment used primarily in the
energy, petrochemical, power, and transportation industries. The Company
sold DEG effective April 10, 2001, retaining a 5% equity interest. The
sale of DEG resulted in the transfer of associated net assets from the
Plan during 2001 totaling approximately $164 million.
Effective July 6, 2000, the C.F. Braun, Inc. Select Savings Plan (Braun
Plan) merged with the Plan. In accordance with the merger, the net assets
of the Braun Plan were transferred to the Master Trust.
Effective September 1, 2000, the Plan spun off certain participants to
the National-Oil Well Retirement and Thrift Plan (NOW Plan) based upon
the purchase and sale agreement signed by the Company and National-Oil
Well, L.P. on September 6, 2000.Approximately $4.4 million in assets were
transferred to the NOW Plan on January 2, 2001, from the Master Trust.
In June 2001, the Plan was amended to allow participants who transferred
to employment with Well Dynamics, Inc. (WDI) and Enventure Global
Technology LLC (Enventure) to voluntarily transfer their account balance
in the Plan to the WDI 401(k) Retirement Plan and the Enventure 401(k)
Retirement Plan. On July 31, 2001, amounts that transferred to the WDI
401(k) Retirement Plan and the Enventure 401(k) Retirement Plan totaled
$3.4 million and $1.5 million, respectively.
In August 2001, Halliburton Energy Services, Inc., a subsidiary of the
Company, entered into an asset purchase agreement with Weatherford
Artificial Lift Systems, Inc. (Weatherford). As a result of the
agreement, approximately $1 million of plan assets were transferred to
the Weatherford International Inc. 401(k) Savings Plan on October 31,
2001.
(5) INVESTMENTS
Individual investments in excess of 5% of net assets available for plan
benefits are as follows:
2001 2000
------------------ ------------------
Participation in Master Trust, at fair value:
Fixed Investment Fund $ 1,273,734,474 $ 1,112,930,458
Equity Investment Fund 253,319,999 371,753,993
General Investment Fund 964,413,585 1,248,585,841
S&P 500 Index Fund 285,530,973 364,789,888
(6) TAX STATUS
The Plan is subject to ERISA and certain provisions of the Internal
Revenue Code (IRC) and is intended to qualify under Section 401(a) of the
IRC. The Internal Revenue Service has determined and informed the Company
by letter dated April 24, 1998 that the Plan and related trust are
designed in accordance with the applicable sections of the IRC. The Plan
has been amended since receiving the determination letter. However,
management believes that the Plan is currently designed and operating in
compliance with the applicable requirements of the IRC. Therefore, no
provision for income tax has been included in the Plan's financial
statements.
10
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(7) RELATED-PARTY TRANSACTIONS
State Street is the trustee defined by the Plan. The assets of the Plan
are held by the Master Trust, of which State Street is also the trustee.
Additionally, the Master Trust invests in the HSF. Therefore, State
Street, the Master Trust, the Company, and the participants of the Plan
qualify as parties in interest.
(8) SUBSEQUENT EVENT
On March 18, 2002 the Company announced plans to reorganize. Management
has not yet determined the impact of this reorganization on the Plan.
11
HALLIBURTON RETIREMENT AND SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
EIN: 75-2677995
Plan #: 001
(a) (b) (c) (d)
IDENTITY OF ISSUER, BORROWER, CURRENT
LESSOR, OR SIMILAR PARTY DESCRIPTION OF INVESTMENT VALUE
- ------- ----------------------------------------------- ------------------------------------ -----------------
* State Street Bank and Trust Company Cash $ 2,937,648
* Halliburton Company Employee Investment in net assets of
Benefit Master Trust Halliburton Company
Employee Benefit Master
Trust 3,400,232,865
* Participant Loans Loans issued at interest rates
between 6% and 10.5% 81,529,596
* Column (a) indicates each identified person/entity known to be a party in
interest.
This supplemental schedule lists assets held for investment purposes at December
31, 2001, as required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure.
See accompanying independent auditors' report.
12
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
Plan Administrator
Halliburton Retirement and Savings Plan:
We consent to the incorporation by reference in the registration statement No.
333-86080 on Form S-8 of Halliburton Company of our report dated June 26, 2002
with respect to the statement of net assets available for plan benefits of
Halliburton Retirement and Savings Plan as of December 31, 2001, and the related
statement of changes in net assets available for plan benefits for the year then
ended and all related financial statement schedules, which report appears in the
December 31, 2001 annual report on Form 11-K of Halliburton Retirement and
Savings Plan.
KPMG LLP
Houston, Texas
June 28, 2002
Exhibit 23.2 NOTICE REGARDING CONSENT OF ARTHUR ANDERSEN LLP Section 11(a) of the Securities Act provides that if any part of a registration statement at the time it becomes effective contains an untrue statement of a material fact or an omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, any person acquiring a security pursuant to such registration statement (unless it is proved that at the time of such acquisition such person knew of such untruth or omission) may sue, among others, every accountant who has consented to be named as having prepared or certified any part of the registration statement or as having prepared or certified any report or valuation which is used in connection with the registration statement with respect to the statement in such registration statement, report or valuation which purports to have been prepared or certified by the accountant. On April 17, 2002, the Plan appointed KPMG LLP to replace Arthur Andersen LLP as the independent auditor of the Plan. Prior to the date of this Form 11-K (which is incorporated by reference into Halliburton Company's filings on Form S-8 Nos. 333-55747 and 333-86080), the Arthur Andersen partners who reviewed the most recent audited financial statements of the Plan as of December 31, 2000 and for the year then ended have resigned from Arthur Andersen. As a result, after reasonable efforts, the Plan has been unable to obtain Arthur Andersen's written consent to the incorporation by reference into the Halliburton Company filings on Form S-8 Nos. 333-55747 and 333-86080 of its audit report with respect to the Plan's financial statements as of December 31, 2000 and for the year then ended. Under these circumstances, Rule 437a under the Securities Act permits the Plan to file this Form 11-K without a written consent from Arthur Andersen. Accordingly, Arthur Andersen will not be liable to you under Section 11(a) of the Securities Act because it has not consented to the incorporation by reference of its previously issued report into Halliburton Company's filings on Form S-8 Nos. 333-55747 and 333-86080. The Company believes, however, that other persons who are liable under Section 11(a) of the Securities Act, including the Company's officers and directors, may still rely on Arthur Andersen's audit reports as being made by an expert under the due diligence defense provision of Section 11(b) of the Securities Act.