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 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 are prepared in accordance with the financial
reporting requirements of ERISA and exhibits are filed for the Halliburton
Savings Plan:
FINANCIAL STATEMENTS AND SCHEDULE
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 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 SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
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 - 10
Supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 11
INDEPENDENT AUDITORS' REPORT
The Benefits Committee of the
Halliburton Savings Plan:
We have audited the accompanying statement of net assets available for plan
benefits of the Halliburton 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 and supplemental schedule 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 plan 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 the 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 Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Halliburton 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 the 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,
June 5, 2001
2
HALLIBURTON SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2001 and 2000
2001 2000
---------------------- -------------------
Assets:
Plan participants' contributions receivable $ 2,889 $ 20,277
Participation in Master Trust, at fair value 2,125,059 23,956,619
Participant loans 63,652 1,308,674
---------------------- -------------------
Net assets available for plan benefits $ 2,191,600 $ 25,285,570
====================== ===================
See accompanying notes to financial statements.
3
HALLIBURTON SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2001
Additions:
Contributions:
Company $ 207,354
Plan participants 927,738
Investment activity:
Allocation of Master Trust net investment activity (1,451,923)
Interest on loans to participants 58,378
-----------------
Total additions (258,453)
-----------------
Deductions:
Benefits paid to participants (2,336,560)
Divestiture (see note 5) (20,298,752)
Transfers (20,888)
Administrative expenses (179,317)
-----------------
Total deductions (22,835,517)
-----------------
Net decrease in net assets available for plan benefits (23,093,970)
Net assets available for plan benefits, beginning of year 25,285,570
-----------------
Net assets available for plan benefits, end of year $ 2,191,600
=================
See accompanying notes to financial statements.
4
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(1) DESCRIPTION OF THE PLAN
The Halliburton Savings Plan (the Plan) is a defined contribution plan
for certain qualified employees of Halliburton Company and certain
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 completion of three months of service.
(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 Company makes matching contributions to
certain groups of participants based on separate formulas set
forth in the plan document.
(c) CASH ACCOUNTS
The Plan maintains cash accounts to facilitate the payment of
benefits and receipt of contributions to the Plan.
(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 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 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 (ten years for
primary residence loans) through payroll deductions. Loans 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 become
fully vested in matching contributions and the earnings thereon
upon the completion of five years of service. Participants who
terminate before becoming vested forfeit the nonvested portion of
their account balance unless they are rehired within five years of
termination. Such forfeitures are used to reduce future Company
matching contributions. As of December 31, 2001, total forfeitures
were approximately $12,000; forfeitures were used to reduce
Company contributions during 2001.
(g) DISTRIBUTIONS
Each participant, or their designated beneficiary, may elect to
receive a distribution upon retirement, termination, disability,
or death. Certain participant balances related to prior plan
mergers may be withdrawn at any time. Direct rollovers to an IRA
or other qualified plans 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 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
At December 31, 2001 and 2000, 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.
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF ACCOUNTING
The accompanying financial statements are prepared using the
accrual basis of accounting.
6
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(b) INVESTMENT VALUATION AND INCOME RECOGNITION
The 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 (loss) from
investments sold, change in the unrealized net gain (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.
(e) PAYMENT OF BENEFITS
Benefits are recorded when paid.
7
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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 $ 2,125 $ 23,957
Plan percent interest 0.1% 0.5%
8
HALLIBURTON 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
===================
NET APPRECIATION (DEPRECIATION) BY TYPE YEAR ENDED
(in thousands) 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 SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(4) INVESTMENTS
Individual investments in excess of 5% of net assets for plan benefits
are as follows:
2001 2000
------------ ---------------
Participation in Master Trust, at fair value:
S&P 500 Index Fund $ 235,446 $ 1,916,908
Fixed Investment Fund 327,640 3,470,404
Balanced Fund 232,531 3,666,836
Halliburton Company Stock Fund 300,037 1,160,124
Large Cap Value Equity 802,694 1,860,693
Large Cap Value Growth 63,459 10,564,992
(5) DIVESTITURE
In April 2000, the Company's Board of Directors approved plans to sell
the businesses within the Dresser Equipment Group (DEG) which specialized
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% interest. The sale of
DEG resulted in the transfer of associated net plan assets from the Plan
during 2001 totaling approximately $20.3 million.
(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 a letter dated November 2, 2001 that the Plan and related trust are
designed in accordance with the applicable sections of the Internal
Revenue Code.
(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 Halliburton Company Stock
Fund; therefore, State Street, the Master Trust, the Company, and the
participants of the Plan qualify as parties in interest.
10
HALLIBURTON SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2001
EIN: 75-2677995
Plan #: 145
(a) (b) (c) (d)
IDENTITY OF ISSUE, BORROWER, CURRENT
LESSOR, OR SIMILAR PARTY DESCRIPTION OF INVESTMENT VALUE
- ------ -------------------------------------------- ---------------------------------------------- ------------------
* Halliburton Company Employee Investment in net assets of Halliburton
Benefit Master Trust Company Employee Benefit Master
Trust $ 2,125,059
* Participant loans Loans issued at interest rates between
6.00% and 10.5% 63,652
* 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.
11
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
Plan Administrator
Halliburton 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 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 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. 333-83223 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. 333-83223 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. 333-83223 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.