UNITED
STATES
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, 2004.
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:
Brown
& Root, Inc.
Employees’
Retirement and Savings Plan
4100
Clinton Dr.
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
(a
Delaware Corporation)
75-2677995
140l
McKinney, Suite 2400
Houston,
Texas 77010
Telephone
Number - (713) 759-2600
Required
Information
The
following financial statements prepared in accordance with the financial
reporting requirements of the Employee Retirement Income Security Act of 1974,
signature and exhibits are filed for the Brown & Root, Inc. Employees’
Retirement and Savings Plan:
Financial
Statements and Supplemental Schedule
Report
of
Independent Registered Public Accounting Firm
Statements
of Net Assets Available for Plan Benefits - December 31, 2004 and
2003
Statements
of Changes in Net Assets Available for Plan Benefits -
Years
ended December 31, 2004 and 2003
Notes
to
Financial Statements - December 31, 2004 and 2003
Supplemental
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) -
December 31, 2004
Signature
Exhibit
Consent
of KPMG LLP (Exhibit 23.1)
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Table
of Contents
|
Page
|
|
|
Report
of Independent Registered Public Accounting Firm
|
1
|
|
Statements
of Net Assets Available for Plan Benefits - December 31, 2004 and
2003
|
2
|
|
Statements
of Changes in Net Assets Available for Plan Benefits
|
|
|
Years
ended December 31, 2004 and 2003
|
3
|
|
Notes
to Financial Statements - December 31, 2004 and 2003
|
4-14
|
|
Supplemental
Schedule
|
|
|
Schedule
H, Line 4i - Schedule of Assets (Held at End of Year) - December
31,
2004
|
15
|
Schedules
not listed above are omitted because of the absence of conditions under which
they are required under the Department of Labor’s Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act
of
1974.
Report
of Independent Registered Public Accounting Firm
To
the
Halliburton Company
Benefits
Committee:
We
have
audited the accompanying statements of net assets available for plan benefits
of
the Brown & Root, Inc. Employees’ Retirement and Savings Plan (the Plan) as
of December 31, 2004 and 2003, and the related statements of changes
in net
assets available for plan benefits for the years 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
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (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, 2004 and 2003 and the changes in its net assets available
for
plan benefits for the years then ended, in conformity with U.S. generally
accepted accounting principles.
Our
audits were performed 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) as of December 31,
2004 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 is the responsibility of the Plan’s management. 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.
/s/
KPMG
LLP
Houston,
Texas
June
29,
2005
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Statements
of Net Assets Available for Plan Benefits
December
31, 2004 and 2003
|
2004
|
2003
|
||||||
|
Assets:
|
|||||||
|
Investments,
at fair value -
|
|||||||
|
Cash
and cash equivalents
|
$
|
558,809
|
$
|
733,386
|
|||
|
Plan
interest in Master Trust
|
550,263,395
|
570,374,100
|
|||||
|
Total
investments
|
550,822,204
|
571,107,486
|
|||||
|
Receivables
-
|
|||||||
|
Company
contributions, net of forfeitures
|
770
|
1,501
|
|||||
|
Plan
participants’ contributions
|
77,478
|
87,864
|
|||||
|
Total
receivables
|
78,248
|
89,365
|
|||||
|
Net
assets available for plan benefits
|
$
|
550,900,452
|
$
|
571,196,851
|
|||
See
accompanying notes to financial statements.
2
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Statements
of Changes in Net Assets Available for Plan Benefits
Years
ended December 31, 2004 and 2003
|
2004
|
2003
|
||||||
|
Additions:
|
|||||||
|
Contributions:
|
|||||||
|
Company,
net of forfeitures
|
$
|
651,619
|
$
|
378,232
|
|||
|
Plan
participants
|
4,233,197
|
5,370,803
|
|||||
|
Rollovers
|
13,536
|
35,535
|
|||||
|
Investment
income, net
|
|||||||
|
Plan
interest in Master Trust investment gain
|
43,830,114
|
71,389,627
|
|||||
|
Total
additions
|
48,728,466
|
77,174,197
|
|||||
|
Deductions:
|
|||||||
|
Benefits
paid to participants
|
(69,024,865
|
)
|
(60,868,298
|
)
|
|||
|
Total
deductions
|
(69,024,865
|
)
|
(60,868,298
|
)
|
|||
|
Net
increase (decrease) to net assets available for plan
|
|||||||
|
benefits
|
(20,296,399
|
)
|
16,305,899
|
||||
|
Net
assets available for plan benefits, beginning of year
|
571,196,851
|
554,890,952
|
|||||
|
Net
assets available for plan benefits, end of year
|
$
|
550,900,452
|
$
|
571,196,851
|
|||
See
accompanying notes to financial statements.
3
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
(1) Description
of the Plan
The
Brown
& Root, Inc. Employees’ Retirement and Savings Plan (the Plan) is a defined
contribution plan for certain qualified employees of Halliburton Company and
certain subsidiaries (Halliburton). The Plan is sponsored by Kellogg Brown
and
Root, Inc. (KBR or the Company). The Plan was established in accordance with
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended
(IRC) and is subject to the provisions of the Employee Retirement Income
Security Act of 1974, as amended (ERISA). 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
first anniversary date of employment following completion of 1,000 hours of
credited 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 50% and 25% for 2004 and 2003, respectively, of the
participant’s eligible earnings up to $205,000 and $200,000 for 2004 and 2003,
respectively. The total amount of participant tax deferred savings contribution
is limited to $13,000 and $12,000 for 2004 and 2003, respectively. Any
contributions in excess of these limits are automatically made to the
participant’s after-tax account. Additional limitations are in place for highly
compensated employees under the provisions of the Plan.
Effective
January 1, 2004, the Company matches 50% of the tax deferred savings
contributions (other than catch-up contributions) that are not in excess of
4%
of eligible earnings. Prior to January 1, 2004, the Company matched
25% of
the tax deferred savings contribution up to a maximum Company match of $250.
The
Company may make annual discretionary retirement allocation contributions,
based
on Company performance to participants, as defined by the Plan document.
Participants are not required to have contributed to the Plan to be eligible
for
such a contribution. The participant’s share of any discretionary retirement
allocation contribution is based on a percentage of their eligible pay for
the
Plan year to be determined in the subsequent year after company performance
results are recorded. For the plan year 2004 and 2003, the Company did not
make
a discretionary retirement allocation contribution.
Participants
who are age 50 or older before the close of the Plan year may elect to make
a
catch-up contribution, subject to certain limitations under the IRC ($3,000
and
$2,000 per participant in 2004 and 2003, respectively).
Employees
are permitted to rollover pre-tax and after-tax amounts with earnings held
in
other qualified plans or individual retirement accounts (IRAs) into the Plan,
as
specified in the Plan document.
4
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
(c)
Plan Accounts
The
Company has entered into a master trust agreement known as the Halliburton
Company Employee Benefit Master Trust (the Master Trust). The Master Trust
was
established for the collective investment of certain defined contribution and
defined benefit plans sponsored by Halliburton or its affiliates. The Plan
maintains a clearing account, which invests in a short term investment fund
to
facilitate the payment of benefits and receipt of contributions to the
Plan.
(d)
Investment Elections and
Transfers
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 Master Trust
(see
note 3). Participants may direct up to a maximum of 15 percent of their
contributions to the Halliburton Stock Fund (HSF).
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. The Plan imposes a fifteen calendar-day waiting period on
transfers involving the Non-U.S. Equity Fund.
(e)
Administration
The
Halliburton Company Benefits Committee (the Committee) controls and manages
the
operation and administration of the Plan. State Street Bank and Trust Company
(State Street) is the Plan’s trustee, and Hewitt Associates LLC is the
recordkeeper.
(f)
Vesting
Participants’
contributions to their accounts and the earnings thereon are fully vested when
made or earned. Participants are fully vested in Company matching contributions
made subsequent to January 1, 2004 after 3 years of service. Prior to
January 1, 2004, participants were fully vested in Company matching
contributions and the earnings thereon. Participants have a vested interest
in
the Company discretionary retirement allocation contribution account based
on
years of service as follows:
|
Years
of service
|
Vested
percentage
|
|||
|
Less
than 3
|
0
|
%
|
||
|
At
least 3 but less than 4
|
20
|
%
|
||
|
At
least 4 but less than 5
|
50
|
%
|
||
|
At
least 5 but less than 6
|
60
|
%
|
||
|
At
least 6 but less than 7
|
80
|
%
|
||
|
7
or more
|
100
|
%
|
||
5
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
The
nonvested portion of a participant’s account is forfeited at the end of the
fifth year following termination unless the participant is rehired within
five
years of termination. Prior to January 1, 2004, forfeitures were
reallocated to the accounts of eligible participants. Effective January 1,
2004, forfeitures are used to reduce Company contributions. Forfeitures
available as of December 31, 2004 and 2003 are $203,041 and $276,306
respectively. Subsequent to December 31, 2003, forfeitures in the
amount of
$274,820 were reallocated to eligible participants and forfeitures generated
in
2004 in the amount of $39,369 were used to offset Company
contributions.
(g)
Distributions
Each
participant, or their designated beneficiary, may elect to receive a
distribution upon retirement, termination, disability, or death. 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.
While
employed, a participant may make in-service withdrawals from their after-tax
accounts as defined in the Plan document. In-service withdrawals are also
permitted upon attainment of age 59-1/2 or proven financial hardship, subject
to
limitations under the Plan.
(h) Investment Earnings
Investment
earnings on participants’ accounts are allocated proportionately based on their
relative account balance in each investment fund.
(i) Halliburton Stock Fund
Effective
July 1, 2002, the HSF was converted into an Employee Stock Ownership Plan
(ESOP). The ESOP is designed to comply with Section 4975(e)(7) of the IRC and
Section 407(d)(6) of ERISA.
The
ESOP
has a dividend pass-through election whereby any cash dividends attributable
to
Halliburton Company Common Stock held by the ESOP are to be paid by Halliburton
directly to the Trustee. Any cash dividends received by the Trustee which are
attributable to financed stock are to be used by the Trustee to make exempt
loan
payments until the exempt loan has been repaid in full. During 2004 and 2003,
there were no loans related to stock purchases.
Each
participant is entitled to exercise voting rights attributable to the
Halliburton Company Common Stock allocated to his or her account and is notified
by the Trustee prior to the time that such rights are to be exercised. The
Trustee is not permitted to vote any allocated shares for which instructions
have been given by a participant. The Trustee is required, however, to vote
at
their discretion all shares which have not been voted by Plan participants
and
beneficiaries.
6
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
(j) Plan
Termination
The
Board
of Directors of Halliburton 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.
(b)
Valuation
of Investments
The
Plan
invests in cash and cash equivalents, which are held by the Trustee outside
of
the Master Trust. Cash and cash equivalents are a short term investment fund,
which is valued at cost, which approximates fair value.
Cash
equivalents, derivative financial instruments, stock securities, mutual funds,
bonds and notes, and all other debt securities held within the Master Trust
are
presented at their quoted market value. Common/collective trust funds are stated
at the fair market value of the underlying securities. The Master Trust
considers all highly liquid investments with an original maturity of three
months or less to be cash equivalents.
Real
estate related investments of the Master Trust consist of real estate mortgages
and investments in real estate investment trusts (REITs). Real estate mortgages
are stated at cost plus accrued interest, less payments received. Investments
in
REITs are stated at fair value.
The
Master Trust’s investment in pooled equity managers (the Pooled Fund) represents
the unitized values of certain equity managers’ accounts on a combined basis.
Each manager’s account is valued daily. A unit price is calculated for each
manager by dividing the total value of the manager’s account by the total number
of units in existence for that manager. Net income and realized/unrealized
investment gains and losses by each manager are passed through to the investment
options through the managers’ unit price.
7
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
The
Fixed
Income Fund within the Master Trust holds 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. The
weighted average crediting interest rates for these contracts is 4.89% and
4.90%
as of December 31, 2004 and 2003, respectively, and the weighted average return
was 4.81% and 5.02% for the years ended December 31, 2004 and 2003,
respectively. In addition, the Fixed Income Fund holds a common/collective
trust
fund, which also invests in investment contracts and asset-backed investment
contracts. The return for the common/collective trust fund is 4.15% and 4.54%
for the years ended December 31, 2004 and 2003, respectively.
The
Plan’s proportionate interest in the investments of the Master Trust is shown in
the statements of net assets available for plan benefits as Plan interest in
the
Master Trust (see note 3).
(c)
Securities Transactions and Investment Income
The
Plan
records interest on cash and cash equivalents held outside of the Master Trust
as earned. Purchases and sales of securities held outside the Master Trust
are
recorded on the trade-date basis.
Purchases
and sales of securities in the Master Trust are recorded on the trade-date
basis. Realized gains (losses) on investments sold and unrealized appreciation
(depreciation) for investments of the Master Trust are combined and presented
as
net appreciation for the Master Trust.
In
addition, investment income of the Master Trust includes interest, dividends,
and other income. Interest income of the Master Trust investments is recorded
as
earned. Dividends on the Master Trust investments are recorded on the
ex-dividend date.
(d)
Administrative Expenses
The
Master Trust pays substantially all plan expenses on behalf of the Plan.
Generally, trustee fees, recordkeeping fees, audit fees, and investment
management fees are paid from Master Trust assets and are charged to the plans
participating in the Master Trust. Expenses related to the direct management
of
the Master Trust are shared on an equitable basis by the participating plans.
Expenses specifically related to an individual plan are charged to the assets
of
the Plan which incurred the charges. These expenses are shown as a component
of
Plan interest in Master Trust investment gain.
(e) Payment of Benefits
Benefits
are recorded when paid.
8
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
(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.
(g) Risk and
Uncertainties
The
investments of the Master Trust are exposed to various risks, such as interest
rate, credit and overall market volatility. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes
in
the value of investment securities will occur in the near term.
(3)
Investment
Assets Held in the Master Trust
Certain
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 eleven funds in which the plans may participate. The combination
of the plans’ assets is only for investment purposes and the plans continue to
be operated under their current plan documents, as amended.
The
following is a summary of net assets as of December 31, 2004 and 2003 and total
investment income for the years ended December 31, 2004 and 2003 of the Master
Trust and net appreciation by investment type for the years ended December
31,
2004 and 2003 (dollar amounts in thousands). The Plan’s interest in the Master
Trust’s net assets for the applicable periods (dollar amounts in thousands) are
also presented.
9
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
|
Net
Assets
|
2004
|
2003
|
|||||
|
(in
000’s)
|
(in
000’s)
|
||||||
|
Assets:
|
|||||||
|
Investments
-
|
|||||||
|
Cash
and equivalents
|
$
|
458,525
|
$
|
429,930
|
|||
|
Collateral
received for securities loaned
|
852,554
|
613,397
|
|||||
|
Asset-backed
investment contracts
|
(69,632
|
)
|
(77,391
|
)
|
|||
|
U.S.
bonds and notes
|
1,117,725
|
1,443,969
|
|||||
|
Non-U.S.
bonds and notes
|
134,345
|
116,032
|
|||||
|
Real
estate related investments
|
-
|
29
|
|||||
|
Halliburton
stock
|
269,080
|
194,187
|
|||||
|
Other
U.S. stock
|
1,068,028
|
1,003,792
|
|||||
|
Non-U.S.
stock
|
421,315
|
373,923
|
|||||
|
Common/collective
trust funds
|
615,634
|
550,283
|
|||||
|
Mutual
funds
|
218,990
|
178,900
|
|||||
|
Securities
loaned -
|
|||||||
|
U.S.
bonds and notes
|
713,032
|
521,439
|
|||||
|
Other
U.S. stock
|
102,130
|
55,604
|
|||||
|
Non-U.S.
stock
|
20,849
|
23,364
|
|||||
|
Total
investments
|
5,922,575
|
5,427,458
|
|||||
|
Receivables
-
|
|||||||
|
Receivables
for investment sold
|
73,853
|
60,758
|
|||||
|
Dividends
|
1,998
|
1,664
|
|||||
|
Interest
|
17,653
|
16,105
|
|||||
|
Other
|
512
|
276
|
|||||
|
Total
receivables
|
94,016
|
78,803
|
|||||
|
Total
assets
|
6,016,591
|
5,506,261
|
|||||
|
Liabilities:
|
|||||||
|
Payables
for investments purchased
|
271,752
|
300,949
|
|||||
|
Obligation
for collateral received for securities loaned
|
852,554
|
613,397
|
|||||
|
Other
payables
|
4,284
|
3,631
|
|||||
|
Total
liabilities
|
1,128,590
|
917,977
|
|||||
|
Net
Assets
|
$
|
4,888,001
|
$
|
4,588,284
|
|||
|
Plan’s
interest in Master Trust net assets
|
$
|
550,263
|
$
|
570,374
|
|||
|
Percentage
interest
|
11.26
|
%
|
12.43
|
%
|
|||
10
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
|
Years
ended
|
|||||||
|
December
31,
|
|||||||
|
Total
Investment Income
|
2004
|
2003
|
|||||
|
(in
000’s)
|
(in
000’s)
|
||||||
|
Net
investment appreciation
|
$
|
340,321
|
$
|
528,287
|
|||
|
Investment
income
|
145,213
|
137,793
|
|||||
|
Expenses
|
(16,425
|
)
|
(14,878
|
)
|
|||
|
Total
investment income
|
$
|
469,109
|
$
|
651,202
|
|||
|
Years
ended
|
|||||||
|
December
31,
|
|||||||
|
Net
Appreciation (Depreciation) by Investment Type
|
2004
|
2003
|
|||||
|
(in
000’s)
|
(in
000’s)
|
||||||
|
Cash
and equivalents
|
$
|
(3
|
)
|
$
|
912
|
||
|
U.S.
bonds and notes
|
3,162
|
13,755
|
|||||
|
Non-U.S.
bonds and notes
|
969
|
6,509
|
|||||
|
Real
estate related investments
|
-
|
(66
|
)
|
||||
|
Halliburton
stock
|
93,272
|
57,833
|
|||||
|
U.S.
stock
|
109,653
|
224,991
|
|||||
|
Non-U.S.
stock
|
55,207
|
87,133
|
|||||
|
Common/collective
trust funds
|
51,044
|
95,642
|
|||||
|
Mutual
funds
|
8,871
|
23,887
|
|||||
|
Other
investments
|
18,146
|
17,691
|
|||||
|
Total
appreciation
|
$
|
340,321
|
$
|
528,287
|
|||
11
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
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 net appreciation of the Master
Trust.
Certain
investment managers of the Master Trust participate in a securities lending
program administered by State Street. The transfer of assets under State
Street’s securities lending program are secured borrowings with pledge of
collateral. The fair market value of the securities loaned as of
December 31, 2004 and 2003 was $836,010,384 and $600,407,471, respectively.
The cash and non-cash collateral received for securities loaned as of December
31, 2004 and 2003 was $852,554,443 and $613,397,374, respectively. As of
December 31, 2004 and 2003, none of the collateral received for securities
loaned has been sold or repledged.
(4)
Sponsor
Reorganization
The
Plan’s sponsor, Kellogg Brown & Root, Inc. was a defendant in a large number
of asbestos and silica related lawsuits and settled these claims through a
Prepackaged Plan of Reorganization under Chapter 11 of the United States
Bankruptcy Code (the Plan of Reorganization) originally filed in
December 2003. In January 2005, funding for these settlements was
completed. The Plan’s sponsor believes that the impact of the Plan of
Reorganization and subsequent settlements will not have an impact on the Plan
or
the Plan’s sponsor’s ability to continue as a going concern. The Plan’s sponsor
has the ability and intent to fund any contributions due under the Plan and
any
costs of administration of the Plan.
(5)
Investments
The
following table represents the fair value of individual investment funds held
under the Master Trust which exceed 5% of the Plan’s net assets as of
December 31, 2004 and 2003:
|
2004
|
2003
|
||||||
|
Participation
in Master Trust, at fair value:
|
|||||||
|
Fixed
Income Fund
|
$
|
268,000,009
|
$
|
287,688,374
|
|||
|
General
Investment Fund
|
203,898,984
|
209,822,530
|
|||||
|
Equity
Investment Fund
|
28,181,759
|
27,233,762
|
* | ||||
|
*Amount
shown for comparative purposes.
|
|||||||
12
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
(6)
Tax
Status
The
Internal Revenue Service (IRS) informed the Company by a letter dated October
3,
2001 that the Plan and related trust were designed in accordance with the
applicable provisions of the IRC. The Company has requested but has not yet
received a new determination letter. The plan administrator believes that the
Plan is currently designed and being operated in compliance with the applicable
requirements of the IRC. Therefore, the plan administrator believes that the
Plan was qualified and the related trust was tax-exempt as of December 31,
2004
and 2003.
(7)
Reconciliation
to Form 5500
The
following is a reconciliation of net assets available for plan benefits per
the
financial statements to the Form 5500:
|
2004
|
||||
|
Net
assets available for plan benefits per the financial
statements
|
$
|
550,900,452
|
||
|
Amounts
allocated to withdrawing participants at December 31, 2004
|
(115,181
|
)
|
||
|
Net
assets available for plan benefits per the Form 5500
|
$
|
550,785,271
|
||
The
following is a reconciliation of benefits paid to participants per the financial
statements to the Form 5500:
|
Year
ended
|
||||
|
December
31, 2004
|
||||
|
Benefits
paid to participants per the financial statements
|
$
|
69,024,865
|
||
|
Add
amounts allocated to withdrawing participants at December 31,
2004
|
115,181
|
|||
|
Benefits
paid to participants per the Form 5500
|
$
|
69,140,046
|
||
Amounts
allocated to withdrawing participants are recorded on the Form 5500 for
withdrawals that have been processed and approved for payment prior to December
31, but not yet paid as of that date. There were no amounts payable to
withdrawing participants at December 31, 2003.
13
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
Notes
to
Financial Statements
December
31, 2004 and 2003
(8)
Related-Party
Transactions
The
Plan,
through its participation in the Master Trust, may invest in investment
securities issued and or managed by the Trustee and asset managers.
Additionally, the Master Trust invests in Halliburton Company’s common stock
through the HSF. These entities are considered parties-in-interest to the Plan.
These transactions are covered by an exemption from the prohibited transaction
provisions of ERISA and the IRC.
(9)
Subsequent
Events
Effective
January 1, 2005, the Master Trust added a new investment for Plan participants
called the Mid Cap Equity Index Fund.
14
BROWN
& ROOT, INC.
EMPLOYEES’
RETIREMENT AND SAVINGS PLAN
EIN:
76-0284788
PLAN
#:
001
Schedule
H, Line 4i - Schedule of Assets (Held at End of Year)
December
31, 2004
|
(a)
|
(b)
|
(c)
|
(d)
|
|
|
Identity
of issue, borrower,
|
Current
|
|||
|
lessor,
or similar party
|
Description
of investment
|
value
|
||
|
*
|
State
Street Bank and
|
SSBTC
Short Term Investment Fund
|
$
|
558,809
|
|
Trust
Company
|
||||
|
*
|
Halliburton
Company
|
Investment
in net assets of Halliburton Company
|
||
|
Employee
Benefit Master
|
Employee
Benefit Master Trust
|
550,263,395
|
||
|
Trust
|
||||
|
$
|
550,822,204
|
* Column
(a) indicates each identified person/entity known to be a party in
interest.
See
accompanying report of independent registered public accounting
firm.
15
Signature
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Halliburton
Company Benefits Committee of the Brown & Root, Inc. Employees’ Retirement
and Savings Plan has duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
Date: June
29,
2005
By: /s/ Michele Mastrean
Michele
Mastrean, Chairperson of the
Halliburton
Company Benefits Committee
16
Exhibit
23.1
Consent
of Independent Registered Public Accounting Firm
To
the
Halliburton Company
Benefits
Committee:
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 29,
2005
with respect to the statements of net assets available for plan benefits
of
Brown & Root, Inc. Employees’ Retirement and Savings Plan as of December 31,
2004 and 2003, and the related statements of changes in net assets available
for
plan benefits for the years then ended, and the related supplemental schedule
H,
line 4i - schedule of assets (held at end of year) as of December 31, 2004,
which report appears in the December 31, 2004 Annual Report on Form 11-K
of the
Brown & Root, Inc. Employees’ Retirement and Savings Plan.
/s/
KPMG
LLP
Houston,
Texas
June
29,
2005