SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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, 2002
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
10200 Bellaire Blvd.
Building 91, Room 2NE18B
Houston, TX 77072
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 - Area Code (713) 759-2600
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of the Halliburton Savings
Plan (the "Plan") on Form 11-K for the period ended December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, Weldon Mire, Vice President Human Resources, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13 (a) or
15 (d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the net assets available for plan benefits as
of December 31, 2002 and the changes in net assets available for plan
benefits for the year ended December 31, 2002 for the Plan.
/s/ Weldon Mire
----------------------------------------
Name: Weldon Mire
Title: Vice President Human Resources
Energy Services Group
Date: June 27, 2003
In connection with the Annual Report of the Halliburton Savings
Plan (the "Plan") on Form 11-K for the period ended December 31, 2002 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, R. Charles Muchmore, Jr., Vice President and Controller, certify, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(3) The Report fully complies with the requirements of Section 13 (a) or
15 (d) of the Securities Exchange Act of 1934; and
(4) The information contained in the Report fairly presents, in all
material respects, the net assets available for plan benefits as
of December 31, 2002 and the changes in net assets available for plan
benefits for the year ended December 31, 2002 for the Plan.
/s/ R. Charles Muchmore, Jr.
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Name: R. Charles Muchmore, Jr.
Title: Vice President and Controller
Energy Services Group
Date: June 27, 2003
Required Information
The following financial statements prepared in accordance with the financial
reporting requirements of ERISA and exhibits are filed for the Halliburton
Savings Plan:
Financial Statements and Schedules
Report of Independent Public Accountants - KPMG LLP
Statements of Net Assets Available for Plan Benefits as of December 31,
2002 and 2001
Statement of Changes in Net Assets Available for Plan Benefits for the
Year ended December 31, 2002
Notes to Financial Statements
Supplemental Schedule H, Line 4i - Schedule of Assets (Held at End of
Year) as of December 31, 2002
Exhibit
Consent of Independent Public Accountants - KPMG LLP (Exhibit 23)
HALLIBURTON SAVINGS PLAN
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Plan Benefits
Year ended December 31, 2002 3
Notes to Financial Statements 4 - 10
Supplemental Schedule
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002 11
Exhibit
Indpendent Auditors' Consent 12
Independent Auditors' Report
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, 2002 and
2001 and the related statement of changes in net assets available for plan
benefits for the year ended December 31, 2002. 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
audits.
We conducted our audits 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 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 benefits of the Plan as of
December 31, 2002 and 2001 and the changes in its net assets available for plan
benefits for the year ended December 31, 2002, in conformity with accounting
principles generally accepted in the United States of America.
Our audits were 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 (ERISA). 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 19, 2003
HALLIBURTON SAVINGS PLAN
Statements of Net Assets Available for Plan Benefits
December 31, 2002 and 2001
2002 2001
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Assets:
Company contributions receivable $ 2,259 $ --
Plan participants' contributions receivable 5,272 2,889
Participation in Master Trust, at fair value 2,233,091 2,125,059
Participant loans 48,170 63,652
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Net assets available for plan benefits $ 2,288,792 $ 2,191,600
=======================================================================================================================
See accompanying notes to financial statements.
2
HALLIBURTON SAVINGS PLAN
Statement of Changes in Net Assets Available for Plan Benefits
Year Ended December 31, 2002
Additions:
Contributions:
Company $ 62,379
Plan participants 175,100
Transfer from other plans 27,007
Investment activity:
Allocation of Master Trust net investment activity (68,639)
Interest on loans to participants 4,244
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Total additions 200,091
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Deductions:
Benefits paid to participants (32,284)
Conversions (4,415)
Transfers 3,943
Administrative expenses (70,143)
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Total deductions (102,899)
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Net increase in net assets available for plan benefits 97,192
Net assets available for plan benefits, beginning of year 2,191,600
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Net assets available for plan benefits, end of year $ 2,288,792
========================================================================================================================
See accompanying notes to financial statements.
3
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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 (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 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 25%
of the participant's eligible earnings of up to $200,000; the
total amount of participant tax deferred savings contributions is
limited to $11,000 for 2002 and $10,500 for 2001. Any
contributions in excess of the $11,000 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). 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 Halliburton Stock Fund (HSF).
(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 not have
more than one loan outstanding at any time. Prior to January 1,
2002, a participant could have had 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. If a participant fails to comply
with the repayment terms of the loan, the Benefits Committee or
its designee may deem such defaulted loans as a distribution when
the loans are considered uncollectible from the participant.
4
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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, 2002, there were no
forfeitures.
(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, 2002 and 2001, 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.
(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 eleven funds in
which the plans may participate. 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.
5
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
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. The 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.
(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.
6
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(3) Master Trust
The following are the statements of net assets as of December 31, 2002
and 2001 and the statement of changes in net assets of the Master Trust
for the year ended December 31, 2002 (dollar amounts in thousands):
Statements of Net Assets 2002 2001
-------------------------------------------------------------------------------------------------------------------------
Cash and equivalents $ 331,928 $ 298,416
Receivables 41,394 28,249
Asset-backed investment contracts (63,425) (29,495)
U.S. corporate and government bonds and notes 1,812,184 1,890,763
Non-U.S. bonds and notes 164,335 293,638
Non-U.S. stock 280,581 377,376
Halliburton Company stock 151,432 100,757
Insurance investment contracts 12,275 23,698
Pooled equity index funds 237,786 319,214
Other U.S. stock 770,807 1,036,399
Pooled bond funds 165,293 78,451
Pooled stable value funds 163,779 10,339
Real estate related investments 111 4,748
Investments in mutual funds 134,361 140,672
Payables (230,182) (315,725)
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Net assets of the Master Trust $ 3,972,659 $ 4,257,500
=========================================================================================================================
Plan dollar value interest $ 2,233 $ 2,125
Plan percent interest 0.1% 0.1%
Year ended
December 31,
Statement of Changes in Net Assets 2002
-------------------------------------------------------------------------------------------------------------------------
Participating plans' net assets, beginning of year $ 4,257,500
Net investment appreciation (depreciation) (290,828)
Net investment income (loss) 130,347
Receipts from participating plans 1,956,101
Withdrawals by participating plans (2,080,461)
-------------------------------------------------------------------------------------------------------------------------
Participating plans' net assets, end of year $ 3,972,659
=========================================================================================================================
7
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
Year ended
Net Appreciation (Depreciation) by Type December 31,
2002
-------------------------------------------------------------------------------------------------------------------------
Cash and equivalents $ (287)
U.S. corporate and government bonds and notes 7,857
Non-U.S. bonds and notes 3,493
Non-U.S. stock (38,523)
Halliburton Company stock 52,008
Real estate related investments 285
Pooled equity index funds (67,916)
Pooled stable value fund 4,533
Pooled Bond Fund 9,956
Other U.S. stock (238,468)
Investments in mutual funds (16,891)
Other investments (6,875)
-------------------------------------------------------------------------------------------------------------------------
Total depreciation $ (290,828)
=========================================================================================================================
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.
(4) Investments
Individual investments in excess of 5% of net assets for plan benefits
are as follows:
2002 2001
-----------------------------------------------------------------------------------------------------------------------
Participation in Master Trust, at fair value:
S&P 500 Index Fund $ 203,197 $ 235,446
Fixed Investment Fund 350,142 327,640
Balanced Fund 239,525 232,531
Halliburton Company Stock Fund 432,427 300,037
Large Cap Value Equity 707,031 802,694
Large Cap Value Growth -- 63,459
-------------------------------------------------------------------------------------------------------------------------
8
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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. Although the Plan has been amended since receiving the
determination letter, the Plan administrator and the Plan's tax counsel
believe that the Plan is designed and is currently being operated in
compliance with applicable requirements of the IRC.
(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 Stock Fund;
therefore, State Street, the Master Trust, the Company, and the
participants of the Plan qualify as parties in interest.
(8) Plan Amendments
In 2002, the Plan was amended as follows:
a) Effective January 1, 2002, the Plan was amended and restated to
comply with rules and regulations contained in the Economic Growth
and Tax Relief Reconciliation Act of 2001 (EGTRRA), which
permitted accepting employee catch-up contributions in accordance
with IRS limits.
b) Effective July 1, 2002, the Halliburton Stock Fund was converted
into an Employee Stock Ownership Plan (ESOP). The ESOP is designed
to comply with Section 4975(e)(7) of the Internal Revenue Code and
Section 407(d)(6) of the Employee Retirement Income Security Act
of 1974 (ERISA).
The ESOP has a dividend pass-through election whereby any cash
dividends attributable to Halliburton Stock held by the ESOP are
to be paid by the Company 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.
9
HALLIBURTON SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
The ESOP has a put option allowing the former participant or
designated beneficiary, when the shares of Halliburton Stock are
distributed to him, the option to sell the shares of Halliburton
Stock to the Company. The put option extends for a period of sixty
days following the date the shares of Halliburton Stock are
distributed to the former participant or designated beneficiary.
10
HALLIBURTON SAVINGS PLAN
EIN: 75-2677995
Plan #: 145
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
(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 $ 2,233,091
* Participant loans Loans issued at interest rates between
5.25% and 5.75% 48,170
-------------------------------------------------------------------------------------------------------------------
* 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, 2002, as required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure.
See accompanying independent auditors' report.
11
Exhibit 23
Independent Auditors' Consent
The 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 19, 2003
relating to the statement of net assets available for plan benefits of
Halliburton Savings Plan as of December 31, 2002 and 2001, and the related
statement of changes in net assets available for plan benefits for the year
ended December 31, 2002, and the related Schedule H, Line 4i - Schedule of
Assets (Held at End of Year) as of December 31, 2002, which report appears in
the December 31, 2002 Annual Report on Form 11-K of Halliburton Savings Plan.
KPMG LLP
Houston, Texas
June 30, 2003
12