DALLAS -- The crosstown merger of Halliburton Co. and Dresser Industries Inc. will result in an oil service industry giant, but probably not in the creation of a mega-401(k) retirement plan.
That's because each company is in the process of making over its retirement plans, and it's too soon to predict whether they will want to repeat the process after the merger.
Halliburton has about $3.7 billion in its U.S. defined contribution plan and around $58 million in its frozen defined benefit plan. Dresser has about $750 million in defined contribution assets and $250 million in its frozen U.S. defined benefit pension plan.
Nathaniel H. Duffield, director of trust investments at Halliburton, said the merger hasn't been discussed internally.
Acquirer Halliburton is on the verge of consolidating the Halliburton Profit Sharing and Savings Plan with two plans representing employees of previous acquisitions, the Brown & Root Inc. Employees' Retirement and Savings Plan and the Halliburton Prior Accounts Retirement Plan.
Halliburton is in the midst of moving record keeping to Hewitt Associates, The Woodlands, Texas; it had been handled in-house.
As part of the makeover, the company is looking at streamlining features of the three plans and changing the employer contribution rate.
Halliburton now matches 50 cents for every $1 workers put in, up to a maximum of 4% of pay for the Halliburton profit-sharing plan. Brown & Root matches 25 cents for every $1, up to a maximum of $250 a year. The prior accounts plan is frozen, and there are no more employer or employee contributions to that plan.
"We're trying to get to the point where it matches the industry in which we compete, and have comparable benefits," Mr. Duffield said, declining to elaborate further.
Moreover, the company is quite satisfied with its retirement plan investment manager lineup (it uses money managers to run separate portfolios, instead of using brand-name mutual funds) and has no plans of making any changes there, Mr. Duffield said.
HALLIBURTON MANAGERS
Halliburton uses seven active domestic stock managers, four international stock managers, five domestic bond managers and two global bond managers. It also uses many of its fixed-income managers in its stable value fund, he said.
The active domestic stock managers in the company's profit-sharing plan are: Ark Asset Management Co. Inc.; Emerging Growth Management Co.; GAMCO Investors Inc.; Husic Capital Management; Liberty Investment Management Inc.; Fayez Sarofim & Co.; and DePrince, Race & Zollo Inc. It also has a small indexed portfolio with State Street Research & Management Co.
As foreign stock managers, Halliburton uses: Brinson Partners Inc.; Northern Cross Investments Ltd.; Schroder Capital Management International Inc.; and Templeton Investment Management Pte. Ltd.
Fixed-income managers are Pacific Investment Management Co.; Neuberger & Berman; Loomis, Sayles & Co.; Sovran Capital Management Corp.; and Putnam Advisory Co. Inc. It uses State Street Global Advisors for an indexed portfolio. The global bond managers are Putnam and State Street Research.
The Halliburton profit-sharing plan's investment options are: an equity fund with both domestic and foreign stocks; a diversified multiasset fund; a stable value fund; and company stock.
The company has not, however, ruled out giving employees additional investment choices through the same managers in the future.
"It's really not a good thing to throw too many changes at participants all at once," Mr. Duffield said.
The company also has two small defined benefit plans that were frozen last year. All but a few managers run money for both the defined benefit and defined contribution plans.
DRESSER'S PLANS
Meanwhile, Dresser Industries froze its defined benefit plan while sweetening its 401(k) plans in 1995. The company also is consolidating the record keeping and administration for its three defined contribution plans, with The Vanguard Group next month, while keeping the three plans separate.
The company has a plan for Dresser employees; another for a joint venture, called Dresser-Rand Co.; and a third representing employees of MW Kellogg, acquired several years ago.
Vanguard replaces Merrill Lynch Group Employee Services for the Dresser parent's plan, and Putnam for the Dresser-Rand plan.
Vanguard already handled the Kellogg plan.
The company also is adding a number of brand-name mutual funds from Vanguard; the half-dozen brand-name Merrill Lynch funds it offers employees in the Dresser 401(k) plan will be converted into Vanguard funds.
The Dresser-Rand plan is primarily with the Putnam mutual fund family, and the Kellogg plan is already with Vanguard.
Karl Mayer, director of benefits at Dresser, said the merger with Halliburton will not affect plans to increase investment options and consolidate record keeping.
Dresser's current options are a Standard & Poor's 500 stock index fund, a basic value equity fund, and a bond fund -- all through Merrill Lynch Asset Management L.P. PRIMCO Capital Management Inc. manages the stable value fund, which also will be converted into an equivalent Vanguard fund, Mr. Mayer said.
Dresser's plan also offers a balanced fund through Phoenix Duff & Phelps' Family of Funds. Dresser also is keeping Davis New York Venture Fund, a domestic large-cap fund.
The company intends to add three domestic small-cap funds, one offered by Rosenberg Institutional Equity Management and two from Vanguard.
From Vanguard, it will add two international stock funds, a money-market fund and a large-cap fund. Company stock also will be an option now.
one merger doubtful
Outside experts doubt the Halliburton and Dresser defined contribution plans will be merged.
"Just look at those two systems. Is the logic for merging those two plans compelling? I don't think so," said Jim Klein, a principal in the New York office of Towers Perrin. "I'd keep them separate."
Mr. Klein does anticipate Halliburton will merge the investment management of both companies' frozen defined benefit pension plans.
But a senior Dresser executive, who did not wish to be identified, said that while Halliburton could combine the investment management of the two companies' pension funds, it might be forced to keep Dresser's plan structure because of the varying negotiated contracts covering union employees.
Dresser has a single plan for salaried employees, and about 40 to 50 smaller plans covering unionized workers, all invested through one master trust, according to the Dresser executive.
