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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: gao seng who wrote (259364)	5/29/2002 2:24:44 PM
From: Mr. Whist	Read Replies (1) \| Respond to of 769670

Investigation of Cheney-Halliburton by SEC WSJ headline: Halliburton Reveals SEC Probe Of Certain Accounting Practices By MELANIE TROTTMAN Staff Reporter of THE WALL STREET JOURNAL DALLAS -- Halliburton Co. said the Securities and Exchange Commission has launched a preliminary investigation into its accounting treatment of cost overruns on construction jobs. The energy-services and construction concern said it believes the investigation stems from a New York Times article last Wednesday that made "certain allegations concerning Halliburton's accounting treatment of construction-job claims and change orders that are negotiated with customers." The New York Times reported that during Vice President Dick Cheney's tenure as its chief executive, Halliburton altered its accounting policies so it could report as revenue more than $100 million in disputed costs on big construction projects that sometimes run over budget. With the policy change, Halliburton began to book revenue on the assumption that its customers would pay at least part of the cost overruns, although they remained in dispute, the Times reported. The Times noted that before 1998 the company had been more conservative, reporting revenue from overruns only after settling with its customers. Halliburton Chief Financial Officer Doug Foshee said a change in the company's business mix resulted in the altered accounting policies as the company moved from cost-reimbursable work, where there were no unapproved claims, to lump-sum contracting. He declined to comment on how much in disputed costs the company booked that it later had to unbook, but he said Halliburton has never recognized profit on a job that had an unapproved claim order. "The vast majority of our experience is we collect at or above what we book for on claim orders," he said. Halliburton said it believes it has accounted for construction claims and change orders in accordance with generally accepted accounting principles applicable to the construction industry. "There is a very specific portion of GAAP that provides for estimates of collection of claims that are not yet approved," Mr. Foshee said. The company expects to get a formal request for documents or a subpoena during the next few days and says it will fully cooperate with the SEC. Separately, Halliburton said it settled a group of 30 asbestos lawsuits in New York. Financial terms weren't disclosed, but the company said the settlement value was "consistent with the company's historical averages" for these types of claims, which were mesothelioma and lung-cancer cases. Since 1976, Halliburton has closed 207,000 asbestos claims through settlements and court proceedings at a total cost of about $162 million. The company has received or expects to receive all but $64 million of this cost from insurers, resulting in an average net cost per closed claim of about $309. A company spokesman said cancer claims tend to be more expensive than the company's average claim.