Halliburton Says SEC Probing Its Accounting

DALLAS — Halliburton Co., a provider of oilfield services and engineering, said late Tuesday that the Securities and Exchange Commission has begun a preliminary investigation of its accounting treatment of cost overruns on construction jobs.

Halliburton, which had Vice President Dick Cheney as its chief executive from 1995 to 2000, said it believes that it accounted for construction claims and change orders in accordance with generally accepted accounting practices applicable to the construction industry.

The Dallas-based company also said it believes the investigation is in response to an article in the New York Times last week regarding construction job claims and change orders that are negotiated with customers.

The energy industry has come under scrutiny for its accounting practices since the collapse of Enron Corp. in December.

“In this kind of environment, given what was written in the New York Times, I think the SEC has an obligation to look,” said Halliburton’s Chief Financial Officer Doug Foshee. “We expect to put this behind us quickly.”

Halliburton, which said it advised the SEC it will cooperate, expects to receive a formal request for documents or a subpoena in the next few days.

The company said before 1998, it did not include the cost overrun claim items in its revenue or accounts receivable before they were resolved with the customer. During 1998, Halliburton began to record these claims in revenue and accounts receivable when the company expected these items could be collected from the customer.

Foshee said the change of accounting method followed a strategic move at its construction and engineering group toward fixed-price projects and away from traditional “cost-plus” deals that guarantee contractors a certain profit margin over and above their costs.

Separately Monday, Halliburton said it had settled a group of 30 asbestos lawsuits, most involving life-threatening cases of cancer, for an unspecified amount of money.

The settlement involved cases pending in New York and was “at a value consistent with the company’s historical averages for these types of claims,” the company said.

Halliburton has resolved 207,000 asbestos-related claims through settlements or court proceedings since 1976 at a cost of $162 million, according to company filings.

Halliburton’s stock closed up 25 cents at $19.35 on the New York Stock Exchange, before news of the SEC investigation was announced.