Halliburton Responds to Larry Klayman's Supersillyous Suit(My Title)

Great idea. Now, if you could figure out a way, to get Beckie to stop the flame war... LOL

I'm late to the party, what's going on? :)

Hi, my friend ! Not all that much , right now. LOL

Iwo Jima!!!!

You are too cool!

CONGRATULATIONS!!!!

From Brit Hume's Special Report yesterday:

Vice President's Business Practices in Question

Thursday, July 18, 2002

Watch Special Report With Brit Hume weeknights at 6 p.m. ET

BRIT HUME, HOST: Five years ago, Halliburton, the huge construction and oil services company headed then by Dick Cheney, made an adjustment in the way it accounted for certain money it was owed. That change has become the focus of the latest round of media and Democratic Party scrutiny of the Bush administration on its corporate connections. SEC looking into it as well.

So, what did Halliburton actually do? And what difference did it make?

For expert answers, we turn to Kenneth Kies, a lawyer and former partner in an accounting firm, not to mention former chief of staff for the Joint Congressional Committee on Taxation. Ken, welcome back. Nice to have you.

KENNETH KIES, FORMER CHIEF OF STAFF, JOINT CONGRESSIONAL COMMITTEE ON TAXATION: Thank you. Good to be here.

HUME: So, Jim Angle mentioned earlier that it changed the way it accounted for money it was owed in contracts in which there had been cost overruns, even though — and what change was that?

KIES: Basically, it was to take into income in the year in which they did the services the amount that they expected to be paid in the future. So...

HUME: Even though they hadn't got the money?

KIES: ... which is very common because they're not a cash method taxpayer. They don't take in the income when they get cash. They get it when they earn it.

HUME: Now, wait a minute. A lot of people, ordinary people, will say, "Wait a minute. Why would you count as income money you hadn't got yet?" Tell me why if that's proper that is proper, why if it's common it's common.

KIES: And the reason it's proper and common is the way you treat expenses is exactly the same way. And what you're trying to do is match your income to your expenses.

HUME: So, in other words, you're trying to match the money you expect to earn from the expenses you incurred to earn it.

KIES: Right. Because what your investors really want to know is, did you have an economic gain that year? And when you have an economic gain, it's does the total amount of expenses you incurred, whether you paid them currently or not, exceed the amount of income you've earned, whether you've collected it or not?

HUME: So, let's assume we're coming down toward the end of the year. And I'm running a little bookshop. And I have bought some new books. And someone has come in and bought them from me. And I haven't paid the person I bought them from yet. And I haven't received the money from the buyers yet. I'm required it do this right to count both the cost I haven't paid yet as an expense and the money I haven't received yet as income, right?

KIES: Right. Because you know you are going to pay that expense...

HUME: Right.

KIES: ... so, you've already incurred the expense, even though you haven't paid the money out. And you are reasonably confident you are going to collect the money. So, your investor knows that you have engaged in activity that's done by the end of the year that will produce economic income. It will come in at a later point, but you earned it that year.

HUME: So, what were the negative consequences? Some people I've read have suggested that this actually made Halliburton's accounting more accurate. What about the old way it was doing it? Why does that lead to some distortion?

KIES: The reason it would lead to a distortion is if you waited until the year in which you collected the money and reported it as income that year, your investor would think, well, you made money that year.

HUME: More money in relation to your expenses.

KIES: Exactly. When you really made that money in an earlier period. So, if you want to more accurately portray what you have actually done in the current year, you want to report the income that you actually earned that year. If you wait and report it next year, you are going to overstate your income in the following year.

HUME: In other words, you are going to overstate the profitability of your undertakings that year.

KIES: Exactly.

HUME: Because it's old — it's actually money you really earned a year earlier, even though you haven't collected it yet.

KIES: That's correct. You didn't really earn it that year. But it's going to show up as part of your income. And that distorts the picture for investors.

HUME: So, what does the SEC investigate here?

KIES: Well, the SEC seems to be looking at a couple of things. One, Halliburton didn't disclose for a year that they had changed to this new method. And so, there might be some concern about there should have been disclosure. Halliburton's position appears to be that the fact that we didn't disclose it wasn't a big deal because the amount of the additional income was small relative to our total income.

HUME: How much was it? And how much was the total — how much was the amount that was listed as additional income? And how much was the total revenue of the company?

KIES: The amount in the year they made the adjustment was an additional income of 89 million against total revenues of $17 billion. So, Halliburton is probably right. Relative to $17 billion, this was not a big item. It probably would have been more prudent if they had disclosed it earlier, but the truth of the matter is they gave a more accurate picture to their investors of what their economic income had been for that year by the changes made.

HUME: Now, some critics are saying that this happened — that they did this in a way that just happened to coincide with a time when they really did — it really did help their overall economic appearance to list this money and made their earnings seem higher than they otherwise would have seemed. What is your take on that?

KIES: Well, it may be true that it actually came at a propitious time to make the change. But the reality is it made their economic reporting more accurate. And so, it's a good thing that they did it. Maybe they should have done it earlier. But from the standpoint of investors, at least they changed to a method that did more accurately report what they were doing.

HUME: Now, let me ask you another question. Can you give me in about a minute's time an explanation of what this issue is that Congress is wrangling with and that some are recommending that Wall Street firms or other firms actually — expense options, that is to say, when they offer stock options to employees or executives, that they count them as an expense? The suggestion seems to be that they're never counted as an expense. What is the real deal?

KIES: Well, here's the real deal. If you are an employee of a company, and you get an option, which is the right to buy stock at a certain price, and that's referred to as the strike price. So, if the strike price you are offered is $50 a share and the current trading value is $40 a share, you wouldn't exercise that option because you would pay $10 more than you could go out and buy it for.

The issue is, what happens at the time whether or not you have gotten economic income when you got that option because of the expectation that your stock will rise. There are some companies that value the value of that option and treat it as an expense. Coca-Cola recently announced they are going to do that. They're in the minority. Most companies do not treat it as an expense.

HUME: Do they ever treat it as an expense?

KIES: Most companies never treat it as an expense.

HUME: Even when the option is exercised?

KIES: Even when the option is exercised. And there are a variety of theories as to it why that's right. There are many theories on the other side. But one of the theories is that there is no cash expense that the company has ever employed.

HUME: Well, we can get back to this perhaps at another time. Ken Kies, great to have you. Thanks for coming in.

http://www.foxnews.com/story/0,2933,58034,00.html

For anybody that missed it.

Well, we could just ignore her when she makes those irrelevant personal attacks. It's not like anyone is really buying into her stuff. But if she makes a substantive comment, we could respond to it as appropriate.

You know, Rush says that if we ever beat the liberals that we will have to keep a few on display just so no one ever forgets what they were like. Rebeckie is like that. There are so few JW supporters around nowadays that we really do need her to present the "opposing view." Her defenses of JW have been just about as effective as some of our criticisms in making JW look bad.

Well, most of " our " refutations , to her sycophantic dribblings. have been quite good and factual. Our side states facts ; she states imagings. But, yes, she should be ignored.

As to Larry / JW / and all of the law suits, I think that this topic has be exhausted ; for now. Don't you ?

Thanks so much for posting that, terilyn - great explanation! (Not that it will do much good for the fact-challenged among us....)

Thanks, I got tired of waiting for them to put up the transcript.

When's JW's next press release?

I figure that we're due a new press release sometime tomorrow. I hope so, because Larry and his press releases are such fun to abuse.

You're welcome.

I got off the computer last night to go watch it. I thought it was so good, made so much sense, that it needed to be posted here.

No huge words, no fancy parsing. Plain english that even the accounting challenged could understand.

That is the caliber attorney Larry will be facing. I almost feel sorry for the poor schmuk.....like hell. LOL

Thanks for posting that interview with Bret. I watched/heard it, and even this OLD lady understood! LOL

Good!

They will mop up the floor with Larry.

And he didn't even have to wander into angles of Monica, the Mafia, or JFK to make his points.

Seriously, this guy was very good. I hope there are 30 more just like him.

I also hope Larry wears his Depends to the hearing. He's gonna need 'em.

I've found that to be the case with most people that Brit interviews.

He finds intelligent, credible people that know what they're talking about and asks questions that I would ask.

And, he asks them in a way that the average joe can relate to and understand.

It's no wonder why Brit and the rest of the Fox News team is kicking butt.

LOL! I'd pay big money to be at THAT hearing.

You and me both!

I happened to be listening to CNN earlier today, and do you know that when they mentioned Cheney's and Haliburton's "problems," the CNN reporter mentioned only two-- the SEC investigation and and the asbestos suit. I thought it interesting that they didn't mention Larry's suit. As much as they'd like for something to stick, I think CNN knows that Larry and his suit are a joke.

I missed it the first time (got back late from doctor appt) and was going to watch the rerun, then switched over to see what Donah-who's show was like at 11pm and forgot to switch back in time and totally missed it!

So I'm really really glad you posted the transcript. I did catch them talking about it again during the panel segment.