Cheney- what will his role be and where is he

Parent Cafe
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<p>Xiggi,</p>

<p>YOU brought up the Halliburton financials, presumably in defense of the company, for reasons I cannot fathom. Your defense of them prompted me to take a look at them. The footnotes are fascinating. I’ve seen a lot of financial reports, but few with as many sordid tales as Halliburton. And don’t try to pull a “change the topic”. UN programs have nothing to do with Halliburton. </p>

<p>Barrons, </p>

<p>You mean to say companies should break US law if it gets them some business? Oh.</p>

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<p>Some laws are open to much interpretation. Is it a fee or a bribe? Let’s let the courts decide. Several pre-convicted folks have been found not guilty. That aside I think some of these laws are not realistic and were passed as window dressing. I hate seeing US companies compete with both hands tied behind their backs. Boeing got smart–instead of old fashioned bribes they just promise so many jobs and contracts to countries buying planes. The difference is mostly semantics as that country will control who gets the jobs and contracts and can collect from them.
Same for Microsoft. They make large donations of software to the host country. I wonder who gets that software and what they pay for it.</p>

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<p>NMD, I DID bring up the financial statements of Halliburton, and my reasons were very clear. If the contracts of KBR were SO profitable, the company should have much better earnings. All we see are tales of overcharging and stories about Cheney burning the midnight oil in vain attempts to send billions of easy business to his former buddies. Som did you see much evidence of the fat earnings of KBR? DO you think that Halliburton would hesitate to undo their merger with KBR? </p>

<p>As far as my reply regarding the Foreign Corrupt … I did not reply to change the subject of the discussion. You presented the facts disclosed in the footnotes as a clear and conclusive evidence of the company being morally bankrupt. The reality is that large governmental contracts are routinely investigated. For the second case, it is not worth checking the identity of the partners before calling this business “sordid”. Who are ENI of Italy and JGC of Japan? … not exactly branches of the Maffia or Yakuzas. </p>

<p>It is a sad reality that is virtually impossible to do business in a great number of countries without “greasing” local governments. There are times when one ought to see the difference between an overzealous “holier than thou” application of the laws and the worldwide business environment. Every country is trying to develop foreign business and the international projects are critical for the US industry and the maintenance of manufacturing jobs. The payments of bribes is not a pretty business, but it is hardly a creation of the imperialistic US business. Pundits love to mention the “leveling the playing field.” When it comes to leveling the playing field, the US may give it its best shot, but some of our policies are equal to send our best runners with fifty pounds of concrete attached to their sneakers. </p>

<p>FWIW, how clean do you think that this business was :</p>

<p><a href=“http://www.forbes.com/markets/feeds/afx/2005/09/06/afx2208227.html[/url]”>http://www.forbes.com/markets/feeds/afx/2005/09/06/afx2208227.html&lt;/a&gt;&lt;/p&gt;

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<p>Vice President Cheney has no stock in Halliburton and has not had any since 2000. But then why let something like the facts get in the way of a good Liberal’s bashing of a Republican elected twice by the American people?</p>

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<p>Xiggi, </p>

<p>Your most recent post is another disappointment in its display of ignorance. If you had any knowledge of accounting and financial reports, you would know that KBR’s results are not reported separately, so they could be wildly profitable while lousy results would drag down the overall results of Halliburton, on a consolidated basis, which is how they report. </p>

<p>BUT, the truth is even worse for your argument. In fact, KBR is making a good profit: "KBR delivered $227 million in operating income in the first six months of 2005, for a 4.2% operating margin…Government and Infrastructure operating income for the first six months of 2005 was $126 million compared to $81 million in the first six months of 2004. " (from the June 30, 2005 SEC form 10Q).</p>

<p>This discussion is about Halliburton, not about corruption in other parts of the world or what other companies do. The “change the subject” strategy is a well known Karl Rove approach. I realize Texans must stick together, but we yanks don’t need to stand for such an approach.</p>

<p>Xiggi, you’re well known for doing your homework. Please do some on Halliburton before you try to defend them. If you need help reading financial statements, let me know. I can send some references.</p>

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<p>NewMassDad, </p>

<p>I fully intend to answer to your latest post, as soon I wake from the torpor of my purported ignorance. </p>

<p>While I cannot trade barbs with a seasoned professional as yourself, I’ll try to find the necessary information about consolidations of earning and accounting for subsidiaries. I am quite certain that I will be able to come up with something to help me understand the the impact of the acquisition of Dresser Industries on the past years’ income. </p>

<p>In the meantime, I take good note that a company does not seem to be able report income for separate divisions because of consolidation. Despite this, I’d like to start comparing the reported 8.52% Operating Margin of Halliburton with the 4.2% margin reported in your last post. While I am at it, and may also take a look how deeply the divisional income of KBR is hidden, and especially pay attention to the reports of their Govervment and Infrastructure earnings. </p>

<p>

</p>

<p>At first glance, the KBR’s contribution to net earnings seems to be rather uneven. I’m sure that the prior years will be mostly instructive, especially when looking at the “small” impact of asbestos claims. </p>

<p>Nitwittingly yours,</p>

<p>Xiggi</p>

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<p>“I fully intend to answer to your latest post, as soon I wake from the torpor of my purported ignorance.”</p>

<p>I can hardly wait.</p>

<p>Meanwhile, please show me how painful the Iraq work is for the company, as they show !profits! and an operating margin of almost 10%!</p>

<p>Then, take a good look at the collection of footnotes discussing all the “challenges” they have from various federal agencies for accounting irregularities, claims of fraud, corrupt practices etc. Then tell me this is normal for business!</p>

<p>BTW, KBR’s contribution is uneven because the US Govt has challenged a lot of KBR’s bills, leading to an income reporting “challenge”. Overall, KBR’s profit contribution is OK but not great. Note, though, that Energy Services should be having boom times, given the state of energy markets, so KBR’s % would be expected to be lower, IMHO.</p>

<p>You might also note that the financial reports of some companies (HAL??) are designed as much to confuse as to inform. Financial analysts earn their bread by teasing out the real story from such reports. The Feds (and FASB) demand that they disclose key data, but they don’t demand that the data be easy to understand.</p>

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<p>NMD</p>

<p>Yesterday, I answered tongue-in-cheek, and simply posted sufficient data to allow anyne to see how easy it was to find the SEPARATE data for the KBR division in the financial statements of Halliburton. I had made the point that the contracts in Iraq -and other givernment contracts- are not the goldmine they are purported to be. Your rebuttal included an attempt to ridicule me and the conclusion that my posts were yet another proof of my ignorance. You further encouraged to do my homework. </p>

<p>Well, MassDad, I read about Halliburton before last elections. I did check the annual reports and analysts reports. From that information, it was easy to see that the contracts, with a majority of “cost plus”, are profitable, albeit to a small degree. How profitable have they been:</p>

<p>Full Year 2003: 194 OP for 5,417 Revenues or 3.58%
First Semester 2004: 81 OP for 5,105 Revenues or 1.59%
Second Semester 2004: 3 OP for 4,208 Revenues or 0.08%
Full Year 2004: 84 OP for 9,393 Revenues or less than 1.00%
First Semester 2005: 126 OP for 4,130 Revenues or 3.05% </p>

<p>For further information, the division of KBR reported losses of $685,000,000 in 2002, 36,000,000 in 2003, and 342,000,000 in 2004. </p>

<p>Now, what were my previous “ignorant” statements? I said that the governmental contracts were NOT that profitable, and I believe that a company reporting an OPERATING margin of less than 4% is NOT very profitable. Considering financial costs, that is a razor thin margin. I also said that Halliburton would like nothing else than divest the KBR unit. Do YOURSELF a favor and read the first pages of the latest annual reports and check the reserves set aside for potential asbestos claims. Then go back and read when the saga began.</p>

<p>While I do not want to debate again the Foreign Corrupt Act, one may note that most of the facts predated KBR entry in the partnership, and that Halliburton fired the employees that participated in the scheme. </p>

<p>My conclusion remains the same: there are only a handful of companies in the world that can provide the services offered by Halliburton and KBR. Would we better off organizing a worldwide tender a la World Bank? The fact that the contract are assigned on a non-bid basis should be reevaluated at the Pentagon, not in Texas. If the Army was able to do a better and cheaper job at it than the private sector, they should do it! I am afraid that we know the answer to that question. Moreover, for people who believe that government contracts are a walk-in-the park, go ahead nd check the adventures of EDS -one of our smartest companies- and its Navy contracts? How do you spell d-i-s-a-s-t-e-r? </p>

<p>So, NMD, setting aside sarcasm this time, If we want to pour over the Quarterly and Annual Reports of Halliburton and its industry peers, let’s go for it. Let’s calculate the various ratios and dissect the net results of KBR. Let’s compare the contributions of the other divisions of Halliburton to the much maligned KBR’s. </p>

<p>Let’s also be clear that I do not care for Halliburton one way or the other. I do not own the stock and know nobody who works there. I would take the same view if the company was Pieter Kiewit, Bechtel, or even Schlumberger. It is just a matter of reporting the information accurately and not fall in the trap of convenient political bashing. </p>

<p>As far as the public financial statements, with the advent of Sarbanes-Oxley, don’t you agree that we may expect the statements to be a lot more detailed and rigorous, especially in the embarrassing footnotes? </p>

<p>That said, next time, you may want to be a little slower in calling me ignorant or careless in my research.</p>

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<p>The surest way to corrupt a youth is to instruct him to hold in higher regard
those who think alike than those who think differently . - Nietzsche</p>

<p>:)</p>

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<p>xiggi, </p>

<p>I won’t waste more time debating financials with someone who may copy numbers well, but cannot interpret them. For example, while the 2004 annual report says KBR lost $342 million, as you state above, the same report says the government and infrastructure business segment of KBR made money. They lost a ton of money in enery and chemicals, not on govt. contracts. You gotta read carefully!</p>

<p>Are their margins on the govt. work good? Well, they would be a lot better if they hadn’t had so many expenses disallowed on audit etc.</p>

<p>Sarbanes-Oxley? The rules for disclosure have not changed, only the stakes for not doing so.</p>

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<p>"I won’t waste more time debating financials with someone who may copy numbers well, but cannot interpret them.:</p>

<p>Well, good for you, NMD … and speak for yourself! </p>

<p>Am I the one who reported that because of consolidation, it was not possible to segregate the KBR operating income: “If you had any knowledge of accounting and financial reports, you would know that KBR’s results are not reported separately, so they could be wildly profitable while lousy results would drag down the overall results of Halliburton, on a consolidated basis, which is how they report.” </p>

<p>It is obvious that I made the differences between the income from Government contracts and Energy and Chemicals. However, you are so eager to nictpick my posts apart that you fail to read the entire contents. </p>

<ol>
<li><p>I said that the governmental contracts are not very profitable and backed that up by posting the ratios of income over sales. None of them exceeded 4%, which is WELL below the operating income of the NON KBR divisions. This means that the net income of Halliburton is dragged DOWN by the government contracts. So much for faulty interpretation, NMD!</p></li>
<li><p>I said that the Halliburton would be happy to divest KBR because it has been a HUGE drag on income. That is why I posted the entire KBR earnings. This was not to illustrate the poor earning associated with govt contracts. Again, so much for faulty interpretation. </p></li>
</ol>

<p>Indeed, you gotta read carefully! </p>

<p>I have always respected your opinions, and do not mind to be corrected at all when applicable. However, your line of accusations in this thread are well beyond the acceptable. :(</p>

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<p>President Bush signed into law the Sarbanes-Oxley Act of 2002, changing forever the financial reporting landscape for finance professionals.</p>

<p>Congress is mandating numerous changes to financial reporting:
Real-time disclosures
Officer certification
Increasing transparency
Independence - now a law, not a virtue
Mandated SEC review
Final rules for pro forma statements due by January 26, 2003
New audit committee requirements - April 26, 2003 deadline
Loans and certain trades prohibited - effective immediately </p>

<p>Congress has given new powers to the SEC:
Criminal penalties for “white collar” crimes strengthened
Statutes of limitations changed
New Public Company Accounting Oversight Board
New analyst conflicts of interest rules
New attorney professional responsibility rules
Protection for whistleblowers</p>