Shaw Group files restated results over estimated costs of projects and an investment in Westinghouse.
The Shaw Group filed its restated results for the first fiscal quarter ended November 2006. It restated results include items which reduced previously reported pre-tax income totaling $5.3 million — $3.4 million after tax.
The engineering and construction company announced last April that it had launched a review to determine the scope of a potential error in the estimated costs of a U.S. Gulf Coast engineering, procurement, and construction petrochemical project. In its Friday filing, the company said management concluded that the financial results for the year ended August 31, 2006 contained two offsetting errors relating to the project, thus resulting in no financial statement impact for the fiscal year.
In addition, it found that the financial statements for the November 2006 three-month period contained a $6.5 million error related to the project.
The company also said it also had reconsidered the accounting for its earlier $1.1 billion investment in Westinghouse. Shaw said it concluded that the transaction should be accounted for as a single equity investment.
Shaw had earlier received a letter from the SEC, which included comments pertaining to its accounting for its investment in Westinghouse, including the application of the equity method of accounting and the accounting for a put option and a customer relationship agreement related to the investment in Westinghouse.
In its latest filing, the company said the put option and related embedded derivative and the commercial relationship agreement should not have been accounted for separately. Therefore, it restated its financial statements to reflect the total Westinghouse transaction cost of about $1.1 billion as "Investment in Westinghouse" in the November 30, 2006 balance sheet.
However, Shaw stressed that it has not finalized its consultations with the SEC Staff related to accounting for the embedded foreign currency component of the put option agreement entered into in connection with the investment in Westinghouse.
Shaw also said it is working with its accounting firm, KPMG, to complete its audit for its restated financial statements for the fiscal year ending August 31, 2006.
The company also warned that its preliminary restated interim consolidated financial statements for the first quarter does not put it in compliance with the filing requirements of the Securities and Exchange Commission.