AMERADA HESS CORPORATION
1185 Avenue of the Americas
New York, NY 10036
May 21, 2002
Jonathan G. Katz
Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
File No. S7-08-02
Dear Mr. Katz:
We are pleased to respond to the proposed rule Acceleration of Periodic Report Filing Dates and Disclosure Concerning Website Access to Reports. Amerada Hess Corporation (the Corporation) is a global independent energy company with worldwide exploration and production activities and domestic refining and marketing operations.
Accelerating Filing Due Dates
We support the need to provide investors with clear, accurate and timely information. We believe that the current deadlines for filing annual and quarterly reports allow us to best meet those needs. As you know, accounting rules have become more complex and disclosure requirements have increased significantly. In addition, audit committee involvement with financial reporting has also expanded, requiring reviews of accounting policies, management judgements, financial statements and disclosures. Moreover, since the issuance of Regulation FD, we and many other companies have put considerable, additional effort into quarterly conference calls, in order to widely disseminate financial information as soon as possible after the earnings release. In short, the entire financial reporting process has expanded in recent years and the Corporation believes that compressing the filing deadlines will reduce the quality of information disseminated and increase costs.
We believe that the solution to providing significant disclosures to the marketplace in advance of the annual and quarterly compliance filings is the expanded use of Form 8-K. For example, a Form 8-K filing could be used for disclosing significant debt or liquidity issues, which currently may not be discussed until a 10-Q is filed. We believe that the use of Form 8-K, when accelerated disclosure is necessary, is a far superior solution compared to compressing the compliance filing deadlines for all SEC registrants.
All our compliance filings are reviewed in detail with senior management. Financial management and our independent auditors discuss quarterly and annual information with the audit committee prior to the release. In addition, the audit committee reviews, modifies and approves the financial statements, footnotes and MD&A prior to filing the annual report on Form 10-K.
We believe the involvement of senior management and the audit committee in the annual and quarterly financial reporting process is a significant factor in assuring accuracy and completeness. Shorter deadlines would diminish the quality and comprehensiveness of these reviews. Furthermore, audit committee members may have to participate in similar reviews at other companies and revised filing deadlines will cause scheduling constraints.
The annual audit is not complete when year-end earnings are announced. In this post-Enron era, we believe it is important to foster an environment that allows the auditors to do a thorough, careful review of the financial statements. The proposed accelerated schedule does not afford the auditors sufficient time to adequately complete their audit and simultaneously prepare for a comprehensive review of their findings with the audit committee. The auditors also perform a review of quarterly earnings and discuss their findings with the audit committee. Similar constraints will exist at each quarter-end.
We report earnings in a quarterly press release as soon as practicable after the information is available, followed by a detailed conference call presentation on the same day. Significant information that is necessary to complete quarterly and annual compliance filings is not available until later in the reporting process. While it is true that technology has made it easier to prepare the income statement, balance sheet and certain analyses, much of the required disclosure in periodic filings comes from sources other than accounting systems. For example, pension disclosures and oil and gas reserve information are externally prepared and are not available when the earnings release is issued. Oil and gas reserves which are estimated by independent consultants are used to calculate the standardized measure of discounted future cash flows, which can only be started after oil and gas reserve data is received.
We believe there would be added cost to meet the proposed accelerated filing deadlines. For example, the same staff that prepares the earnings announcement and conference call information, also prepares the compliance filings. The accelerated filing deadlines would compress this workload requiring additional staff during peak periods. In addition, it is unlikely that the shortened filing deadlines can be met without data processing enhancements at a number of company locations.
We concur with the proposal to make quarterly and annual filings available on the Corporation's internet site and we currently publish these filings on our website. However, we believe that the required posting should be at least one day after the EDGAR filing. To format the report for the website at the same time as the EDGAR filing will further compress the time available for preparation and review.
In summary, we firmly believe that the proposed accelerated reporting deadlines should not be adopted. All of the available time prior to the current filing deadlines is necessary to prepare accurate and complete information in accordance with SEC requirements. We believe the potential decrease in the thoroughness of oversight and review by senior management, audit committees and auditors will outweigh any perceived benefits of accelerated filing deadlines. The desired goal of timely release of new material financial and operating information to the public can best be accomplished by the expanded use of Form 8-K.
Thank you for considering our views. We would be pleased to answer any questions or discuss these issues further. I can be reached at (212) 536-8550.
Very truly yours,
/s/ John Y. Schreyer
John Y. Schreyer
Executive Vice President
and Chief Financial Officer