Ok, anyone interested in seeing what kind of "stable" person truthneverstarts is, swing on over to the BAC board, he has about 20 "classic" posts. I'll give you a little appetizer.
Notice his "strong sell" emphasis. Hmmm, sounds familiar.
If the link doesn't work, try message 54045 on the BAC board, a real must read.
Come now BJT, "are you smoking your own dope" or is that Wulff dope?
Hmmm, and what about the rest of the universe of MLP's, are they to going to be forced to restate everything as well? Is the SEC going after all of them, or just Kinder Morgan as you seem to insinuate.
Why do you continue to state it as 50%, its 50% of any incremental earnings.....big difference. Do you understand how the splits work, or do you need one of us to explain it for you.
There are three clasees of stock because the corporate and capital structure warrants it. This would cease to be an MLP without KMI acting as GP/LP, and KMP unitholders acting as LP's. You are thoroughly confused.
Some of you out there may say, I really don't care about accounting. Think about it this way. Why are there three classes of stock sitting on the same assets? Why all this complexity? I'm sure you can come up with lots of clever reasons. But the real reason is this: to hide the debt. As Warren Buffett says, complexity always serves a purpose, and in this case, the complexity serves to hide the debt from the from LP unitholders.
Don't take my word for it. Just wait for the SEC to order a total restatement of the KMP balance sheet, with KMI owning half the assets and accounting for KMP debt on its own balance sheet. It's no different than if KMI owned half of the KMP units, in which case it would have to account for KMP debt on its balance sheet. That is what the SEC is going to decree, and it will decimate KMP shares.
Excellent post, excellent choice. Poor Billy, soon nobody s going to respond to the postings under the BJR profile, because this entire mb is gonna put the BJR profile in the "ignore" box. Bye Bye Billy. Just like the Carter family.... Jimmy went to Annapolis, and Billy got the cardboard box! Sooooooo welcome to the box Billy.
I can't wait to not see your response.
Rock On KMP-KMR!
KMP IS NOT AN OFF-BALANCE SHEET ENTITY! Your comments are fraudulent! KMI accounts for their interest in KMP using the Equity method of accounting. Equity Method accounting is completely consistent with the KMI/KMP relationship as well. Generally, EM is used where the % of control varies between 20-50%. Equity method accounting impacts the KMI balance sheet and income statement in the following ways:
Initial investment recorded at historic cost on BS of KMI as LT Asset. This asset is adjusted each period for the "Equity in KMP's Earnings" (i.e., KMI's pro rata share of KMP's net income), and decreased by the amount of dividends received from KMP.
Pro rata portion of KMP N.I. is accretive to KMI's net income.
This essentially realizing KMI's pro rata portion of KMP's book value.
How can you insinuate that KMI's debt is "Off Balance Sheeet" when in fact it is not. What you are not mentioning is that KMP holds $4B in debt because it also OWNS the assets that were purchased with that debt. You imply that it is done by some deceitful design and financial engineering that is meant to harm investors.
You are totally wronf on this. KMI doesn't 'take' 50% of anything from KMP. They, like many people on this board, are owner of KMP units. Additionally, in 2002 and prior there were asset dispositions from KMI to KMP. It would breach the 'Arm's Length Principle" for them to dispose of assets to a related party (i.e., give them away) unless there is a direct pecuniary interest on the part of KMI. For lack of a better word, KMP has 'earned' their share of distributable cash flow through indirect and direct investment in KMP.
Your opening statements are completely outrageous as well. Like KMI - I TOO have ONE interest as a unitholder of KMP, that is - increasing my wealth through distribution increases. I see the point your making, but the mechanism you decribed is what directly aligns the interes of KMI and unitholders of KMP. KMI is compensated for the functions it performs - managing the assets (that it directly or indirectly contributed) of KMP in the most efficient manner.