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Enbridge Energy Partners, L.P. Message Board

  • SAMSIR SAMSIR Feb 7, 2006 8:14 AM Flag

    Dividend

    I'm sure someone can explain how this company can earn $.96/sh and pay out $3.70/sh. Can anyone help with this?

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    • I am not an accountant but I think it is paid out of cash flow, depreciation and depeltion allowaces. I could never understand how depreciarion was the same as cash, thou.
      Remember this a partership.

    • the quarter div. is .925 per share multiply by 4 =3.72 if compounded might be a bit higher

    • > I'm sure someone can explain how this company
      > can earn $.96/sh and pay out $3.70/sh. Can
      > anyone help with this?

      Let me try...

      Let's say you have a taxi cab that you just bought for $10,000 and plan to depreciate it over 10 years. When you buy it, your financial reporting does not show a $10,000 expense; it shows a $10,000 decrease in cash and a $10,000 increase in plant, property, and equipment. Your income statement is not affected, because purchase of capital equipment is not treated as a period expense.

      One year goes by, and you record your first depreciation expense in the amount of $1,000. However, this $1,000 is not a cash expense; it doesn't take anything out of your pocket. So, while your income takes a $1,000 hit, your cash flow doesn't.

      In case of EEP, in 2004 it had net income of $138 million and depreciation expense of $120 million, which was more than enough to pay $191 million in distributions to unit holders.

      For more details, refer to EEP's atatement of cash flows:

      http://www.sec.gov/Archives/edgar/data/880285/000104746905004849/a2152397z10-k.h
      tm

      (page F-6)

 
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