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  • AT&T to record $2.2B gain for Q4 around pension, post-employment benefits  [View news story]
    The retirement benefit obligations (pension and medical, usually) are a liability to be settled in the future.

    The company calculates this obligation by amounts over each of the future years they expect the plan to be alive, then discount that amount using a market rate, say 4%. That yields a present value number, lets use 100. This is what the company thinks they owe over many future years in current dollars.

    Next the company calculates the present value of the investments set aside to fund this obligation, the current portfolio, future contributions, and estimated earnings from the portfolio. This gives a present value dollar number of the assets to pay the obligation. Lets say it is 80.

    So the present value of the obligation is 100, the present value of the investments set aside for this is 80, therefore, the "unfunded liability" is 20. Lets say in prior years they did this and at the end of last year the number was 25, not 20. So the company takes the difference, 5, and reduces the liability, with an offset to an equity account through the income statement.

    Broadly (very) the final effect is to debt liability (reduces), credit equity (increases). This has a balance sheet effect and does run through "comprehensive income" on the balance sheet, but there is no cash effect.

    You see this mostly with companies that are old and have legacy defined benefit plans. Many companies now use a defined contribution plan, which simple means they make a contribution to your 401k this year, record the expense and that is the end of it.

    The fact that the pension obligation is reduced is a good thing, but nothing to get excited about. If the obligation is increased year after year, that is a bad thing.

    Hope this helps.
    Jan 22, 2016. 11:02 PM | 20 Likes Like |Link to Comment
  • Yahoo prepares to cut at least 10% of its workforce  [View news story]
    Reducing headcount to improve financial metrics? Positioning for a sale of the core business?

    Let's hope so.
    Jan 7, 2016. 09:20 AM | 3 Likes Like |Link to Comment
  • Kinder Morgan: Why Is (Almost) Everyone In Panic Mode?  [View article]

    Astute inquiry, "The question I have is why...?",

    Even more astute solution.

    As an retired CFO, that is what I would do. I would also blame the regulators for part of the delays.
    Dec 6, 2015. 10:50 AM | 2 Likes Like |Link to Comment
  • Phillips 66 target upped to $110 at Oppenheimer  [View news story]
    From what I read, demand for finished product is growing, but not as fast as crude is coming out of the ground. Refiners are going to face growing and ultimately glut inventories. This is a cyclical business affected by both supply (with current low prices) and demand (with current demand growing at a declining rate). At some point in the near future the spread between input cost and out put price will slow and reverse. Who knows how long that will be, but it is prudent to view refiners as trades and not investments. 110 seems a bit optimistic.
    Dec 5, 2015. 12:11 AM | Likes Like |Link to Comment
  • Kinder Morgan: When Will The Panic End?  [View article]
    Was today capitulation?

    Average 3 month volume 19.2 million, today 73.4 million.
    Sooner or later KMI will run out of sellers and the stock will bottom.

    I am not saying this is the bottom, but we have to be getting close.
    Dec 3, 2015. 04:36 PM | 28 Likes Like |Link to Comment
  • AOL President Lord leaving firm, wanting to run public company  [View news story]
    Dec 1, 2015. 01:34 PM | 1 Like Like |Link to Comment
  • Industry Pressures Are Too Much For Alliance Resource Partners To Overcome  [View article]

    You are right in theory, but my 40 years experience as CFO in agribusiness is that when a commodity price tanks those players going out of business discount product below cost (and even below that of the low cost producer) to capture cash flow to survive. Eventually they go out of business and price recovers and the low cost producer wins. It is a long painful journey even for the eventual winner.

    ARLP looks like the eventual winner, but the stock price could go lower for longer and consequently not be the best place for investment dollars right now.
    Nov 10, 2015. 11:47 AM | 7 Likes Like |Link to Comment
  • Industry Pressures Are Too Much For Alliance Resource Partners To Overcome  [View article]
    Sorry, in my haste I picked up your id instead of Dennis.

    My apologies.
    Nov 10, 2015. 11:41 AM | 1 Like Like |Link to Comment
  • Industry Pressures Are Too Much For Alliance Resource Partners To Overcome  [View article]
    Puddnhead, you may find this link useful.

    Electronic version of an article published as International Journal of Modern Physics
    B, Vol. 23, No. 3 (2009) 275{364 , DOI No: 10.1142/S0217979209049...
    c World
    Scienti c Publishing Company,

    Two German physicists demonstrate CO2 does not possess the ability to hold or transfer heat and cannot cause any measurable temperature increase. The position that CO2 causes AGW violates the second law of thermodynamics. Read the Abstract and the conclusion before delving into the numbers. They are daunting.
    Nov 9, 2015. 12:30 PM | 3 Likes Like |Link to Comment
  • Buy Chevron For Its 5% Yield And The Ride Oil Back To $80 A Barrel  [View article]
    Nuclear powered US air craft carrier, as in USS Harry S. Truman, CVN-75.

    Awesome boat.
    Nov 8, 2015. 10:15 PM | 1 Like Like |Link to Comment
  • Chick-fil-A seen as long-term threat to McDonald's  [View news story]
    The left should go some place else.
    Oct 2, 2015. 08:36 PM | 2 Likes Like |Link to Comment
  • No long-term future in tar sands, Alberta's premier says  [View news story]
    Reliable statistical methodology?

    Nice, but it does not mater.

    Basis Statistics for you, "Correlation is no evidence of cause and effect."

    Most of the climate change people like to overlook this. It does not fit their emotions.
    Sep 30, 2015. 08:51 PM | 3 Likes Like |Link to Comment
  • Why Phillips 66 Stock Is An Excellent Long-Term Investment Opportunity  [View article]
    Most of the PSX earnings come from refining, which are greatly influenced by the crack spread.

    I calculate the crack spread from time to time to get a feel for the market price compared to the 3:2:1 crack spread using numbers. These may not be the exact ones to use, but they can be valuable for comparison over time if used consistently. Jan 21, 2015 the spread was $13.06. Today it was $14.27

    PSX closed Jan 21 at $66.25; today at $78.59. The crack spread has not increased at the same rate or proportion as the market price.

    My concern is this. If today's favorable conditions persist - and really how much better can we expect them to get for refiners - then how much better can the market price get? Is the stock fully valued at this level for these conditions?

    I think it may be. I wrote 80 weekly calls on my PSX position and will continue to do so until the stock is called away. PSX is a great company, but it looks like the stock may be topping.
    Sep 18, 2015. 11:29 PM | 5 Likes Like |Link to Comment
  • Global rout continues as Asian markets open lower  [View news story]
    Thanks, Hobar. I AM getting old. Hard to believe I forgot that year.
    Aug 24, 2015. 10:59 PM | Likes Like |Link to Comment
  • Global rout continues as Asian markets open lower  [View news story]
    Maybe you guys are too young to have experienced 1986, but this feels like back then.
    Aug 23, 2015. 10:34 PM | 6 Likes Like |Link to Comment