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Bryce_in_TX

Bryce_in_TX
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  • FDA to require calorie count on menus [View news story]
    Transparency is a good thing. If I get anything from a restaurant, it's usually from Subway, but knowing the amount of fat and calories in the food, and if there is any transfat, might get me to buy from somewhere else as well. For some people, especially seniors, this information is necessary for survival.

    But what does this have to do with drugmakers and a pushback on prices?
    Nov 25, 2014. 02:51 PM | Likes Like |Link to Comment
  • Tesla Motors, Inc. Taking A Hit In London And With Long Time Bull [View article]
    I regard GM as making a lot of lesser quality cars and trucks. I had a Chevy Corsica with a paint job that peeled, a Pontiac Grand Prix we had to get rid of because water and anti-freeze leaked into the engine, and my son bought a 2009 Chevy Silverado which he just paid off. He's not planning on buying another Chevy, but is looking at Toyota for his next vehicle. His truck is too loose in the steering, just doesn't drive near as good as our 2009 Honda. I don't think I'll ever buy American again. We just can't make a car as good as Japan. I wouldn't be surprised if GM and Chrysler go bankrupt. My experience with GM products over the last 20 years has been less than satisfactory.
    Nov 22, 2014. 11:51 PM | 1 Like Like |Link to Comment
  • Tesla Motors, Inc. Taking A Hit In London And With Long Time Bull [View article]
    Gordonr,

    An hour, 4 times a year is a big weekend waster? OMG

    1 hour, once a year is very reasonable using synthetic oil that goes for 10,000 miles between changes.
    Nov 22, 2014. 11:37 PM | 1 Like Like |Link to Comment
  • Tesla Motors, Inc. Taking A Hit In London And With Long Time Bull [View article]
    Valueseeker,

    Talk about spreading FUD. That Tesla was stolen and going over 100 mph when it crashed and caught fire. Jeez, the nonsense is just as bad with the bears as with the bulls.

    http://aol.it/1HBqfCL

    Let's see how many Tesla fires have there been, about 4? Compare that to 17 per hour in an ICE, yep 17 per HOUR.

    http://read.bi/1HBqfCN
    Nov 22, 2014. 11:34 PM | 2 Likes Like |Link to Comment
  • Tesla Lowers Ambitions [View article]
    arondaniel,

    7 years, uhhuh. And reindeer can fly too. Sorry for being sarcastic, but watch and learn. It won't happen in that amount of time.
    Nov 22, 2014. 07:01 PM | 1 Like Like |Link to Comment
  • Tesla Lowers Ambitions [View article]
    Uh, User6199421, having been close to an F4 as it ripped through my city 35 years ago, a car is the last place you want to be if you are caught in it. Acceleration in a tornado is of little use. If you are caught in one what you want to do is seek inside shelter if possible. If that isn't possible, seek a ditch. The day after the tornado I drove to work where our offices were in shambles. There were several 18 wheelers on their sides along the expressway. Our college football stadium lights were twisted and bent down. The wind would whip any car around like a toy. You don't want to be in a car.
    Nov 22, 2014. 06:47 PM | 2 Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    I have been clear on what I presented. If you have links to other companies who do it like LINE does I'll look at it. Otherwise, thanks for the discussion.
    Nov 21, 2014. 06:45 PM | 1 Like Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    "Hedging is a price tool, and the costs of hedging flow through as settlements are made, and net profits (cash revenues less an amortized cost) are incorporated in the "price including hedges" lines of their disclosures. "

    Only the cash proceeds are counted in the DCF calc, not the costs. The amortization or cost of the puts and derivatives is not included in the DCF calc. So, without a link, I have no idea of what you are speaking of here.

    "Probably because hedging activity is price dependent, irregular and subject to management discretion, while maintenance capex is that which management regards as necessary to replace reserves each and every quarter, which is a key selling point for investors."

    Another key selling point to investors is safe, stable cash flows. Even if reserves and production are maintained as planned, the price achieved for the sale of it is volatile unless there are hedges in place. I don't buy that the cost of hedges should not be part of the DCF calc. The hedges insure a certain amount of cash flow. Without them the company's cash flows would be volatile. If LINE used its new definition of Adjusted EBITDA and the traditional DCF formula (Adjusted EBITDA less interest expense less maintenance cap ex), the cost of derivatives would be included in the DCF calc. See page 329 in link. 'Premiums paid for put options that settled during the period' are deducted in determining Adjusted EBITDA.

    http://1.usa.gov/1llkqOq

    "Your comments go more to other valuation factors which are considered heavily by analysts but are not part of DCF."

    With all due respect to you, that doesn't compute to me.

    "There are many different ways to define maintenance capex. In general, maintenance capex is typically defined as an expenditure that is made to sustain existing assets. This is distinct from expenditure made to augment existing assets, which would be classified as growth capex. In other words, capital spent on an existing asset that preserves the asset’s useful life or cash flow generating ability would be considered maintenance, while capital spent to increase an asset’s life or cash flow would be considered growth capital."

    Here it says that maintenance cap ex can be defined in many different ways and that capital spent on an existing asset that preserves its cash flow generating ability would be considered maintenance cap ex. (Page 26) Hedges preserve the cash flow generating ability of the production from oil and gas reserves.

    http://bit.ly/1fgz472
    Nov 21, 2014. 06:19 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    "LINN considers the cost of puts as a 'capital' investment and views it as an additional cost of an acquisition (hence the target to spend up to 10% of the cost of an acquisition on puts). No one disputes that 'depreciation' of oil and natural gas assets should be excluded from EBITDA or distributable cash flows because it is a 'capital' expense, and the company views puts the same way."

    So, if LINE views puts the same as PP&E, why doesn't it count their cost, that would approximate amortization, as part of maintenance cap ex?

    http://bit.ly/11DVdJ2
    Nov 21, 2014. 05:03 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    What I am saying is it appears that LINE never accounts for the cost of the derivatives in its calculation of DCF. If they did, they could say so and quash all the controversy.

    Whereas, with PP&E, LINE estimates maintenance capex that approximates the deprecation on it, in the DCF calc.

    The two are treated differently. LINE doesn't count all costs, it doesn't appear.

    LINE counts the proceeds from the derivatives, but not the costs. That results in an overstatement of DCF.

    I respect what you said, so I started presenting it in a different way. The results are the same. If they borrow the money or issue equity to pay for the derivatives, there is still a real cost for the derivatives. LINE never accounts for it in their DCF calc, whereas they do account for the cost of PP&E in that calc in the form of maintenance cap ex.

    If they are managing quarterly results, which I imagine they are, there are probably other items besides this one that are being managed.
    Nov 21, 2014. 04:41 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    Capt Jack,

    Cumulative deficits matter. LINE has spent some $1.4 billion on derivatives since they've gone public. Most of that has been paid out in distributions. Even though it was a real cash cost to the company, the cash was never accounted for, unlike PP&E. LINE will keep paying for the debt and equity (in the form of distributions paid out on that equity) used to finance the derivatives well beyond 2014.
    Nov 21, 2014. 03:34 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    " It's not a source of cash, it is a cash item they are excluding from the non-GAAP DCF calculation because it impacts multiple periods, just as property acquisition costs do (except generally over a shorter period)."

    But, with PP&E there is maintenance cap ex for it included as a deduction from DCF, which really represents the ongoing depreciation of the PP&E, right? Where is the maintenance cap ex deduction for the derivatives?

    LINE's new definition for Adjusted EBITDA includes a deduction for the expired derivatives in the current period. But, LINE no longer uses Adjusted EBITDA in its DCF calculation.

    Without taking into consideration the cost of the derivatives in the calculation of DCF, whereas they do take into consideration the cost of PP&E, it looks to me like they are overstating DCF. The cost of the derivatives is being excluded from the calculation, but they are borrowing or issuing equity to pay for them. So, the cost is ignored in the DCF calc which results in much or most of that cost being distributed out to unitholders, whereas maintenance cap ex for PP&E is deducted from the DCF calc and does not get paid out. There is a different treatment for the derivatives versus PP&E. The cost of the derivatives is being financed through debt or equity and the proceeds from those derivatives is being paid out to unitholders, rather than paying down the debt or buying back units, resulting in permanent increases in debt and equity.

    Either way you look at it, the derivatives are a real cash cost that LINE doesn't consider a real cash cost, and they are treated differently than PP&E in the DCF calculation.

    My conclusion is that DCF is being overstated.
    Nov 21, 2014. 03:31 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    I am not speaking of accrual accounting, i.e. future periods. I am speaking of cash accounting. In cash accounting paying for the full price of an asset is counted as a current period expense. The cash flow statement is cash accounting, it ties into the company bank balances at the end of the period, meaning cash paid for the derivatives is GONE, as reflected in cash flow from ops and the company cash on hand. It can't be a source of cash for any calculation.
    Nov 21, 2014. 01:53 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    You can read a 10-K, I assume? 2011 and 2012.

    Immaterial? The cost in 2011, cash paid out for put premiums, was $134.352 million and their supposed excess that year was $123.736 million, after adding back the $134.352 million. In 2012 the cost, cash paid out for put premiums, was $583.434 million and the supposed excess was $82 million after adding back the $583.434 million. Look at it for yourself. I have provided links. It is very material and once cash is paid out it's gone. It can't be a source of cash for DCF.
    Nov 21, 2014. 01:46 PM | Likes Like |Link to Comment
  • Decline In Oil Prices Unlikely To Affect Linn Energy's Distribution [View article]
    The put is a financial investment, used as risk insurance, not PP&E. It is deducted from cash flow from operations, not cash flow from investing activities, see page 72 of LINE's 2012 10-K, "Premiums paid for derivatives".

    http://1.usa.gov/1BUTu2V

    I am speaking of cash accounting, not accrual or GAAP. Once that cash is paid out, it is gone. You can't magically add it back to cash flow from ops,as LINE has done in calculating their DCF. See page 64 of LINE's 2013 10-K, "Excess (shortfall) of net cash provided by operating activities after distributions to unitholders and discretionary adjustments". See "premiums paid for derivatives"? It is added as a source of cash. They add back money that has gone out in cash. That cash is gone, you can't add it back. That's why I say that LINE counts the revenues from the derivatives, but not the costs in their DCF Calculation. The cost is added back. No accounting method, cash, tax, or GAAP allows that, and it is common sense that you have to deduct the costs of the derivatives from the revenue to figure how much profit or cash you have to pay out to unitholders, whether it is cash basis, tax basis, or accrual accounting. However, here I am speaking of cash basis only. LINE adds back money that has been paid out in cash for derivatives in the same year.

    http://1.usa.gov/1d98Xks
    Nov 21, 2014. 01:16 PM | Likes Like |Link to Comment
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