AltaGas Income Trust is an income trust that has interests in natural gas extraction and transmission along with coal-fired, gas-fired, and hydro power generation; natural gas field gathering and processing; and energy services. The entity also provides services including natural gas and natural gas liquids marketing, gas transportation, and the wholesale marketing of power. Its objective is to ensure stable cash flows that can be used to pay out a steady distribution to its unitholders. Income trusts are investment vehicles that hold income-producing assets. Income trusts generally pay a monthly cash distribution to their unitholders, which is one of the primary reasons that investors would purchase units.
Instructions
Access the financial statements for AltaGas Income Trust for the year ended December 31, 2009, from the entity’s website or from SEDAR (www.sedar.com) and answer the following questions.
(a) For the period 2005 to 2009, what have been AltaGas’s distributions per unit, the net income per unit, and the funds from operations per unit? Compare the amounts each year and comment. Why would the trust provide all this information on a per-unit basis? Are the distributions sustainable?
(b) Review the statement of cash flows for the two years 2008 and 2009. What are the total cash flows from (or used by) operations, investing activities, and financing activities? What sources of cash are available to fund the annual distributions and capital investments? Do you think that the distributions are sustainable?
(c) Using information from Note 21 and the statement of cash flows only, determine the 2009 balances for accounts receivable, inventory, accounts payable and accrued liabilities, customer deposits, and deferred revenues, starting with the December 31, 2008 balances. Compare with the actual amounts for December 31, 2009, and explain any differences.
(d) Using the net book value of capital assets at December 31, 2008, as the opening balance and items from the statement of cash flows, statement of earnings, and related note disclosures, try to reconcile the opening and closing balance for capital assets for 2009.