Summary
Targa Resources Corp. (TRGP) filed an 8-K on October 23, 2014, to revise previously reported financial statements. The company identified an accounting error related to the reporting of certain buy-sell transactions for NGL products, which were incorrectly recorded on a gross basis as Revenues and Product Purchases. These transactions should have been reported on a net basis under Generally Accepted Accounting Principles (GAAP). The company states that these misclassifications were not material to any affected periods. However, the revision impacts reported revenues and product purchases for fiscal years 2011-2013 and quarterly periods in 2013-2014. Importantly, Targa Resources clarified that this revision has no impact on previously reported net income, cash flows, financial position, or other profitability measures. Investors should note that while gross revenue and cost of goods sold figures are adjusted, the gross margin remains unchanged.
Key Highlights
- 1Revision of previously reported revenues and product purchases due to accounting error.
- 2Error involved incorrectly reporting NGL buy-sell transactions on a gross basis instead of a net basis.
- 3The company concluded the misclassifications were not material to any affected period.
- 4Revenues and Product Purchases have been reduced on a net basis across multiple past reporting periods (2011-2014).
- 5No impact on previously reported net income.
- 6No impact on previously reported cash flows.
- 7No impact on previously reported financial position or other profitability measures.