Business Context and Reporting Period
This Form 8-K is filed by Cheniere Energy Partners, L.P. on September 12, 2011. The filing addresses a non-reliance on previously issued financial statements for the fiscal year ended December 31, 2010, and the quarter ended March 31, 2011. The Audit Committee concluded that these statements should no longer be relied upon due to an incorrect presentation of earnings per unit.
Key Financial Metrics and Restatement Details
The filing does not report new revenue, profit, cash flow, or debt figures. Instead, it details a restatement of earnings per unit (EPS) presentation. Total net income remains unchanged; only the per-unit calculation methodology is being corrected to separate common unit earnings from combined limited partner unit earnings.
| Period | Net Income (Loss) | EPS (Restated - Common Unit) | EPS (Original - Combined LP Unit) |
|---|---|---|---|
| Year Ended Dec 31, 2010 | $107,568 (in thousands) | $1.70 | $0.65 |
| Year Ended Dec 31, 2009 | $186,912 (in thousands) | $1.13 | $1.13 |
| Year Ended Dec 31, 2008 | $(78,344) (in thousands) | $(0.48) | $(0.48) |
| Q1 Ended Mar 31, 2011 | $(2,209) (in thousands) | $0.35 | $(0.01) |
| Q1 Ended Mar 31, 2010 | $58,824 (in thousands) | $0.36 | $0.36 |
Material Changes Versus Prior Period
The material change is strictly presentational regarding earnings per unit. For the year ended December 31, 2010, the restated earnings per common unit ($1.70) are significantly higher than the originally reported combined earnings per limited partner unit ($0.65). Similarly, for the quarter ended March 31, 2011, the restated figure ($0.35) differs from the original loss per unit ($(0.01)). The filing explicitly states that this restatement has no impact on the Consolidated Balance Sheets, Consolidated Statements of Operations (total amounts), or Consolidated Statements of Cash Flows.
Management Commentary, Risks, and Contingencies
Management and the Audit Committee identified a material weakness in internal control over financial reporting and disclosure controls and procedures as of the dates the original statements were filed. This weakness relates to the failure to present net income per common unit separately. The company is filing amendments to its 2010 Form 10-K and Q1 2011 Form 10-Q to correct this presentation. The independent auditor, Ernst & Young LLP, has been consulted regarding these matters.
Investor Verification Checklist
- Verify the upcoming amendments to the 2010 Form 10-K and Q1 2011 Form 10-Q for the corrected EPS presentation.
- Review the detailed disclosure of the material weakness in internal controls in the forthcoming amendments.
- Confirm that total net income and cash flow figures remain consistent with previously filed reports.
- Monitor future filings for remediation steps regarding the identified internal control weakness.