Business Context and Reporting Period
Company: Natural Resource Partners L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: March 30, 2012
Subject: Non-reliance on previously issued financial statements for the second and third quarters of 2011 due to accounting corrections.
Key Financial Metrics and Adjustments
The filing details specific restatements to prior period financial data. These adjustments were non-cash items and did not affect the statement of cash flows.
- Deferred Revenue Correction: $4.0 million total ($0.04 per unit) related to minimum royalties.
- $2.5 million ($0.02 per unit) related to a prior year; recorded in Q4 2011.
- $0.7 million should have been recorded in Q2 2011.
- $0.8 million should have been recorded in Q3 2011.
- Coal Reserve Exchange: An exchange with Williamson Energy (Cline Group affiliate) occurred in Q2 but was not recognized until later.
- Q2 2011 Impact: Increased net income by $3.2 million ($0.03 per unit).
- Q3 2011 Impact: Decreased net income by $2.1 million ($0.02 per unit).
Material Changes Versus Prior Comparable Period
The filing mandates a shift in reliance from the original Form 10-Qs for Q2 and Q3 2011 to the corrected data in Footnote 17 of the Form 10-K for the year ended December 31, 2011. The specific net adjustments to the 2011 quarters are as follows:
| Line Item | Q2 2011 Adjustment | Q3 2011 Adjustment |
|---|---|---|
| Revenue | Increased by $5.1 million | Decreased by $0.6 million |
| Depletion Expense | Increased by $1.3 million | Increased by $0.7 million |
| Net Income | Increased by $3.9 million | Decreased by $1.3 million |
Guidance, Outlook, and Risks
Management Commentary: The company and its Audit Committee discussed these corrections with independent accountants. The Form 10-K for 2011 was filed with an unqualified opinion regarding the corrected financial statements.
Risk/Contingency: Investors are explicitly instructed not to rely on the financial statements included in the original Form 10-Qs for the second and third quarters of 2011. The filing does not provide forward-looking guidance, revenue projections, or liquidity metrics for the current period beyond the restatement notice.
Important Facts for Investor Verification
- Verify financial performance for Q2 and Q3 2011 using Footnote 17 of the 2011 Form 10-K, not the original 10-Q filings.
- Note that the $4.0 million deferred revenue correction and the coal reserve exchange were non-cash items.
- Confirm that the 2011 Form 10-K received an unqualified audit opinion despite the restatements.
- Be aware that the filing does not contain current period (2012) revenue, profit, or cash flow data.