Business Context and Reporting Period
Company: Plains GP Holdings, L.P. (PAGP)
Filing Type: Form 8-K (Current Report)
Date of Report: January 4, 2018
Event Date: December 22, 2017 (Enactment of the Tax Cut and Jobs Act)
Context: The filing addresses the immediate accounting and financial impact of the newly signed U.S. Tax Cut and Jobs Act on the company's deferred tax assets.
Key Financial Metrics
Deferred Tax Asset (as of Sept 30, 2017): $2.2 billion
Estimated Reduction in Deferred Tax Asset: $770 million to $880 million
Percentage Reduction: 35% - 40%
Impact on Income Tax Expense: The reduction will be recognized as an expense in the fourth quarter of 2017.
Other Metrics: The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity for the current period.
Material Changes Versus Prior Period
The primary material change is the re-measurement of the company's deferred tax asset due to the statutory reduction in the U.S. corporate federal income tax rate from 35% to 21%. This legislative change necessitates a write-down of the asset value calculated under the previous rate structure.
Guidance, Outlook, and Risks
- Assessment Status: Management is currently assessing all accounting and disclosure impacts under Accounting Standards Codification Topic 740 but has not completed the assessment.
- Future Disclosure: Additional information regarding the full impact on financial statements is expected to be provided when fourth quarter and full year 2017 results are announced in early February.
- Risk/Contingency: The estimated reduction range ($770 million to $880 million) is preliminary and subject to finalization upon completion of the assessment.
Investor Verification Checklist
- Verify the final quantified impact of the Tax Act on the Q4 2017 income tax provision when results are released in early February.
- Confirm the final adjusted value of the deferred tax asset on the balance sheet as of December 31, 2017.
- Review the full year 2017 earnings release for any other material impacts of the Tax Act not detailed in this preliminary estimate.