Help interpreting the Income Statement

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pullingpitch
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Help interpreting the Income Statement

Post by pullingpitch »

I'm having difficulty reconciling the income statement reported by Fortis (FTS) with that found on Google Finance. Google Finance shows the net income as 410M in 2013 and 362M in 2012 while Fortis's 2013 annual report shows net income as 420M and 371M for the same years respectively. This seems to be due to the fact that Google Finance treats the minority interest/non controlling interest as a deduction while Fortis does not. Can anyone explain why that is and which one is correct?
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parvus
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Re: Help interpreting the Income Statement

Post by parvus »

Have you looked at the originals at Sedar.com?
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pullingpitch
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Re: Help interpreting the Income Statement

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Yes, that is where I got the annual report from.
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Re: Help interpreting the Income Statement

Post by Shine »

Haven't looked at either sites however, is it possible Google is using US$ and Foris is reporting in CDA$?
pullingpitch
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Re: Help interpreting the Income Statement

Post by pullingpitch »

I have checked with Fortis investor relations and there is no question that the reason for the discrepancy in net income is because the non-controlling interest is being treated differently by Google Finance (and several other online tools like Google Finance). Fortis confirmed that fact but haven't been able to tell me why that is the case.
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DavidR
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Re: Help interpreting the Income Statement

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pullingpitch wrote:I'm having difficulty reconciling the income statement reported by Fortis (FTS) with that found on Google Finance. Google Finance shows the net income as 410M in 2013 and 362M in 2012 while Fortis's 2013 annual report shows net income as 420M and 371M for the same years respectively. This seems to be due to the fact that Google Finance treats the minority interest/non controlling interest as a deduction while Fortis does not. Can anyone explain why that is and which one is correct?
There may not be an answer to 'which one is correct'. Different information is useful for different purposes.
GAAP requires Fortis to report 100% of the income of one or more subsidiaries of which Fortis is not the 100% shareholder, rather than the proportionate share. GAAP considers this to be useful information, so it requires reporting it. Yet GAAP also recognizes that the NCI's share of that income is not available for Fortis's shareholders, so it requires a deduction when computing earnings per share.
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Re: Help interpreting the Income Statement

Post by SQRT »

DavidR wrote:
pullingpitch wrote:I'm having difficulty reconciling the income statement reported by Fortis (FTS) with that found on Google Finance. Google Finance shows the net income as 410M in 2013 and 362M in 2012 while Fortis's 2013 annual report shows net income as 420M and 371M for the same years respectively. This seems to be due to the fact that Google Finance treats the minority interest/non controlling interest as a deduction while Fortis does not. Can anyone explain why that is and which one is correct?
There may not be an answer to 'which one is correct'. Different information is useful for different purposes.
GAAP requires Fortis to report 100% of the income of one or more subsidiaries of which Fortis is not the 100% shareholder, rather than the proportionate share. GAAP considers this to be useful information, so it requires reporting it. Yet GAAP also recognizes that the NCI's share of that income is not available for Fortis's shareholders, so it requires a deduction when computing earnings per share.
It's been a while since I thought about GAAP. Thanks for the explanation. Wouldn't NCI be deducted near the bottom of the income statement or is it only for EPS? I used to know this stuff and maybe it has changed?
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Re: Help interpreting the Income Statement

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SQRT wrote:It's been a while since I thought about GAAP. Thanks for the explanation. Wouldn't NCI be deducted near the bottom of the income statement or is it only for EPS? I used to know this stuff and maybe it has changed?
Fortis uses US GAAP it appears. Annual report is here:http://www.envisionreports.com/Fortis20 ... 14_E01.pdf
Income stmt on page 77, retained earnings p79.
$420 is reported as net earnings for the year, with $410 credited to retained earnings and $10 to NCI
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Re: Help interpreting the Income Statement

Post by SQRT »

DavidR wrote:
SQRT wrote:It's been a while since I thought about GAAP. Thanks for the explanation. Wouldn't NCI be deducted near the bottom of the income statement or is it only for EPS? I used to know this stuff and maybe it has changed?
Fortis uses US GAAP it appears. Annual report is here:http://www.envisionreports.com/Fortis20 ... 14_E01.pdf
Income stmt on page 77, retained earnings p79.
$420 is reported as net earnings for the year, with $410 credited to retained earnings and $10 to NCI
Thanks again. Looks quite a lot different from when I did this kind of thing.
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Re: Help interpreting the Income Statement

Post by DavidR »

SQRT wrote:Thanks again. Looks quite a lot different from when I did this kind of thing.
Quite a lot different from my day-to-day work too! (I work with CCPCs, not public companies - but I recently had to prepare a set of consolidated FS and had to brush up a little on Non-Controlling Interest)
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