Document and Entity Information
Document and Entity Information (USD $) | |||
3 Months Ended
Mar. 31, 2010 | Apr. 23, 2010
| Jun. 30, 2009
| |
Document and Entity Information | |||
Entity Registrant Name | Ultra Petroleum Corp. | ||
Entity Central Index Key | 0001022646 | ||
Document Type | 10-Q | ||
Document Period End Date | 2010-03-31 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $5,906,164,446 | ||
Entity Common Stock, Shares Outstanding (actual number) | 152,195,397 | ||
Document Fiscal Year Focus | 2,010 | ||
Document Fiscal Period Focus | Q1 |
Consolidated Statement of Opera
Consolidated Statement of Operations (USD $) | ||
In Thousands, except Per Share data | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Revenues: | ||
Natural gas sales | $250,747 | $158,830 |
Oil sales | 22,377 | 9,123 |
Total operating revenues | 273,124 | 167,953 |
Expenses: | ||
Lease operating expenses | 10,324 | 10,243 |
Production taxes | 28,407 | 17,351 |
Gathering fees | 11,955 | 10,791 |
Transportation charges | 15,905 | 13,355 |
Depletion and depreciation | 51,267 | 60,661 |
Write-down of proved oil and gas properties | 0 | 1,037,000 |
General and administrative | 6,402 | 4,574 |
Total operating expenses | 124,260 | 1,153,975 |
Operating income (loss) | 148,864 | (986,022) |
Other income (expense), net: | ||
Interest expense | (11,718) | (7,297) |
(Loss) gain on commodity derivatives | 181,351 | 206,428 |
Other income (expense) net | 151 | (2,613) |
Total other income (expense), net | 169,784 | 196,518 |
(Loss) income before income tax (benefit) provision | 318,648 | (789,504) |
Income tax (benefit) provision | 116,272 | (276,916) |
Net (loss) income | $202,376 | ($512,588) |
Basic (Loss) Earnings per Share: | ||
Net (loss) income per common share - basic | 1.33 | -3.39 |
Fully Diluted Earnings per Share: | ||
Net (loss) income per common share - fully diluted | 1.31 | -3.39 |
Weighted average common shares outstanding - basic | 152,073 | 151,238 |
Weighted average common shares outstanding - fully diluted | 154,366 | 151,238 |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | Mar. 31, 2010
| Dec. 31, 2009
|
Current assets: | ||
Cash and cash equivalents | $6,017 | $14,254 |
Restricted cash | 1,681 | 1,681 |
Oil and gas revenue receivable | 89,708 | 82,326 |
Joint interest billing and other receivables | 40,708 | 29,411 |
Derivative assets | 93,292 | 4,398 |
Deferred tax assets | 0 | 12,225 |
Inventory | 4,011 | 4,498 |
Prepaid drilling costs and other current assets | 15,996 | 4,948 |
Total current assets | 251,413 | 153,741 |
Oil and gas properties, net, using the full cost method of accounting: | ||
Proved | 1,890,801 | 1,794,603 |
Unproved properties not being amortized | 320,400 | |
Property, plant and equipment | 87,919 | 73,435 |
Long Term Derivative Assets | 15,889 | 2,554 |
Long Term Restricted Cash | 28,257 | |
Deferred financing costs and other | 6,366 | 7,415 |
Total assets | 2,572,788 | 2,060,005 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 127,930 | 131,122 |
Production taxes payable | 63,751 | 60,820 |
Current deferred tax liabilities | 33,054 | |
Derivative liabilities | 1,068 | 35,033 |
Capital cost accrual | 91,133 | 64,216 |
Total current liabilities | 316,936 | 291,191 |
Long-term debt | 1,046,000 | 795,000 |
Deferred income tax liability | 297,055 | 239,217 |
Long-term derivative liabilities | 4,717 | 50,542 |
Other long-term obligations | 51,644 | 35,858 |
Shareholders' equity: | ||
Common stock - no par value; authorized - unlimited; issued and outstanding - 151,442,194 and 151,232,545, respectively | 399,283 | 377,339 |
Treasury stock | (10,525) | |
Retained earnings | 457,153 | 281,383 |
Total Shareholders' Equity | 856,436 | 648,197 |
Total liabilities and shareholders' equity | $2,572,788 | $2,060,005 |
1_Consolidated Balance Sheets
Consolidated Balance Sheets (Parenthetical) | ||
Mar. 31, 2010
| Dec. 31, 2009
| |
Balance Sheets (Parenthetical) | ||
Common stock, no par value | 0 | 0 |
Common stock, shares authorized | unlimited | unlimited |
Common stock, shares issued | 152,195,397 | 151,759,343 |
Common stock, shares outstanding | 152,195,397 | 151,759,343 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | ||
In Thousands | 3 Months Ended
Mar. 31, 2010 | 3 Months Ended
Mar. 31, 2009 |
Operating activities: | ||
Net (loss) income for the period | $202,376 | ($512,588) |
Adjustments to reconcile net (Loss) income to cash provided by operating activities: | ||
Depletion and depreciation | 51,267 | 60,661 |
Write-down of proved oil and gas properties | 0 | 1,037,000 |
Deferred and current non-cash income taxes | 114,467 | (276,939) |
Unrealized loss (gain) on commodity derivatives | (182,020) | (186,073) |
Excess tax benefit from stock based compensation | 11,317 | 0 |
Stock compensation | 2,781 | 2,125 |
Other | 84 | 117 |
Net changes in operating assets and liabilities: | ||
Restricted cash | 0 | 1,058 |
Accounts receivable | (18,679) | 29,464 |
Prepaid expenses and other | (10,830) | 2,006 |
Other non-current assets | 2,905 | (2,323) |
Accounts payable, production taxes and accrued liabilities | 3,879 | (31,966) |
Other long-term obligations | 13,765 | 9,375 |
Net cash provided by operating activites | 168,678 | 131,917 |
Investing Activities: | ||
Acquisition of oil and gas properties | (332,970) | |
Oil and gas property expenditures | (198,578) | (220,757) |
Gathering system expenditures | (15,185) | (1,112) |
Restricted Cash, investing | (28,257) | |
Change in capital cost accrual | 26,917 | (58,629) |
Net proceeds from consolidation of undeveloped land | 68,420 | 0 |
Inventory | 486 | (310) |
Other | 0 | |
Purchase of capital assets | (36) | (591) |
Net cash used in investing activities | (422,689) | (281,399) |
Financing activities: | ||
Borrowings on long-term debt | 297,000 | 258,000 |
Payments on long-term debt | (546,000) | (342,000) |
Proceeds from issuance of Senior Notes | 500,000 | 235,000 |
Deferred financing costs | (2,265) | (1,279) |
Repurchased shares/net share settlements | (16,668) | 0 |
Excess tax benefit from stock based compensation | 11,317 | 0 |
Proceeds from exercise of options | 2,390 | 0 |
Net cash provided by (used in) financing activities | 245,774 | 149,721 |
(Decrease)/increase in cash during the period | (8,237) | 239 |
Cash and cash equivalents, beginning of period | 14,254 | 14,157 |
Cash and cash equivalents, end of period | $6,017 | $14,396 |
Description of the Business
Description of the Business | |
3 Months Ended
Mar. 31, 2010 | |
Description Of The Business [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS: Ultra Petroleum Corp. (the "Company") is an independent oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and natural gas properties. The Company is incorporated under the laws of the Yukon Territory, Canada. The Company's principal business activities are conducted in the Green River Basin of Southwest Wyoming and in the north-central Pennsylvania area of the Appalachian Basin. |
Significant Accounting Policies
Significant Accounting Policies | |
3 Months Ended
Mar. 31, 2010 | |
Significant Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | 1.SIGNIFICANT ACCOUNTING POLICIES: The accompanying financial statements, other than the balance sheet data as of December 31, 2009, are unaudited and were prepared from the Company's records. Balance sheet data as of December 31, 2009 was derived from the Company's audited financial statements, but does not include all disclosures required by U.S.Generally Accepted Accounting Principles ("GAAP"). The Company's management believes that these financial statements include all adjustments necessary for a fair presentation of the Company's financial position and results of operations. All adjustments are of a normal and recurring nature unless specifically noted. The Company prepared these statements on a basis consistent with the Company's annual audited statements and RegulationS-X. RegulationS-X allows the Company to omit some of the footnote and policy disclosures required by generally accepted accounting principles and normally included in annual reports on Form10-K. You should read these interim financial statements together with the financial statements, summary of significant accounting policies and notes to the Company's most recent annual report on Form10-K. (a)Basis of presentation and principles of consolidation:The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries UP Energy Corporation and Ultra Resources, Inc. The Company presents its financial statements in accordance with GAAP. All inter-company transactions and balances have been eliminated upon consolidation. (b)Cash and cash equivalents:The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. (c)Restricted cash:Restricted cash represents cash received by the Company from production sold where the final division of ownership of the production is unknown or in dispute. Wyoming law requires that these funds be held in a federally insured bank in Wyoming. Long-term restricted cash represents cash that was set aside in an escrow account in connection with the purchase of additional acreage in the Marcellus Shale, which closed on February 22, 2010. (d)Property, plant and equipment:Capital assets are recorded at cost and depreciated using the declining-balance method based on a seven-year useful life. Gathering system expenditures are recorded at cost and depreciated using the straight-line method based on a 30-year useful life. (e)Oil and natural gas properties:On January 6, 2010, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Update ("ASU"), Oil and Gas Reserve Estimation and Disclosures. The ASU amends FASB Accounting Standards Codification ("ASC") Topic 932, Extractive Activities Oil and Gas ("FASB ASC 932") to align the reserve calculation and disclosure requirements of FASB ASC 932 with the requirements in the SEC Release No. 33-8995, Modernization of Oil and Gas Reporting Requirements ("SEC Release No. 33-8995"). The ASU is effective for reporting periods ending on or after December 31, 2009. Accordingly, the Company adopted the update to FASB ASC 932 as of December 31, 2009. The Company uses the full cos |
Oil and Gas Properties
Oil and Gas Properties | |
3 Months Ended
Mar. 31, 2010 | |
Oil and Gas Properties [Abstract] | |
OIL AND GAS PROPERTIES | 2. OIL AND GAS PROPERTIES: March 31, December 31, 2010 2009 Developed Properties: Acquisition, equipment, exploration, drilling and environmental costs $ 3,690,725 $ 3,544,519 (1,799,924) (1,749,916) 1,890,801 1,794,603 Unproven Properties: Acquisition and exploration costs not being amortized(2)(3) 320,400 - $ 2,211,201 $ 1,794,603 (1)During the first quarter of 2009, the Company recorded a $1.0billion ($673.0million net of tax) non-cash write-down of the carrying value of the Company's proved oil and gas properties as of March31, 2009, as a result of the ceiling test limitations, which is reflected as write-down of proved oil and gas properties in the accompanying consolidated statements of operations. The ceiling test was calculated based on March31, 2009wellhead prices of $2.47 per Mcf for natural gas and $33.91 per barrel for condensate. |
Long Term Liabilities
Long Term Liabilities | |
3 Months Ended
Mar. 31, 2010 | |
Long-Term Liabilities [Abstract] | |
LONG-TERM LIABILITIES | 3. LONG-TERM LIABILITIES: March 31, December 31, 2010 2009 Bank indebtedness $ 11,000 $ 260,000 Senior Notes 1,035,000 535,000 Other long-term obligations 51,644 35,858 $ 1,097,644 $ 830,858 Bank indebtedness:The Company (through its subsidiary) is a party to a revolving credit facility with a syndicate of banks led by JP Morgan Chase Bank, N.A. which matures in April 2012. This agreement provides an initial loan commitment of $500.0million and may be increased to a maximum aggregate amount of $750.0million at the request of the Company. Each bank has the right, but not the obligation, to increase the amount of its commitment as requested by the Company. In the event the existing banks increase their commitment to an amount less than the requested commitment amount, then it would be necessary to add new financial institutions to the credit facility. Loans under the credit facility are unsecured and bear interest, at the Company's option, based on (A)a rate per annum equal to the higher of the prime rate or the weighted average fed funds rate on overnight transactions during the preceding business day plus 50basis points, or (B)a base Eurodollar rate, substantially equal to the LIBOR rate, plus a margin based on a grid of our consolidated leverage ratio (100.0basis points per annum as of March 31, 2010). At March 31, 2010, the Company had $11.0million in outstanding borrowings and $489.0million of available borrowing capacity under our credit facility. The facility has restrictive covenants that include the maintenance of a ratio of consolidated funded debt to EBITDAX (earnings before interest, taxes, DDA and exploration expense) not to exceed 3 times; and as long as our debt rating is below investment grade, the maintenance of an annual ratio of the net present value of our oil and gas properties to total funded debt of at least 1.75 to 1.00. At March 31, 2010, the Company was in compliance with all of our debt covenants under our credit facility. Senior Notes:On March6, 2008, the Company's wholly-owned subsidiary, Ultra Resources, Inc. issued $300.0million Senior Notes ("the 2008 Senior Notes") pursuant to a Master Note Purchase Agreement between the Company and the purchasers of the Notes. On March5, 2009, Ultra Resources, Inc., issued $235.0million Senior Notes ("the 2009 Senior Notes") pursuant to a First Supplement to the Master Note Purchase Agreement. And, on January 28, 2010, Ultra Resources, Inc., agreed to issue an aggregate amount of $500.0 million of Senior Notes ("the 2010 Senior Notes") pursuant to a Second Supplement to the Master Note Purchase Agreement. Of the 2010 Senior Notes, $270.0 million were issued on January 28, 2010 and $230.0 million were issued on February 16, 2010. The Senior Notes rank pari passu with the Company's bank credit facility. Payment of the Senior Notes is guaranteed by Ultra Petroleum Corp. and UP Energy Corporation. Proceeds from the sale of the 2010 Senior Notes were used to repay revolving credit facility debt, but did not reduce the borrowings available to the Company under the revolving credit facility, and for general corporate purposes, includ |
Share Based Compensation
Share Based Compensation | |
3 Months Ended
Mar. 31, 2010 | |
Stock Based Compensation [Abstract] | |
SHARE BASED COMPENSATION | 4. SHARE BASED COMPENSATION: Valuation and Expense Information Three Months Ended March 31, 2010 2009 Total cost of share-based payment plans $ 4,686 $ 3,742 Amounts capitalized in fixed assets $ 1,905 $ 1,617 Amounts charged against income, before income tax benefit $ 2,781 $ 2,125 Amount of related income tax benefit recognized in income $ 987 $ 745 The fair value of each share option award is estimated on the date of grant using a Black-Scholes pricing model. The Company's employee stock options have various restrictions including vesting provisions and restrictions on transfers and hedging, among others, and are often exercised prior to their contractual maturity. Expected volatilities used in the fair value estimates are based on historical volatility of the Company's stock. The Company uses historical data to estimate share option exercises, expected term and employee departure behavior used in the Black-Scholes pricing model. Groups of employees (executives and non-executives) that have similar historical behavior are considered separately for purposes of determining the expected term used to estimate fair value. The assumptions utilized result from differing pre- and post-vesting behaviors among executive and non-executive groups. The risk-free rate for periods within the contractual term of the share option is based on the U.S.Treasury yield curve in effect at the time of grant. There were no stock options granted during the three months ended March 31, 2010. Changes in Stock Options and Stock Options Outstanding The following table summarizes the changes in stock options for the three months ended March 31, 2010 and the year ended December 31, 2009: Weighted Number of Average Options Exercise Price (000's) (US$) Balance, December 31, 2008 4,213 $ 0.25 to $98.87 Forfeited (43) $51.60 to $78.55 Exercised (666) $ 0.25 to $33.57 Balance, December 31, 2009 3,504 $ 1.49 to $98.87 Forfeited (1) $75.18 Exercised (683) $ 1.49 to $33.57 Balance, March 31, 2010 2,820 $ 2.61 to $98.87 PERFORMANCE SHARE PLANS: Long Term Incentive Plans.Each year since 2005, the Company has adopted a Long Term Incentive Plan ("LTIP") in order to further align the interests of key employees with shareholders and to give key employees the opportunity to share in the long-term performance of the Company when specific corporate financial and operational goals are achieved. Each LTIP covers a performance period of three years. The 2008 LTIP has two components: an "LTIP Stock Option Award" and an "LTIP Common Stock Award." In 2009 and 2010, the Compensation Committee (the "Committee") approved an award consisting only of performance-based restricted stock units to be awarded to each participant. Under each LTIP, the Compensation Committee establishes a percentage of base salary for each participant which is multiplied by the participant's base salary to derive a Long Term Incentive Value. The LTIP Common Stock Award in 2008 and the 2009 and 2010 LTIP award of restricted stock units are performance-based and are measured over a three year performance period. |
Income Taxes
Income Taxes | |
3 Months Ended
Mar. 31, 2010 | |
Income Taxes [Abstract] | |
INCOME TAXES | 5. INCOME TAXES: During the quarter ended March 31, 2010, the Company recorded an income tax provision of $116.3 million or 36.5% of income before income tax provision. This compares to an income tax benefit of $276.9 million or 35.1% of the loss before income tax benefit for the quarter ended March 31, 2009. |
Derivative Financial Instrument
Derivative Financial Instruments | |
3 Months Ended
Mar. 31, 2010 | |
Derivative Financial Instruments [Abstract] | |
DERIVATIVE FINANCIAL INSTRUMENTS | 6.DERIVATIVE FINANCIAL INSTRUMENTS: Objectives and Strategy: The Company's major market risk exposure is in the pricing applicable to its natural gas and oil production. Realized pricing is currently driven primarily by the prevailing price for the Company's Wyoming natural gas production. Historically, prices received for natural gas production have been volatile and unpredictable. Pricing volatility is expected to continue. The Company relies on various types of derivative instruments to manage its exposure to commodity price risk and to provide a level of certainty in the Company's forward cash flows supporting the Company's capital investment program. Commodity Derivative Contracts: During the first quarter of 2009, the Company converted its physical, fixed price, forward natural gas sales to physical, indexed natural gas sales combined with financial swaps whereby the Company receives the fixed price and pays the variable price. This change provides operational flexibility to curtail gas production in the event of continued declines in natural gas prices. The contracts were converted at no cost to the Company and the conversion of these contracts to derivative instruments was effective upon entering into these transactions in March 2009, with upcoming settlements for production months through December 2010. The natural gas reference prices of these commodity derivative contracts are typically referenced to natural gas index prices as published by independent third parties. From time to time, the Company also utilizes fixed price forward gas sales to manage its commodity price exposure. These fixed price forward gas sales are considered normal sales in the ordinary course of business and outside the scope of FASB ASC 815, Derivatives and Hedging. Fair Value of Commodity Derivatives: FASB ASC 815 requires that all derivatives be recognized on the balance sheet as either an asset or liability and be measured at fair value. Changes in the derivative's fair value are recognized currently in earnings unless specific hedge accounting criteria are met. The Company does not apply hedge accounting to any of its derivative instruments. The application of hedge accounting was discontinued by the Company for periods beginning on or after November 3, 2008. Derivative contracts that do not qualify for hedge accounting treatment are recorded as derivative assets and liabilities at fair value on the balance sheet and the associated unrealized gains and losses are recorded as current expense or income in the income statement. Unrealized gains or losses on commodity derivatives represent the non-cash change in the fair value of these derivative instruments and does not impact operating cash flows on the cash flow statement. At March 31, 2010, the Company had the following open commodity derivative contracts to manage price risk on a portion of its natural gas production whereby the Company receives the fixed price and pays the variable price. See Note 7 for the detail of the asset and liability values of the following derivatives. Type Point of Sale Remaining Contract Period Volume - MMBTU/Day Average Price/MMBTU Fair Value - Marc |
Fair Value Measurements
Fair Value Measurements | |
3 Months Ended
Mar. 31, 2010 | |
Fair Value Measurements [Abstract] | |
FAIR VALUE MEASUREMENTS | 7.FAIR VALUE MEASUREMENTS: As required by the Fair Value Measurements and Disclosure Topic of the FASB Accounting Standards Codification, we define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and establishes a three level hierarchy for measuring fair value. Fair value measurements are classified and disclosed in one of the following categories: Level1:Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date. Level2:Inputs other than quoted prices included within Level1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level2 include non-exchange traded derivatives such as over-the-counter forwards and swaps. Level3:Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability. The valuation assumptions utilized to measure the fair value of the Company's commodity derivatives were observable inputs based on market data obtained from independent sources and are considered Level2 inputs (quoted prices for similar assets, liabilities (adjusted) and market-corroborated inputs). The following table presents for each hierarchy level our assets and liabilities, including both current and non-current portions, measured at fair value on a recurring basis, as of March 31, 2010. The company has no derivative instruments which qualify for cash flow hedge accounting. Level 1 Level 2 Level 3 Total Assets: Current derivative asset $ - $ 93,292 $ - $ 93,292 Non-current derivative asset $ - $ 15,889 $ - $ 15,889 Liabilities: Current derivative liability $ - $ 1,068 $ - $ 1,068 Non-current derivative liability $ - $ 4,717 $ - $ 4,717 In consideration of counterparty credit risk, the Company assessed the possibility of whether each counterparty to the derivative would default by failing to make any contractually required payments as scheduled in the derivative instrument in determining the fair value. Additionally, the Company considers that it is of substantial credit quality and has the financial resources and willingness to meet its potential repayment obligations associated with the derivative transactions. For non-financial assets and liabilities measured or disclosed at fair value on a non-recurring basis, primarily our asset retirement obligation, this respective subtopic of FASB ASC 820 was effective January1, 2009. Implementation of this portion of the standard did not have a material impact on consolidated results of operations, financial position or liquidity. Fair Value of Financial Instruments The estimated fair value of |
Legal Proceedings
Legal Proceedings | |
3 Months Ended
Mar. 31, 2010 | |
Disclosure Legal Proceedings Abstract | |
LEGAL PROCEEDINGS | 8.LEGAL PROCEEDINGS: The Company is currently involved in various routine disputes and allegations incidental to its business operations. While it is not possible to determine the ultimate disposition of these matters, the Company believes that the resolution of all such pending or threatened litigation is not likely to have a material adverse effect on the Company's financial position or results of operations. |
Subsequent Events
Subsequent Events | |
3 Months Ended
Mar. 31, 2010 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | 9.SUBSEQUENT EVENTS: FASB ASC Topic 855, Subsequent Events ("FASB ASC 855"), sets forth principles and requirements to be applied to the accounting for and disclosure of subsequent events. FASB ASC 855 sets forth the period after the balance sheet date during which management shall evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which events or transactions occurring after the balance sheet date shall be recognized in the financial statements and the required disclosures about events or transactions that occurred after the balance sheet date. The FASB issued ASU No 2010-09, Subsequent Events - Amendments to Certain Recognition and Disclosure Requirements, on February 24, 2010, in an effort to remove some contradictions between the requirements of U.S. GAAP and the SEC's filing rules. The amendments remove the requirement that public companies disclose the date of their financial statements in both issued and revised financial statements. The Company has evaluated the period subsequent to March 31, 2010 for events that did not exist at the balance sheet date but arose after that date and determined that no subsequent events arose that should be disclosed in order to keep the financial statements from being misleading. |