Passenger Trains > Oh Now That's the Way to Report It

https://www.yahoo.com/news/amtrak-says-finally-making-profit-192400522.html

Randal O'Toole writing an Amtrak hit piece is about as remarkable as the sun setting in the west tonight. Triple yawn.

Some people never tire of criticizing  Amtrak's accounting methods. They just can't stop beating this "dead horse" of a story.

Amtrak has been reporting financial data for 40+ years - and they have never been officially charged with illegal accounting practices by Congress,
The Inspector General, The Office of Management & Budget, or anyone else.

If a true Amtrak hater like John Mica -- in all those hearings (remember?) - never once accused  "Soviet Style" Amtrak of phony accounting, 
why should anybody listen to this guy.




 

ColdRainAndSnow Wrote:
-------------------------------------------------------
> Randal O'Toole writing an Amtrak hit piece is
> about as remarkable as the sun setting in the west
> tonight. Triple yawn.

He has a point about depreciation costs.

mp51w Wrote:
-------------------------------------------------------
> ColdRainAndSnow Wrote:
> --------------------------------------------------
> -----
> > Randal O'Toole writing an Amtrak hit piece is
> > about as remarkable as the sun setting in the
> west
> > tonight. Triple yawn.
>
> He has a point about depreciation costs.

Um.......yeah! He DEFINITELY has a point about depreciation expense!!! I mean come on. Did Amtrak have that much brass that they were going to try to omit depreciation?

Depreciation is more than what O'Toole describes as well. Its depreciating the COST of the equipment that was originally purchased. I would expect that some equipment has a $0 depreciation expense (cause it reached useful and has been fully expensed out) but other equipment that was purchased still has a depreciable life and expense - namely the Acela Express trainsets. There's other things besides equipment that gets amortized or depreciated that is likely being omitted. Its a company's property, infrastructure - property, plant, and equipment!!!!. Come on this is accounting 101. Not even cost accounting.

Maybe Amtrak should have said it will be EBITDA positive for the first time in 40 years??? - if that is even an accurate statement. EBITDA is a descent measurement out their on Wall Street (earning before interest, taxes, depreciation, and amortization). But to say Amtrak is going to be "profitable" without considering depreciation expense????? Come on. That doesn't fly. As the article mentions, Amtrak has no investors, just Congress to answer to, but there is the Attorney General's Office that does oversight on Amtrak. I am sure they will be all over Amtrak's press release, as well as Amtrak's auditors (you audit beyond the numbers these days!). 

Didn't realize Amtrak was trying to be this foolish in their press release. But then again, there's brand new Viewliner Diners rolling around the system making axle count requirements rather than being used for a revenue purpose.............. 

mp51w Wrote:
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> ColdRainAndSnow Wrote:
> --------------------------------------------------
> He has a point about depreciation costs.

I'll never be one to endorse Amtrak's accounting practices...The whole "The NEC is profitable and the LDTs incur all our losses" BS more than exemplifies their problems. But O'Toole is about 1000 miles away from any sense of objectivity WRT Amtrak. Which makes his Amtrak pontifications hard to take seriously. 

ColdRainAndSnow Wrote:
-------------------------------------------------------
> mp51w Wrote:
> --------------------------------------------------
> -----
> > ColdRainAndSnow Wrote:
> >
> --------------------------------------------------
>
> > He has a point about depreciation costs.
>
> I'll never be one to endorse Amtrak's accounting
> practices...The whole "The NEC is profitable and
> the LDTs incur all our losses" BS more than
> exemplifies their problems. But O'Toole is about
> 1000 miles away from any sense of objectivity WRT
> Amtrak. Which makes his Amtrak pontifications hard
> to take seriously. 

I don't endorse either on this topic, let alone few others. Frankly, I thought we already saw this "glide path to profitability." Same show just different characters..... 

When he said rolling stock lifespan is just 25 years and therefore all Depreciation should be amortized to that point is silly. One also does not write out a hard check to "Depreciation God", but purchases equipment and charges it however the financing dictates when they purchase equipment.

Amtrak's accounting is garbage,  not for the arguments he stated, but mostly due to fixed cost allocation hocus-pocus, which escapes the attention of Ernst & Young. When David Gunn got there, they were a month from bankruptcy despite prior annual report comfort letters from the accounting firm, which evidently don't mean a whole lot. Either auditors don't drill down enough or they are too short-sighted. 



Edited 2 time(s). Last edit at 11/18/19 04:39 by joemvcnj.

ColdRainAndSnow Wrote:
-------------------------------------------------------
> Randal O'Toole writing an Amtrak hit piece is
> about as remarkable as the sun setting in the west
> tonight. Triple yawn.

I had email correspondence with that nucklhead...(Randal).  He is affilated with the Cato Institute  and is the voice of the Koch Brothers. 
He says he is a railfan but is against all subsidies for transportation.