Live tweeting the Friday Night Dump

Careful readers — those that like to read footnotes — may have noticed that it’s been a few months since we’ve posted anything. There’s a good reason for that. Largely, it’s because I have been dealing with a complicated family health situation that makes it hard for me to focus on much else. But it’s also because there’s no real business model for providing free content on a niche subject like SEC filings. We have a Pro product that is designed (and priced) for institutional investors. But I know that product is simply unaffordable for individual users. I’m conscious of that and have given a lot of thought on ways to carve out some of our Pro content for non-institutional users. That’s why I’m proud to unveil a new tool designed by the guys behind Bespoke that is a subset of our institutional product: the Friday Night Dump. Like footnotedPro, Continue reading "Live tweeting the Friday Night Dump"

America’s dying malls weigh on retailers

Last year was a terrible year for brick-and-mortar retailers as layoffs and bankruptcies climbed. But 2017 is shaping up to be even worse, particularly for those located in a mall. Since the start of this year, an alarming number of companies have been making references in their filings to “mall traffic.” And both the number, and the tone, add fuel to the notion that the country’s malls are in accelerated decline. Consider this letter to shareholders written by Buffalo Wild Wings President and Chief Executive Officer Sally Smith that was disclosed in the company’s recent proxy filing:
“Casual dining restaurants face a uniquely challenging market today. Millennial consumers are more attracted than their elders to cooking at home, ordering delivery from restaurants and eating quickly, in fast casual or quick-serve restaurants. Mall traffic has slowed. And, surprisingly, television viewership of sporting events (important for us, especially) is down.”
Smith Continue reading "America’s dying malls weigh on retailers"

Fox News harassment controversy gets its very own disclosure

After months of controversy swirling around claims of sexual harassment at the Fox News Channel, its parent company finally acknowledged the obvious in its latest 10-Q today. Twenty-First Century Fox said in its filing: “the network’s primetime lineup has significantly changed which could have a negative impact on our ratings.” No kidding? That’s just a portion of a new disclosure section the company added entitled: “Fox News Channel.” The new section summarizes the impact on the company of the well-publicized allegations of sexual harassment that have been swirling since last year. While bits and pieces of the issue have been slipped into previous footnotes in filings, this is the first time the company saw fit to round them all up in one tidy package for investors. This filings comes just weeks after on-air personality Bill O’Reilly was forced out after 20 years at the channel. He was sunk by Continue reading "Fox News harassment controversy gets its very own disclosure"

LendingClub and the art of executive pay euphemisms

In the history of LendingClub, the year 2016 will not be remembered fondly. There was the shock resignation of CEO Renaud Laplanche over a faulty loan scandal. There was a plunge in the stock price, which had already been tumbling since the IPO. And then there were three straight quarters of losses, followed by a weak guidance, and the near-complete turnover in executive ranks. Reaching for the thesaurus, one might come across the word: “bloodbath.” But in discussing the impact of all this on executive compensation in the company’s latest proxy, LendingClub found itself turning to some other rather creative euphemisms. For example: The implosion of its leadership and the loan scandal? LendingClub says: “The year 2016 proved to be a transformational year for our senior leadership team, and we believe we are building a sophisticated, experienced management team that will lead us in our next generation of growth.” Continue reading "LendingClub and the art of executive pay euphemisms"

Will lightening strike twice for Axovant?

Earlier this week, Axovant Sciences, a company that few people have probably heard of, announced that it was hiring the bio-pharma equivalent of a rock star as its new CEO. David Hung may not have the same name recognition of, say, Beyonce or Bono. But when it comes to turning small companies into big paydays, he seems to have the right experience. At least that’s what Axovant shareholders appear to be hoping for, based on the fact that the company’s stock has surged nearly 30% since Hung’s appointment was announced on Monday. Trading volume, which was typically well below 500,000 shares, reached 7.5 million on Tuesday, before calming slightly to 1.6 million on Wednesday. That’s because last September, Hung managed to sell his former company, Medivation, Inc. to Pfizer for around $14 billion. Hung, who had founded the company and served as its CEO, personally walked away with Continue reading "Will lightening strike twice for Axovant?"

Failed Obamacare Repeal Creates Uncertainty For Corporations

If there’s anything corporations hate more than change and competition, it’s uncertainty. But facing the unknown is exactly where thousands of companies find themselves now that the Trump Administration seems to have abandoned its efforts to repeal The Patient Protection and Affordable Care Act of 2010, known better as “Obamacare.” The signature policy achievement of the Obama Administration has been the subject of endless political debate over its effectiveness pretty much since it was proposed and passed. We’re not interested in rehashing the politics here. But no matter how one feels about Obamacare, it’s been clear to us here at Footnoted that companies from a wide spectrum of industries have been anxious about the repeal efforts as well as the lack of clarity about what would come next. Indeed, since the start of this year, and through the recent 10-K filing season, it became rare to read a filing that didn’t include
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2016 was the year of autonomous vehicles

The day most people use autonomous vehicles to zip around likely remains many years in the future. But 2016 saw the public profile of self-driving cars and trucks start to crescendo amid high-profile tests that offered a taste of a robotic future. Beyond just hype, this frenzy of activity forced a growing number of publicly-traded companies to start reckoning with the  potential impact of this new technology. As such, the number of filings in 2016 that referenced “autonomous vehicles” surged dramatically. That wave has continued to rise during the first two months of 2017 as companies from a growing range of industries think that the prospect of self-driving vehicles is serious enough that they need to make some kind of disclosure to investors. In 2016, Footnoted counted 128 filings that made some kind of reference to “autonomous vehicles.” That was up from just 37 in 2015, and 23 in 2014. Continue reading "2016 was the year of autonomous vehicles"

Election results have gun makers feeling blue

The unexpected results of the presidential election delivered good news and bad news for the gun industry. In the months leading up to the November election, it seems gun owners clearly thought Hillary Clinton would win. As a result, they were driving up sales of firearms, a common occurrence when they believe there is an increased risk of anti-gun legislation. But with the victory of Donald Trump, apparently gun owners’ minds were put as ease. As a result, firearm sales have dropped sharply. In a recent 8-K, Sturm Ruger & Company Inc. included a transcript of its earnings call on Feb. 23.  Chris Killoy, Sturm’s president and CEO, said the year had been going great until November. Revenues for 2016 were $664.3 million, up from $551.1 million in 2015. Across the country, the number of background checks performed by the National Incident Criminal Background Check System, jumped 10% Continue reading "Election results have gun makers feeling blue"

Election results have gun makers feeling blue

The unexpected results of the presidential election delivered good news and bad news for the gun industry. In the months leading up to the November election, it seems gun owners clearly thought Hillary Clinton would win. As a result, they were driving up sales of firearms, a common occurrence when they believe there is an increased risk of anti-gun legislation. But with the victory of Donald Trump, apparently gun owners’ minds were put as ease. As a result, firearm sales have dropped sharply. In a recent 8-K, Sturm Ruger & Company Inc. included a transcript of its earnings call on Feb. 23.  Chris Killoy, Sturm’s president and CEO, said the year had been going great until November. Revenues for 2016 were $664.3 million, up from $551.1 million in 2015. Across the country, the number of background checks performed by the National Incident Criminal Background Check System, jumped 10% Continue reading "Election results have gun makers feeling blue"

PG&E’s Filing Of Misery

It might be tough to find any company that offered a gloomier set of disclosures than the list of fires, explosions, and legal problems found in PG&E’s latest annual report. None of this seems to be bothering investors. The stock closed on Wednesday at $64.76, which appears to be an all-time high. Still, consider these disclosures in the 10-K the company filed on Feb. 16. First up: The company noted that it was sentenced back on January 26 to five years of corporate probation for its role in the 2010 explosion of a natural gas pipeline that exploded and killed eight people in San Bruno, Calif. The sentence includes a five year oversight period by a third party and a $3 million fine. Next, the company explained that it was still facing an inquiry from federal regulators as to whether it should be “suspended or debarred from entering into federal procurement and non-procurement Continue reading "PG&E’s Filing Of Misery"

On Intuitive Surgical’s trifecta of events

The massive geopolitical shifts recently have us watching filings closely to see how companies are reacting to the new Trump administration. While the meaning of this new reality is still coming into focus, there may be no better example of how companies face a growing list of question marks than high-flying Intuitive Surgical. In a 10-K filed on Monday, the company added extensive disclosures about how it could be hit by a triple whammy: Changes to NAFTA, an overhaul or repeal of Obamacare, and the United Kingdom’s decision to pull out of the European Union. Intuitive is one of Silicon Valley’s biggest, if somewhat quiet, successes. The robotic surgical company quietly debuted on the stock exchange on June 16, 2000, closing at a split-adjusted $18.25 per share. Last Friday, its stock closed at $702.13 per share. As it expands its surgical tools into more types of surgery, it’s Continue reading "On Intuitive Surgical’s trifecta of events"

2016: The year in filings

Every year in January, we like to step back and take a look at the world that was in terms of filings. The number of filings made to the SEC was only modestly higher than in 2015: 670,831 compared with 662,936 for 2015, or 1.1% higher. Those numbers still pale in comparison to the 750,000 filed in 2007, or the year before the last stock market bubble burst. Given the current political climate, and the urge to repeal Dodd-Frank (see H.R. 78), it will be interesting to see if those numbers change at all in 2017. About 1/3 of those filings were insider-trading related (which we don’t pay as close attention to, but people like Asif Suria, among others do). We asked the folks at Sentieo to run the numbers on the filings that we do pay close attention to: 10Ks, 10Qs, 8Ks and proxies. Continue reading "2016: The year in filings"

The 2016 election in the filings

It’s now been three weeks since Americans elected Donald Trump as the nation’s next President. While Trump doesn’t take office until Jan. 20, 2017, we’ve seen a number of interesting disclosures in SEC filings related to the pending change in administrations. Given that the outcome has widely been viewed as a surprise, many companies (and their lawyers) are still probably trying to get a handle on just what the election outcome will mean for them. All told, we found 35 references to the election in 8-Ks, 10-Qs and 10-Ks that were filed in the past three weeks. When we narrow that down to companies with market caps of more than $1B, the number dropped to 9. That might seem low, but keep in mind that the majority of companies (those on a typical calendar year) had already filed their 10-Qs prior to the Nov. 9 deadline. As you might expect, Continue reading "The 2016 election in the filings"

Apple grows its real estate holdings

Apple is widely known for being super-secretive (see this post from Quora, for example). But the price of being a public company means that several times a year, they are required to peel the onion back a bit. At least, they have to peel it back enough to file three 10-Qs, a 10-K, and a proxy each year. Yesterday, the company filed its 10-K. And while you won’t find any juicy details about its high-profile driverless car project, which according to various media reports has been abandoned, or whatever the iPhone 8 will bring, that doesn’t mean that the 120-page filing isn’t worth a close read. Take, for instance, its disclosure on its real estate holdings. For years, Apple has disclosed a single number for the property it owned and leased; then it broke out the amount that was leased, which included Apple’s retail empire. To get the number for Continue reading "Apple grows its real estate holdings"

One CFO’s revolving door

Back on July 1, Ralph Lauren filed this 8-K providing separation details for its CFO, Robert Madore. While the company had previously announced Madore’s plans to step down, it waited until after the markets closed on the eve of a three-day holiday weekend (the Fourth of July) to provide Madore’s compensation details. We’ll go out on a limb here and say it probably had something to do with the $2.5 M in severance spelled out in Madore’s severance agreement. In exchange, Madore had to stick around until Sept. 30, which is today. In our experience, people who get that type of severance aren’t usually in a rush to land their next gig. Indeed, most agreements that we’ve seen spell out that an executive is prohibited from working for a similar type of business. That’s what the severance payment is for – to tide someone over so that he doesn’t Continue reading "One CFO’s revolving door"

Is Warren Buffett trying to prop up oil?

For someone who isn’t exactly known for talking his book, the Oracle of Omaha is sure doing a lot of that lately. How else to explain these 8 Form 4s filed since the beginning of the year? Each of the filings disclose that Buffett has been actively adding to his already hefty stake in Phillips 66. Just to put those 8 Form 4s into perspective, in 2015, Berkshire Hathaway filed 3 Form 4s for the entire year. A quick search of Berkshire’s 13Fs shows that it has made regular use of the “Confidential Treatment” rule that allows high-profile investors (like Buffett) from having to disclose certain positions in their routine quarterly filings for a number of months. That’s certainly what Buffett did with his investment in International Business Machines. Though the buying was done during the first quarter of 2011, a confidential treatment request made it invisible to others until Continue reading "Is Warren Buffett trying to prop up oil?"

SEC filings in 2015: a look back

At the start of each year, we like to take a deep breath and look back on how many SEC filings were filed last year. First, the good news: the number of filings made to the SEC actually declined slightly last year to 662,936. That’s compared with 668,635 for 2014. It’s been about three years since we’ve seen the number of filings made actually decline. The numbers for 2015 look particularly good when you compare them to those in 2007 when just over 750,000 filings were made. Woo-hoo! But that’s still a lot of filings to wade through, especially if you’re sloshing around in EDGAR (An interesting aside: our friend Ken Adams has much more colorful language to describe the circles of EDGAR-hell, which you can read here). According to our own internal stats, we looked at about 3% of those filings (though keep in mind that as with Continue reading "SEC filings in 2015: a look back"

The cost of security at Facebook

It’s been well-documented both here and other outlets (see this WSJ story for example) that the corporate jet is one of those perks that CEOs love more than just about anything else. And what’s not to love, given the hassles of flying commercial these days? We thought about that when we saw this interesting comment letter that was publicly released yesterday about how much Facebook is spending on CEO Mark Zuckerberg’s travel. As the letter makes clear, it’s a lot more than the $610K that Facebook has publicly disclosed previously in its most recent proxy statement. That’s because Facebook says that number only reflects “personal use of aircraft chartered in connection with Mr. Zuckerberg’s overall security program and on which Mr. Zuckerberg and guests flew” and not the business expense of any security provided. Here’s the way that Facebook’s external counsel, Fenwick & West, put it in the letter to Continue reading "The cost of security at Facebook"

Drowning in adjusted EBITDA!

We’re at the tail end of earnings season — the next Q deadline is on Monday, Nov. 9. What that means is that Team Footnoted has been reading an awful lot of filings. As we tweeted on Friday, 139 8-Ks and 95 10-Qs were filed after 4 pm last Friday. Any guess on how we spent our weekend? Yesterday, another 160 10-Qs came crashing on our electronic shore. While we don’t read all of those filings — after all, we’re not total masochists — one thing comes across loud and clear: the number of companies using the term “adjusted EBITDA” appeared to be swelling. We tweeted this too, last week, and got some interesting responses. So we decided to run the numbers and here’s what we found: the bloat in adjusted EBITDA is real, even at the largest of large-cap companies. We searched for the term “Adjusted EBITDA” in 8Ks,
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New title, old salary at Ralph Lauren

Last week, Ralph Lauren Corp. announced that it had hired a new CEO, Stefan Larsson, to take over the reins from the company’s namesake, Ralph Lauren. As expected, the passing of this type of baton got lots of coverage in the media. But far more interesting to us was the 8-K that Ralph Lauren (the company) filed two days after the big media announcement. That’s because the filing included both an employment agreement with Larsson and an amended agreement with Ralph Lauren (the man). First, the agreement with Larsson: his base salary was set at “not less than” $1.25 million with a target bonus of 3x that amount and a maximum of 4.5 times. He will also get a one-time equity award valued at $9.125 million, with the shares split more or less evenly between time-based and performance-based options. If Larsson is terminated without cause or voluntarily Continue reading "New title, old salary at Ralph Lauren"