Monday, August 28, 2017

We know we are preaching to the choir when we say that all the juicy stuff in a corporate filing is tucked away in the footnotes. Legal proceedings, changes in accounting policy, controls and procedures, off-balance sheet risks—they’re all there, somewhere.

A big part of understanding those footnote disclosures, however, is knowing when something has changed from one filing period to the next. Today we’re going to show how Calcbench subscribers can do that.

First you need to identify the disclosure you want to research within a company. A full dive into our Interactive Disclosure database is beyond the scope of this particular post. Suffice to say, you need to create the list of companies you want to examine; then find the disclosure you want from the pull-down menu on the left; then set the time parameters from the choices on the top right. Eventually you’ll get to something that looks like Figure 1, below.

In the above picture, we are staring at the Controls & Procedures disclosures for the oil & gas sector, made in their Form 10-K reports for 2016. The disclosure menu on the left is circled in red; the time period parameters on the right are circled in blue. We happen to be looking at the disclosures for Anadarko Petroleum.

Now let’s zoom into the key point: that tab above the disclosure that says “add previous period.” See Figure 2, below.

Press that tab, and you get Figure 3— which, you guessed it, adds the previous period.

In our case, we went a little nuts and added the two prior periods. Blam! Suddenly we’re looking at Anadarko’s Controls and Procedures disclosures for 2016, 2015, and 2014. You can scroll through the text and see that, essentially, Anadarko made the same disclosures for the last three years.

Sometimes that may be all you want to know: that nothing has changed. Then again, if the company has changed a key accounting policy, announced new litigation, settled old litigation, or done anything along similar lines— you can find that fact easily, and when that fact was disclosed, by comparing previous periods.

One caveat: remember whether you are examining annual or quarterly reports. If you’re looking at annual reports and compare previous periods, you will get the prior annual report.

If you’re looking at quarter reports, however, you’ll get the prior quarter’s report. When you come to the company’s fourth quarter, that will bring up the Form 10-K by default, since Q4 and annual reports are typically the same document. But if you’re looking at, say, the second-quarter 2017 filing, you won’t immediately get the second-quarter 2016 report; you’ll get the first-quarter 2017 filing.

That’s all for today’s How To tip. Happy digging!

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