SEC Filings, The 8-K or Current Report


SEC filings, the 8-k or current report. We’ll take a look at how best to extract information from an 8k as with our other articles in regards to the SEC filings. Were gonna start by going to the SEC’s company search website and we’re going to focus on Vera Bradley. A company with a 2010 I P O. The 8-ks are filed as to you disclose material news about the business often associated with the press release. As a banker you’ll want to focus on news about acquisitions or earnings reports so between the 10k or 10q filing you may see an 8k pop up. It’s very important that you as the banker open and read that and see if its earnings news because if its earnings related it’s reasonable to assume that the news would be priced into the company’s stock price thereby affecting its total enterprise value. Now lets look at the SEC website as we’ve done before just typed in the symbol were going to search for companies and while we previously clicked on the most recent 10q now I see a lot of 8-ks so I’m just going to click on and see what they happen to be about. The first one actually gives us a little teaser right here with the departure of directors officers which doesn’t seem super important for valuation purposes. The next one says department directors or officers. Again not super important to me for what I’m doing but here is the most recent results of operations and financial conditions. So Im going to click on the 8k and the SEC headline of the form 8-k for the company just tells me on August 30 2011 the company issued earnings press release. The press release is attached in the exhibit. So we’re gonna go back and see the press release exhibit. While the 10q is a shorter version of a 10k in terms about the quarterly results. The 8k is even shorter so it’s very easy for us to go through. We could see that in this case it was just a press release from the company where they’re announcing quarterly results. Since these are now out in the market it’s important that we use what we can from this when we are using data for evaluation. Like I said in the introduction this is priced in the company’s stock price it’s already affected enterprise value. So we need to go in and look at the numbers and if they are provided we need to change our com comps analysis and our mna comps analysis with this more recent information and we just probably wanna put a footnote that the source of our comps is in an 8-k as a press release, as it’s not quite at the 10q level. So we also want to flip to see if there’s anything material talking about acquisition anything year to date results, revenues increased. They actually provide outlook with some companies don’t do but this company has provided an outlook in this case they expect net revenues for the third quarter $107 – $210 million and EPS 0.26 per share. Now you may be even have analysis that includes something like this or if you just gonna be in a meeting it’s important that you know the stats on your company but as weve done always. We go to the top of our balance sheet and grab our cash number which is lower than it has been but the company has plenty of availability I think as I recall on borrowing so we have our cash number, we have our long-term debt number now 71 million up from 67 at year end. Again a negligible current portions so we are just going to use that long-term debt stat. Next we’ll look at the income statement. You’ll see that theyve got the current quarter but we for LTM our last 12 months purposes just want the combined first and second quarter. So the 26 weeks ended at the end of July in 2011 and we’re gonna back to the end July 2010. So it looks like we’re gonna add to our year and we’re going add about $40 million in revenue to get our LTM revenue and as we’ve done before we look at our operating income and we are going to add our DNA to that which is about four million for each. So actually looks like about a fifteen million dollar increase EBITDA great results for this company. Also were gonna look for our earnings per share and if we remember from our other modules with this particular company they had a change our corporate form from an s-corp when their private to a C-Corp which affected the way they deal with taxes. So if we look at the previous year we see almost no taxation current year more like forty percent of normal tax rate. So we can use our net income for the current year but we’re gonna try to look for some sort of adjustment and sure enough on the next page the company is providing reconciliation of non gap financial measures. So now the company needs to report as if it was a C-Copr for the previous period. So we could see that they’re telling us they did an adjusted net income of $19 million. Now seeing the 19 and the 25 in the current period we do know that net income in fact went up six million when looked at on a comparable basis for the LTM period. Likewise we can have an earnings-per-share number so it diluted 61 cents and 48 cents in the previous period. So we can add 13 cents to our year-end EPS and were also going to get a share count from this document. So just flipping through we just got into the finances again I said it’s a very short document especially when compared to a 10k but even shorter than a 10q. But it’s imperative that bankers look and see where the 8-Ks have been published since the previous financial report.