More Exotic SEC Filings

I recently wrote about 10-K filings, which are a great source for company and industry research.  Now let’s delve into some of the more obscure SEC filings used for specific events.  We’ll walk through them and take a look at one or two real examples.

10-Q:  Quarterly Reports

Basically just like the annual report, except these sometimes offer more detailed commentary on quarter-to-quarter performance.  If you’re really trying to understand trends in the numbers, you should look at quarterly changes and how the company explains them.  Also, some companies put additional commentary in the 10-Q that doesn’t make it to the 10-K.  However, be forewarned, if a company is tight-lipped in the 10-K, you’ll usually find the same is the case in the 10-Q’s.

S-1:  IPO Prospectus

The S-1, also known as a red herring (because all of the statements made about often high-risk companies about to go public should be taken with a grain of salt) is filed when a company announces plans to do an IPO.  The format is somewhat similar to a 10-K, with a heavy emphasis on risks.

Looking at the filing for Tesla Motors, the electric car company, as an example, we can find a lot of interesting information in the S-1.  Tesla has sold 937 Tesla Roadsters and already has deposits for about 2,000 sedans (priced at $49,900), starting to validate their plan to address a much bigger market segment with the sedan.  The company has an extensive intellectual property portfolio including a proprietary power train, an AC 3-phase induction motor, and battery cooling and management.  In their assessment of the car market, they quote some market research from Frost & Sullivan stating that the market for electric and hybrid vehicles is expected to grow from 1.75 million units to 10.6 million worldwide between 2008 and 2015.  (This is a great place for me to mention that published market sizing data can be less than accurate.)  Tesla also has ambitious store opening plans – going from 10 at the end of 2009 to nearly twice that number by the end of 2010.  Despite an operating profit margin of -31%, gross margin is up to 8%.  Tesla already sells cars for more than they cost to make, although of course they have a long way to go to reach sustainable economics.

S-4:  Mergers and Acquisitions Filing

These filings are essentially like 10-K’s for mergers.  They describe the state of the business being acquired and explain some of the background to the merger for shareholders who will vote on the combination.  Unfortunately, only acquisitions considered material in size compared to the acquiring company get an S-4 filing, so Apple’s recent Quattro Wireless acquisition, for example, didn’t make the cut despite being $275 million in value.

S-4’s also take up to 3-4 months after the announcement of a merger to come out, so they are not very well suited for breaking news analysis, to say the least.

8-K:  Special Events or Changes

These are filed any time there is a material event that comes up between quarterly reports.  The vast majority of these are not very useful.  For example, the results of voting at the annual shareholder’s meeting may occasion an 8-K, not exactly something you want to spend a lot of time on.  But, if there is a major event that you’re interested in (earnings guidance change, M&A activity, etc.), check for an 8-K.

Have you used any of these to good effect in your work?


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