#10-q

VIDA SEC Filings - VIDA Global Inc. 10-K, 10-Q, 8-K Forms

For the week ending May 5, 2023 we processed thousands of filings. On Wednesday alone, we received over 500 earnings releases and nearly 300 10-Qs. Below are a few highlights from last week’s earnings reports.

Both DraftKings and Apple filed an 8-K in the evening (post-close) on May 4th and then filed the 10-Q in the morning (pre-open) on May 5th. Calcbench processed both the earnings report and the quarterly report within minutes of the information being made public. 

With Apple, the press is screaming about iPhone sales, but their services business did $20.9 billion in sales with costs of $6.07 billion. So the gross margin was 71% slightly down from 72.6% a year ago. But if the services business was a stand alone company, it would rank in the top 150 of the S&P 500 in terms of sales. 

DraftKings’ reported an adjusted loss per share of $(0.51) while GAAP EPS was $(0.87). Why the difference? Mostly due to Stock-based compensation expense and Amortization of intangible assets. Note: a year ago the Stock-based compensation expense was higher.

Marriott International reported earnings and overall the numbers look good. Year-over-year Q1 revenue, operating income and net income have increased substantially. But digging into disclosures we found some signs of slower growth in certain hotel brands. See the Ritz Carlton RevPAR (revenue per available room) which was growing fast right after quarantine, but has been limping along more recently.

Garmin also reported this week - both an 8-K and a 10-K in the morning. Overall, sales and profits were down year-over-year. We delved into their operating segments. A look under the covers at the outdoor segment sheds light into where the bulk of losses are coming from.

Kraft Heinz was another where the segments helped tell an interesting story. Organic sales up 9.4%. Remember last week when we shared how to obtain  organic sales growth from Coca-Cola and Pepsico?  

Last but not least from our findings, time series data. Examples included Broadridge which reported current and recurring revenues. Using Calcbench we got a time series of both.  The Income statement, directly below, is a time series of metrics while the bar chart below it is of the recurring revenue from Broadridge.  Please note that the bar chart x-axis reflects most recent information all the way on the right hand side, whereas the income statement reflects most recent information on the left hand side.

Want to learn why investment bankers are cautious?  PJT Partners, a boutique banking advisory firm from the Morgan Stanley family breaks out advisory revenues and note the trend.  It may be a harbinger.

Periodically at Calcbench, we take a look at the time between earnings announcements dates and the subsequent 10-K, or 10-Q. It was something that we originally did back in 2016.

We followed that up with another post in 2018.

So we took another shot today and looked at the most recent 10-Q filing period for 405 firms in the S&P500. Here’s a table of results. As you can see, 62.5% of firms in our sample, filed both documents within a day of each other, with over 40% filing in the SAME day!

Unlike in 2016 when we started tracking this data, today, we actually collect 8-K data and have clients using it. So if you want to learn more, drop us an email or use the chat function on calcbench.

Let us know if you want more.

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Days Btw Releases Firms % of Total Cumulative %-age 0 168 41.5% 41.5% 1 85 21.0% 62.5% 2 23 5.7% 68.1% 3 14 3.5% 71.6% 4 10 2.5% 74.1% 5 12 3.0% 77.0% 6 7 1.7% 78.8% 7 11 2.7% 81.5% 8 15 3.7% 85.2% 9 8 2.0% 87.2% >= 10 52 12.8% 100.0%

Many of our readers have also expressed the desire to see the list of the companies who publish both on the same day. Here they are:

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The bubbles seem to have burst for National Beverage, maker of LaCroix soda water.

National Beverage, delightfully tickered as $FIZZ, took a 10 percent hit to its stock price on Tuesday. Why? Because a new lawsuit has emerged against the company, alleging that senior executives were preparing to declare that LaCroix soda cans are free of the toxic chemical Bisphenol A — which, the plaintiff in the lawsuit says, is misleading.

The plaintiff is a former National Beverage executive, Albert Dejewski, who also says that when he tried to raise his concerns to management, the company fired him.

Now, whistleblower complaints against large companies are not new, and for the record, National Beverage denies any wrongdoing. But the lawsuit did prompt a flurry of analyst notes about the company and its prospects, which don’t seem to rosy right now. (One analyst diplomatically called National Beverage “effectively in free fall.”)

So what do the numbers say? We pulled up the Company-in-Detail page for $FIZZ and looked.

Figure 1, below, compares National Beverage’s most recent quarterly filing to the year-ago period. Pretty much every number is moving in the wrong direction: revenue down, cost of sales up, gross profit down, SG&A expenses up, pretax income down. Heck, even the company’s provision for taxes is up. How often do you see that since Congress cut corporate taxes 18 months ago?

Then we jumped over to FIZZ’s footnote disclosures. Nothing to leave you feeling refreshed in those filings, either.

Sales by case volume were down 4.1 percent, “principally due to widespread media coverage of litigation regarding the marketing and labeling of LaCroix” — and those were prior lawsuits alleging contaminants in LaCroix, not to be confused with this whistleblower retaliation lawsuit filed this week. Costs were up due to higher fixed costs, including the price of aluminum and freight shipping.

The company’s cash position is still rising, but it rose only $19 million in the most recent quarter, compared to rising $26.2 million a year earlier. The company also reported a decrease in working capital because of a special cash dividend paid to shareholders last November that cost $135.2 million.

So perhaps surprising nobody, LaCroix’s share price has been tumbling for the better part of a year: from $124 per share last November, to $47.50 this week.

The other week we noted an occasional quirk in financial reporting, where numbers a company announces in its earnings release don’t match what the company actually files in its 10-K or 10-Q several weeks later.

Today we have another example of that phenomenon — except this time that difference comprises almost all the company’s net income reported for the year, and clearly that detail sailed right off the radar screen of most investors.

The company in question: Virtu Financial ($VIRT), a financial services firm in New York with $1 billion in annual revenue. Here’s what happened.

On 8 Feb. 2018, Virtu filed its earnings release for 2017 full-year results. There on Page 10 of the release, Virtu reported that net income attributable to stockholders of $17.33 million. (Total net income was $33.29 million, but Virtu had to deduct the non-controlling interest portion of $15.96 million.) See Figure 1, below. The net income number is highlighted in yellow.

On 13 March 2018, however, Virtu filed its Form 10-K. There, we can see that net income attributable to shareholders was only $2.94 million. That’s $14.39 million of net income vaporized, a decline of 83 percent. See Figure 2, below, with the net income number highlighted in grey.

What happened?

Much of the answer lies in the line-item just above net income: provision for income taxes.

In the earnings release, Virtu reported its provision for income taxes at $78.13 million. By the time Virtu filed its 10-K five weeks later, its provision for income taxes stood at $94.26 million — a difference of $16.13 million.

Virtu also fiddled with a few other numbers here and there on the income statement. For example, interest and dividends income dropped by $3 million, while commissions on technology services rose by $5 million. The ever popular “other, net” also rose by $1.7 million.

Add up all those fluctuations, and Virtu’s net income pretty much evaporates for the year.

We aren’t entirely sure why Virtu’s tax bill changed so much. That was the first year companies were starting to report after the sweeping corporate tax cut from December 2017, so lots of revaluations were happening. You can investigate further on our Interactive Disclosure Viewer if you’re curious.

Equally interesting is what happened with Virtu’s stock price. We looked it up.

On Feb. 3, the day of the earnings release and reported net income of $17.33 million, Virtu’s stock jumped 22 percent, from $21.65 tyo $26.50.

And on March 13, when Virtu dropped the whole 10-K and net income dwindled down to $2.94? The stock opened at $32.80 and closed at $32.95. In other words, nobody cared. But small discrepancies like that add up over time, and people start to care sooner or later.

When does a company become a Reporting Entity: A company becomes a ‘Reporting Company’ when it has a class of securities registered with the U.S. Securities and Exchange Commission (SEC), under the Securities Exchange Act of 1934 ( the “Exchange Act”), adhering to any one of the following sections:

Section 12 (b): The issuer elects to register under this section and lists its securities on a national securities exchange such as NASDAQ, NYSE or other.

Section 12 (g): The issuer elects to register under this section if a class of its equity securities is held by a certain number of non-accredited investors and its total assets on the last day of the fiscal year-end are more than $10 million.

Section 15 (d): The issuer elects to issue its securities (debt or equity securities) to the public but does not list its securities on a national stock exchange.

Most companies register with the U.S. Securities and Exchange Commission (SEC) to finance their operations. When they do register under Section 12 or Section 15 (d), they are subject to statutory reporting requirements such as :

Annual reports on form 10-K

Quarterly reports on form 10-Q

Current reports for material corporate events reporting on form 8-K

The company must file the forms 10-K, 10-Q and 8-K including financial statements, exhibits and other related disclosures with the U.S. SEC via its online system EDGAR (Electronic Data Gathering, Analysis, and Retrieval system). These reports should also be submitted simultaneously to the stock exchange the company is listed on such as NASDAQ and NYSE.

The deadlines of filing these forms is determined by each company’s filing status, which in turn is determined by the public float (market capitalization) and reporting history.

The U.S. Securities and Exchange Commission has divided all reporting companies into the following filing statuses:

Large accelerated filers

Accelerated filers

Non-accelerated filers

Smaller reporting companies

* Public float (market capitalization) is determined by multiplying the number of shares held in the hands of the public investors by the “market value.” 

For companies with a calendar fiscal year, the value of public float is calculated as of the most recently completed second fiscal quarter.

Per SEC’s rules for “market value” calculations, a company can use either the:

closing sale price, or

average of the last bid and last ask prices of the common equity

as of any date within 60 days prior to the end of its most recent fiscal year.

A smaller reporting company (SRC) that cannot use public float to determine its eligibility for filing status can base it on its annual revenues. Companies with annual revenues less than $50 million in the previous year with a zero float would still qualify as an SRC. In June 2016, the U.S. SEC proposed to amend the annual revenues threshold to revenues below $100 million in previous year. For further details visit SEC Proposes Amendments to Smaller Reporting Company Definition

The company must assess its status at the end of the most recently completed second fiscal quarter and reflect any changes on its form 10-Q. If the filing status of the company changes then it must adhere to the new filing deadlines for annual reports on form 10-K and quarterly reports on form 10-Q. 

The company can request an extension with the U.S. SEC on these forms by filing the form 12b-25 Notification of Late Filing enumerating the reasons for the delay in reasonable detail, no later than one business day after the due date of the form. The company can request an extension of 15 calendar days on annual form 10-K and 5 business days for quarterly form 10-Q. There is no filing extension available for Current Form 8-K filings. Companies have four business days after the specified event mentioned in Sections 1-6 and 9 of the U.S. SEC to file form 8-K. However, companies filing under Section 7 Regulation FD might have to file their 8-K earlier.

If the company fails to file these forms timely with the U.S. SEC, the SEC has the authority to impose fines or other penalties for noncompliance with filing requirements including issuing a notice of delinquency. If the company continues to miss filing deadlines and does not take corrective action, the SEC may take additional enforcement measures, such as suspending the company's trading on a stock exchange or initiating legal action against the company or its officers.

For further details visit, What causes a company to be delisted from a stock exchange?

After its Initial Public Offering (IPO) when does a firm have to file a 10-K report? A firm that has gone through an initial public offering (IPO) must file a 10-K report with the Securities and Exchange Commission (SEC). The filing deadline for the Form 10-K depends upon the company’s fiscal year end and its filing status. A company who has just completed its IPO will be considered a non-accelerated filer since large accelerated filers must have filed at least one annual report and be subject to requirements under under Section 13(a) and 15(d) of the 1934 Act for at least 12 months. For example, if a company completed its IPO on November 1, 2024, and its fiscal year ends on December 31, 2024, it would have to file its first 10-K report by March 31, 2025. A company's filing status can change in subsequent years based on its public float and revenue. The company should regularly assess its status to ensure compliance with SEC regulations.

References:

U.S. Securities and Exchange Commission Jumpstart Our Business Startups Act  Frequently Asked Questions

Rule 12b-2 of the Exchange Act

https://dart.deloitte.com/USDART/home/publications/deloitte/additional-deloitte-guidance/roadmap-initial-public-offerings/chapter-1-introduction-initial-public-offerings/1-2-types-issuers

About The Author

Arushi Bhandari is an MBA and a licensed CPA in the state of California. She has helped several Silicon Valley startups at different stages with their accounting and tax related issues. Her publications eBooks - STARTUP Financing, Equity and Tax and Introduction to Equity Compensation are available on Apple iBookstore, Amazon Kindle and Google Play. She maintains a public blog at www.startuptaxaccounting.com especially aimed at startups, and has guest blogged at different startup platforms such as The Startup Garage and Belmont Acquisitions.

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