Thursday, February 21, 2008

Stanley Works Updates But What Did You Say?

Stanley Works (SWK) announced that they updated investors and analysts on the company's growth strategies and key initiatives on Feb 21 . Mr. Lundgren Chairman and Chief Executive Officer, commented:

"Today we updated Wall Street analysts and investors on the exciting growth, cost reduction and asset efficiency initiatives that represent the heart of our day-to-day efforts. We highlighted the Stanley Fulfillment System whose benefits began to show in the form of considerable inventory reductions and cash flow growth in 2007. Along with a solid long-term strategy, brand and new product vitality and continued execution, we are confident in the prospects for continued growth in the coming years."

The press release issued at approximately noon Thursday Feb 21 really did not say much. If they several hours with analysts et al surely they said more important stuff than the above paragraph. If there is an update that means there is some kind of disclosure that has occurred. Just saying we are doing good and thanks for your support is a little weak.

The press release had approximately 1744 words. Of which 989 were boiler plate legalese that is standard in all disclosure communication. If you go to the corporate web site you will find a 92 page PDF document that is available to all. The document is what they talked about with the analysts. This document is not filed with the SEC whereas the abbreviated press release was. I am guessing that the company will eventually take down the investor meeting from their web site as they are not legally obligated to maintain it.

So Stanley, why not file the 92 pager with the SEC? It just looks suspicious. It’s all about the transparency these days and this one does not measure up.

Wednesday, February 20, 2008

La-Z-Body Still In The Recliner

La-Z-Boy (LZB) reported increased profits on decreased sales. Always a good trick if you can do it. So it deserves closer scrutiny. Who knows maybe an important business lesson may reveal itself.

OK after reading the press release and search for the financial statements here is what happened. They dropped their dividend to conserve cash. Why not just drop the entire dividend and do the job right?

Also last years supposed loss was the result of non cash write downs of intangibles from business held for sale. So the bounce is not as dramatic as you would think. But keep reading. La-Z-Boy made $9.5 million net income in the quarter. To get there they booked approximately $7.2 million for Income from Continued Dumping and Subsidy Act and approximately $4.9 million other income.

Kurt L. Darrow, La-Z-Boy’s President and Chief Executive Officer, said: “We continue to go through a difficult macroeconomic period which is impacting the housing and home furnishings markets.”

Well OK we all read the papers but what are you doing to make this place a financially viable entity. You cannot make it on corporate welfare

Tuesday, February 19, 2008

Kowabunga! How Do They Do It?

Think Partnership Inc. d.b.a. Kowabunga!® (THK) announced some preliminary results. How the SEC lets companies get away with this I do not understand. In a press release dated Feb 19,2008 they basically reported revenues and EBITDA. Read this quote

“The company estimates revenues will total approximately $20.0 million for the fourth quarter of 2007, which would represent an increase of 5% from $19.0 million reported in the fourth quarter 2006. Earnings before interest, taxes, depreciation and amortization expenses (EBITDA) is estimated to be approximately $2.4 million for the fourth quarter of 2007, compared with $2.7 million reported in the fourth quarter.”

Scott P. Mitchell, Think Partnership's president and chief executive officer went on to provide some commentary on the results. But the real numbers will be announced later. Read this quote from the press release.

“The company will issue its fourth quarter and full year 2007 financial results after the close of market on March 13, 2008, followed by a conference call at 4:30 p.m. Eastern Time.”

So what was today all about and where does it stand in terms of REG FD and disclosure requirements? We all know that once you have the EBITDA number figured out you should have the full financials available. In any event they are asking the market to rely on the sneak peak preliminary numbers for the next four weeks”
Back track to last Friday Feb 15 Kowabunga! issued a press release while the market was open indicating that they have adopted a shareholder rights program. You know just in case there is an unsolicited offer. Hmm 15% trigger point.

Then they sneak in this dividend announcement

“In connection with this plan, Kowabunga!’s board of directors declared a dividend of one Preferred Stock Purchase Right for each outstanding share of Kowabunga!’s Common Stock. The dividend will be received by shareholders of record on Friday, February 29, 2008. ‘

Absolutely no information in the press release as to what the terms of the preferred will be. By the way when will the dividend actually be issued. I presume Feb 29.

Kowabunga! is communications challenged. There could have been more clarity on this one. But look its on AMEX and maybe that explains it!

Monday, February 18, 2008

Marriott International Where Is The Balance Sheet?

Marriott released Q4 and year end numbers on Thursday and then followed up with a conference call. The press release headline said the results were solid. Revpar was up; an extremely important metric in the lodging business. But pray tell where is the balance sheet in all this.

The press release which is supposed to disclose to investors what the results are had a tremendous amount of operating detail. But the press release did not contain a balance sheet. The conference call covered many topics at great length but analysts and management essentially ignored the balance sheet.

Several tidbits of information were thrown out. In the past year they spent approximately $1.8 billion in share buy backs. Thanks a lot; the share price has been moving constantly downward. They continued in the fourth quarter repurchasing 12 million shares for $462 million. From the conference call we learnt that they deployed $900 million in capital expenditures, loan advances, net time share development, and equity and other investments.

They glossed over the fact that that have increased long term debt by approximately $1 Billion. This will naturally cost them in a large increase in interest expense and eventual repayment obligations. Basic business school stuff that was left out.
Seems to me that management is overly focused on Revpar and associated metrics. The lodging business is bricks and mortar intensive and more transparency on balance sheet issues would be appropriate.

By the way, you finally find the balance sheet in the 10-k. Most companies announce it to the world and let it figure prominently.