What 10-Ks have in common with Barack Obama…

February 21, 2008

images-13.jpegBarack Obama is not the only one thinking about “change” right now. Here at Footnoted we’re also interested in change – namely, the ways that some companies’ 10-Ks have changed from last year’s versions. While these year-to-year comparisons highlight important trends in recent filings, e.g., the increased popularity of terms like “subprime” and “monoline exposure,” they sometimes reveal minor revisions that leave me scratching my head. For example, Marriott International (MAR) let some crazed English major loose on its 10-K this year, adding and deleting zillions of commas for no apparent reason, and the room decor in the company’s Renaissance Hotel chain has strangely transformed from “whimsical” to “provocative.”

Otherwise, Marriott’s 10-K was not terribly provocative, though the company did add a new risk factor not seen in its previous filings, relating to “failure to maintain the integrity of internal or customer data.” The firm noted that “significant theft, loss or fraudulent use of customer, employee or company data could adversely impact our reputation and could result in remedial and other expenses, fines and litigation.” Given that a unit of Marriott had some well-publicized trouble with lost customer data over two years ago, it’s not clear why this language is showing up now.

A new risk factor also popped up in the 10-K filed by Waste Management Inc. (WMI) on Tuesday, relating to the new “revenue management” system the firm has been piloting, at considerable cost, over the last year. The filing reveals that the firm has run into big problems with the new application, causing termination of the pilot program. (The company had referred to some problems with the pilot in its last 10-Q, filed in October, suggesting there could be a delay in implementation.) Trashing this system, Waste Management says, may lead to material costs, and it warns that “issues related to the licensed application” could ultimately result in a material impairment charge.

Also, for what it’s worth – you be the judge – Dow Chemical (DOW), whose Building Solutions division achieved record sales last year despite U.S. housing market woes, thinks residential construction in the U.S. will “bottom out” during the second half of this year ( per the 10-K it filed Wednesday).

Ed note from Michelle: This isn’t a political endorsement. Really, it isn’t!

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