Public companies must file forms


November 12, 1990|By Mark Stevens | Mark Stevens,Mark Stevens

Are you searching for little-known business information? The kind that can give you valuable insight into your competitors or that can open the doors to prospective customers?

If so, you'll want to tap into an arm of the federal government that offers a wealth of data on thousands of publicly traded companies.

It's all made possible by the nation's security laws, which require public companies to disclose comprehensive information concerning their financial status, executive compensation, joint ventures, mergers and acquisitions and legal entanglements.

"Assume for example that you hear through the grapevine that your biggest competitor is beginning to expand by selling franchises," says Steven Goldspiel, president of Disclosure Inc., a company that monitors security law filings on behalf of corporate clients. "Convinced that franchising is a good idea for your company, you decide to follow suit. But before you proceed, you want to find out precisely what your competitor is up to. How much he's charging for franchises, the terms of his franchise agreement and the number of franchises he's sold to date."

If the competitor is publicly traded, such information might be revealed in the attachments to its 10-K report, which must be filed annually with the Securities and Exchange Commission.

"Typically the 10-K includes financial statements for the last three years, detailed descriptions of the company's lines of business, and profiles of officers' backgrounds and experience," Goldspiel says.

Information from securities filings can help companies to conduct these additional activities:

* Monitor the status of your competitors' legal battles. Considering that public companies are required to report on the progress of significant litigation in their 10-K documents and in quarterly 10-Q filings, monitoring these reports can give you insight into the status of these cases.

"This can be valuable for any number of reasons," Mr. Goldspiel says. "Let's say that a major competitor claims to hold a patent on technology that gives it a clear advantage in the marketplace. Should you discover through SEC filings that your competitor is being sued by a third party for patent infringement, you may learn that the advantage it once held will soon be eliminated."

* Discover emerging alliances formed specifically to encroach on your market. If your competitors have decided to attack your customer base in unison, you'll likely find advance warning of this in their 10-K filings.

* Develop compensation plans based on the data you'll find in the annual proxy statements and the 10-K's filed by public companies in your field or industry.

* Uncover new sales prospects. Lurking within the complex structure of publicly held companies may be corporate divisions or subsidiaries in the market for your products or services. Camouflaged as they are by their parent companies, you may be unaware of their existence and business needs.

"Here again, SEC filings can prove to be a potent business tool," Mr. Goldspiel says. "At a client's request, we can do a data base search of 12,000 companies, informing the client of which companies are likely to have an interest in their products or services."

Companies interested in obtaining SEC data can work through private services or can contact the Securities and Exchange Commission, Public Reference Branch, SEC, Washington, D.C. 20549. For a free guide to SEC filings, call Disclosure at (800) 843-7747.

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