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Who's Filing Now?

Once again, as Wall Street waits for happy hour, we Fools wade into 8-K filings that, if the timing is to be believed, executives would rather you not read.

Filings like this one from Longs Drug Stores (NYSE: LDG  ) , which says that certain members of the pharmacy's management team stand to earn millions in bonuses. CEO Warren Bryant, for example, could earn more than $2.5 million by my math.

Aren't scripts for Hollywood?
Trouble is, we don't know exactly what he and his fellow executives need to do for shareholders in order to cash in. Quoting from the 8-K:

The executive officers of the Company listed below are eligible to receive performance-based compensation for Fiscal Year 2008 based on the Company's achievement of certain adjusted operating income, same store front-end sales growth, and script count growth. [Emphasis mine.]

If these don't strike you as typical metrics, you're right. Not that there's anything wrong with that -- firms report progress in non-GAAP form all the time. Sirius Satellite Radio (Nasdaq: SIRI  ) and XM Satellite Radio (Nasdaq: XMSR  ) would have to be two of the most popular.

Longs makes the list because its results contain the impact of closed stores and other discontinued operations. So what's the problem? Search the fourth-quarter press release. Nowhere is there a mention of "certain adjusted operating income" or "same store front-end sales growth" or "script count growth." Same goes for the 10-K.

And that smells funny. Publish the metrics, Longs. That's the only way for shareholders -- that is, your owners -- to know whether Bryant and others deserve the millions they stand to earn this fiscal year.

Really, it's a better opportunity
But my favorite filing this week comes from toolmaker Black & Decker (NYSE: BDK  ) , which reported that group vice president Thomas Koos resigned to become CEO of Jacuzzi Brands. Construction tools chief Bruce Brooks is to take Koos' place.

There's little here to arouse suspicion. Even the quote from CEO Nolan Archibald is pretty bland: "We thank Tom Koos for his contributions to the success of the consumer business, and we wish him well in his next endeavor."

Awwwww. Can't you just feel the love? Get me a cup of tea and a sweater. And turn on Oprah while you're at it.

Actually, wait. Let's have a look at how Koos did before we call this a well-deserved group hug and move on. What do we find? Uh-oh. Sales were down 7% in the fourth quarter. Per-share earnings, meanwhile, fell 27% over the same period.

We can't blame all that on Koos, right? Right. Trouble is, power tools and accessories accounted for 73.5% of Black & Decker's revenue in 2006 and, within that division, consumer tools were among the poorest performers. Quoting from the most recent 10-K:

Sales of the consumer power tools and accessories business in the United States decreased at a low single-digit rate primarily as a result of lower consumer power tool and pressure washer sales, which were partially offset by the sales of the acquired Vector business. Excluding the sales of the acquired Vector business, sales of the consumer power tools and accessories business declined at a low double-digit rate from the 2005 level with sales down across most channels and product lines. Actions taken by major retailers to reduce inventory levels also negatively impacted the U.S. consumer power tools and accessories business in 2006. [Emphasis mine.]


With 15 years in the PR biz, I can tell you that Black & Decker probably pitched this messy job to Brooks as a "turnaround opportunity." Meanwhile, Koos, who probably had enough of "turnaround opportunities" in his six years in the executive ranks at B&D, heads for safer waters at Jacuzzi Brands.

Oh, wait, that's not right either. Jacuzzi was struggling for years before business development superstar Apollo Investment (Nasdaq: AINV  ) agreed to buy the firm for $1.25 billion in cash and assumed debt. The transaction was completed last month.

That means Koos is leaving one "turnaround opportunity" for another. Anyone want to bet that Archibald, tired of poor consumer sales, is sad Koos went looking for a new gig? I wouldn't.

That's all for this week. Think you've found a late filing we Fools should see? Let me know.

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Fool contributor Tim Beyers, who is ranked 1,426 out of more than 24,900 in our Motley Fool CAPS investor intelligence database, usually favors two scoops of ice cream over the inside scoop. Tim didn't own stock in any of the companies mentioned in this story at the time of publication. All of his portfolio holdings can be found at Tim's Fool profile. His thoughts on SEC filings, Foolishness, and investing in general may be found in his blog. Apollo Investment Corp. is a Motley Fool Income Investor recommendation. XM is a former Rule Breakers recommendation. The Motley Fool's disclosure policy may be filed under "F" for fair, or Foolish.

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3/12/2010 4:01 PM
BDK.DL $74.05 Down +0.00 +0.00%
The Black & Decker… CAPS Rating: ***
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Longs Drug Stores CAPS Rating: *
AINV $5.48 Down -0.04 -0.72%
Apollo Investment CAPS Rating: *****
SIRI $3.88 Down -0.12 -3.00%
Sirius XM Radio CAPS Rating: **
XMSR.DL $0.00 Down +0.00%
XM Satellite Radio CAPS Rating: No stars