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 biotech Isis Pharmaceuticals (Nasdaq: ISIS  ) , which responded to concerns regarding the independence of director Dr. Richard DiMarchi by ending a $12,000-a-year consulting contract it had with him.

Institutional Shareholder Services had brought the complaint, alleging that the payments meant that DiMarchi couldn't effectively operate as a completely objective member of Isis' board. Good call.

Filing far from the tree
Sadly, I can't say the same for Learning Tree's (Nasdaq: LTRE  ) decision to part ways with Ernst & Young, its accountant since 2002.

Even though the company spends lots of time explaining how well it, a training specialist, and Ernst & Young are getting along, I sense the accountant is relieved to move on. From the 8-K:

In our Form 10-K for the year ended September 29, 2006 we disclosed that our management had concluded that our internal control over financial reporting was ineffective as of September 29, 2006  because of material weaknesses related to entity-level monitoring controls, our financial statement close process, and our accounting for income taxes.

Whoops.

For the uninitiated, the Sarbanes-Oxley legislation of 2002 now forces companies to report on whether they've put in place adequate mechanisms for measuring and reporting business progress. Most often, these mechanisms are known as "internal controls."

Dozens of firms have been forced to contend with out-of-whack internal controls in recent years, including JDS Uniphase (Nasdaq: JDSU  ) and UTStarcom (Nasdaq: UTSI  ) .

Fixing these bugaboos can be costly. For Learning Tree, they appear to have at least contributed to the departure of Chief Financial Officer LeMoyne Zacherl. Interim CFO Charles Waldron, a consultant with services firm Tatum, will fill in till a replacement is found, though shareholders will have to pay for his services. Referring back to the filing:

Tatum will be making Mr. Waldron's services available as our employee and Chief Financial Officer under an Agreement dated April 30, 2007. We will pay Mr. Waldron a salary of $32,000 per month and will pay Tatum a fee of $8,000 per month.

Did you do the math? Yep, that's $480,000 a year -- or nearly double what Zacherl took home during fiscal 2006. (For those wondering, that was $259,787.) Hope he's worth it, guys.

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 6,444 out of more than 28,400 rated investors in our Motley Fool CAPS database, usually favors two scoops of ice cream over the inside scoop. Tim didn't own shares in any of the companies mentioned in this article at the time of publication. His 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. The Motley Fool's disclosure policy may be filed under "F" for fair, or Foolish.


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