The XML Financial Analysis Lifecycle RIXML+XBRL Demonstration Project

XML-based project combines RIXML research document information “header” file with an XBRL “resource” file. Project shows how all stages of financial analysis lifecycle can be greatly improved with XML tagging “Real World” use case demonstration with existing systems ready to be used in practice.

RIXML and XBRL Organization Analysis Lifecycle Project Participants

Financial Report Analysis Lifecycle Spreadsheet Application XBRL Reader Internet Browser Proprietary Database EDGAR Newswire Data Service Provider Research Report RIXML Buy-Side ConsumptionPublishersDistributionPreparationXBRL Reports Analyst Spreadsheet Model Investor Relations / Filing Prep Sell-Side Research House Public Company Earnings Release Coding SEC Filing Form

Our Path Through the Lifecycle Spreadsheet Application XBRL Reader Internet Browser Proprietary Database EDGAR Newswire Data Service Provider SEC Filing Form Research Report RIXML Earnings Release Coding Buy-Side ConsumptionPublishersDistributionPreparationXBRL Reports Analyst Spreadsheet Model Investor Relations / Filing Prep Sell-Side Research House Public Company START END

Publishing an Earnings Release Company uploads text Earnings Release, XBRL version, or both, directly to newswire

Still a Bit of Human Contact for Confirmation… I’m calling to confirm that you submitted a news release via PRN Direct. Yes, I did. Thanks for checking.

Earnings Release Is Coded for Distribution Releases are coded for distribution by industry, author, subject, etc.

Earnings Release Distribution The text Earnings Release is combined with a XBRL file and coding and distributed in multiple formats to reach investors, analysts and financial media XBRL text coding Immediate release or queued for timed distribution XBRL only XBRL and text Text only Institutional investors Individual Investors Financial Media Wire Services

While a Text-Only Earnings Release Can Only Be Read…

… a XBRL Earnings Release Is Completely Interactive with a Customizable Display.

… XBRL Earnings Releases Can Be Analyzed in Line by Line Detail … Earnings release financial statement line items are individually tagged for advanced analysis

… Allowing for Close Investigation of Revenue Sources and Earnings Quality … Earnings can be instantly adjusted by any user criteria and easily visualized.

… And Automatic Comparison Against Other Reports Published in XBRL. Earnings release results can be compared in detail against other reports for the same company or its competitors.

XBRL Also Allows for Much More Comprehensive Valuations to Be Automatically Updated …

… And for Financial Statements to Be Exported Into Spreadsheets for Further Analysis XBRL tagged information can also be exported into spreadsheets for customized analysis incorporating information from other data sources

Buy-Side Analyst – A Day in the Life Tremendous benefits of an XBRL tagged release  Receive Earnings Release moments after publication  Data is available in Excel moments after receipt  No time spent on the gathering and data entry

Buy-Side Analyst – A Day in the Life Actionable data within moments  Compare new actuals with historical financials  Look for surprise vs sell side estimates  Review new valuations with real time market data

Buy-Side Analyst – A Day in the Life Spend more time reviewing the data Quickly update valuation and analysis and compare results against estimates

Benefits of XBRL to Sell-Side Analyst Tremendous benefits of an XBRL tagged release  Receive Earnings Release moments after publication  Data is available in Excel moments after receipt  No time spent on the gathering and data entry Produce a well developed earnings model incorporating new information Publish a research report as timely as possible Distribute research to clients using high value added and easily digestible RIXML+XBRL formats

Data Service Providers Use RIXML Content to Provide Their Users With Detailed Search Criteria Buy side analysts can search research for … Targeted Themes Quantitative Equity based research for Technology industry Precise Initiate coverage on a stock I follow Action Related Reports focused on estimate upgrade/downgrade

What is RIXML? An open industry standard that provides for extensive metadata tagging to any piece of investment research, in any form or media, with significant detail for end users to quickly search, sort and filter aggregated research The indexing that describes the content and context of the document, not the document itself A standardization of terms and rules that enables clear description of investment research data

Benefits of the RIXML Standard Increases the efficiency of distribution to publish research directly or indirectly to consumers The RIXML specification supports multi-language and any media type Multiple tags are allowed and primary indicators are provided for many values Identifies research relevant to a user’s profile through the sorting and filtering of standardized, co-mingled data from various sources

Content  Any published content, in any format for investment research Metadata  Any information describing the content  This “wrapper” allows the content to be transported with all information necessary for a system or user to know what it is about In RIXML:  Content = Product  Metadata is broken into key “packages” that describe the product  Each “package” contains information designed to describe a specific aspect of the content Information Architecture Approach

RIXML Header is Combined with XBRL Resource File for Distribution RIXML can be used to distribute and provide content information for a variety of research “resource” file types such as.pdfs, spreadsheets, and xbrl documents. RIXML+XBRL files are distributed by sell-side investment research houses through research data service providers using the same header file plus resource file method currently used. PDF, XLS or XBRL (resource file) RIXML (control file) Data Service Providers (FactSet, Reuters, First Call, etc) Institutional investors

Sell-Side Equity Analyst Process Model Update  Incorporate financial results from news release into analysis and forecasting model  Compare results with forecasts Analyze new metrics and review valuations Confirm investment recommendation and publish research to inform clients of conclusions Analysi s Company results announced Financial model updated Conclusions

Sell-Side Analyst Incorporation of Earnings Release into Forecasting Models Sell-Side analyst can quickly and automatically incorporate results into forecast models without manual re-entry

XBRL: A Major Advance in Financial Reporting HTML or PDF renditions of reports only exploit the ease of distribution that the Internet offers In practice they are of little more value than a photocopied press release XBRL will allow accurate, relevant, scalable querying of financial information Conclusion: Complex information can be turned into simple knowledge!

XBRL Analysis Workflow Integrated Models Regulatory Filings Economic Customers Supply Chain XBRL Internet Data Purveyors SEC FactSet PR Newswire … XBRL XML/XBRL Buy Side/Investors Multiperiod estimates Risk profiles Management assessments Analysts Source: Morgan Stanley Research RIXML/XBRL XBRL

Use Case: Updating Financial Models Quick Comments  Immediate response to earnings releases  Time pressure restricts the level of analysis Detailed Analyses  More detailed analysis of filings  Routine reports should be easier to complete Source: Morgan Stanley Research

Workflow: Updating Financial Models Current Workflow:  Report published to the web in HTML or PDF format  Analyst manually transcribes numbers into spreadsheet model and…  …analyses results quickly in order to get a comment out Process with XBRL:  Report published in XBRL format  Numbers automatically loaded into spreadsheet by an Excel add-in  Analyst has more time to analyze results with confidence Analysi s Company results announced Financial model updated Conclusions

XBRL Filings Can Also Be Incorporated Into High-End Proprietary Database/Analysis Systems Operating Leases: What is Real Debt/Credit Risk Sources: Company reports, Morgan Stanley Research (2,000) - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Winn Dixie StoresFedEx Corp.UPSWalgreensDeutsche Post World Net Cathay Pacific Airways Millions of $USD Estimated Net Reported Debt Net Debt including Operating Leases Available in ModelWare

Why XBRL for Financial Analysis Accuracy  Greater confidence in numbers used for analysis  Reliable results in higher quality conclusions Timeliness  More time to focus on analysis, not process  Shorter “time to market”  More frequent high-quality analysis Other Points to consider…  Research model changing  Information and Knowledge are two separate things  Numbers aren’t everything; context matters too  We need more companies to report using XBRL

RIXML+XBRL Results in More Detailed, Timely and Value-Added Reports RIXML+XBRL greatly benefits both the Sell-Side and the Buy-Side of Wall Street  Sell-Side analyst is can work much more quickly in greater detail with XBRL earnings releases and provide a better recommendation and research product to their buy- side clients using combination of RIXML+XBRL  Buy-Side clients are able to search sell-side research using much finer RIXML criteria to find a much useful and actionable XBRL research