IMPORTANT: new simulation engine to address re-stated split sensitive line items

Dear All,

A new engine is live that addresses newly discovered issues with split sensititive line items that are re-stated. It has to do mostly with annual statements since that’s where companies typically re-state prior years (this data is flagged as “summary” data by Compustat), but we found few issues with late quarterly data too.

The items in question are

EPS incXor, EPS exclXor, Shares, Shares diluted

We found cases where data was being re-stated in subsequent periods but was flagged as “as-reported”. These data should be split adjusted using the original period date, not the period date in which they come in. To further complicate matters we found cases where two values of the same line item come in for the same period , one flagged as as-reported, one as “summary data”. This is something we did not expect. Since we only have one slot for each line item, we had to add information to our line item to tell us if it was as-reported, or summary, so we can make the correct split adjustement.

We don’t expect a big impact from this. PLease let us know if you see problems. We still have the old version of the engine for comparison.

Thank You

Do you think it affects EarnYield as well?

There’s a slim chance that it affects EarnYield since it’s based on TTM EPS. It’s slim because the period is shorter and interim data is not usually re-stated, mostly just annual. We have found few cases where a interim filing with as-reported data was being adjusted for splits using the wrong period date because it was restated or came in late, and a split occurred at exactly the wrong moment. From what I can tell there’s a key piece of data missing that causes this problem , and we’ve had to implement work-arounds. We’re discussing this with Compustat to double check that our understanding and assumptions are correct.