The XML Financial The XML Financial Analysis LifecycleAnalysis LifecycleRIXML+XBRL Demonstration Project

RIXML+XBRL Demonstration ProjectRIXML+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 RIXML and XBRL Organization Analysis Lifecycle Project ParticipantsProject Participants

Financial Report Analysis LifecycleFinancial Report Analysis Lifecycle

SpreadsheetApplication

XBRL Reader

Internet Browser

Proprietary Database

EDGAR

Newswire

Data Service Provider

Research Report

RIXML

Buy-Side ConsumptionPublishers DistributionPreparation XBRL Reports

Analyst Spreadsheet

Model

Investor Relations / Filing Prep

Sell-Side Research

House

Public Company

Earnings Release

Coding

SEC Filing Form

Our Path Through the LifecycleOur Path Through the Lifecycle

SpreadsheetApplication

XBRL Reader

Internet Browser

Proprietary Database

EDGAR

Newswire

Data Service Provider

SEC Filing Form

Research Report

RIXML

Earnings Release

Coding

Buy-Side ConsumptionPublishers DistributionPreparation XBRL Reports

Analyst Spreadsheet

Model

Investor Relations / Filing Prep

Sell-Side Research

House

Public Company

START

END

Publishing an Earnings ReleasePublishing an Earnings Release

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

Still a Bit of Human Contact for Confirmation…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 Earnings Release Is Coded for Distribution

Releases are coded for distribution by industry, author, subject, etc.

Earnings Release DistributionEarnings 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

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

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

… … XBRL Earnings Releases Can Be Analyzed in XBRL Earnings Releases Can Be Analyzed in Line by Line Detail …Line by Line Detail …

Earnings release financial statement line items are individually tagged for advanced analysis

… … Allowing for Close Investigation of Revenue Allowing for Close Investigation of Revenue Sources and Earnings Quality …Sources and Earnings Quality …

Earnings can be instantly adjusted by any user criteria and easily visualized.

… … And Automatic Comparison Against Other And Automatic Comparison Against Other Reports Published in XBRL.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 XBRL Also Allows for Much More Comprehensive Valuations to Be Automatically Updated …Valuations to Be Automatically Updated …

… … And for Financial Statements to Be Exported And for Financial Statements to Be Exported Into Spreadsheets for Further AnalysisInto 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 LifeBuy-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 LifeBuy-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 LifeBuy-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 AnalystBenefits 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 Data Service Providers Use RIXML Content to Provide Their Users With Detailed Search CriteriaProvide Their Users With Detailed Search Criteria

• Buy side analysts can search research for …

Targeted ThemesQuantitative Equity based research for Technology industry

PreciseInitiate coverage on a stock I follow

Action RelatedReports focused on estimate upgrade/downgrade

What is RIXML?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 StandardBenefits 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

Metadata Definition &ModelingContent

Metadata

(Tags)

Metadata(Tags)

Metadata(Tags)

Metadata

(Tags)

Context

Information

Content &

Resource

Informati

onLegal

Information

Source

Informati

on

Product(Any Research)

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 ApproachInformation Architecture Approach

RIXML Header is Combined with XBRL Resource RIXML Header is Combined with XBRL Resource File for DistributionFile 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 ProcessSell-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

AnalysisCompany results

announcedFinancial model

updated Conclusions

Sell-Side Analyst Incorporation of Earnings Sell-Side Analyst Incorporation of Earnings Release into Forecasting ModelsRelease 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 ReportingXBRL: 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 WorkflowXBRL Analysis Workflow

Integrated Models

Regulatory Filings

Economic

Customers

Supply Chain

XBRL

Internet Data Purveyors

SECFactSetPR 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 ModelsUse 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 ModelsWorkflow: 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

AnalysisCompany results

announcedFinancial model

updated Conclusions

XBRL Filings Can Also Be Incorporated Into XBRL Filings Can Also Be Incorporated Into High-End Proprietary Database/Analysis Systems 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 Stores FedEx Corp. UPS Walgreens Deutsche PostWorld Net

Cathay PacificAirways

Mill

ions

of $

US

D

Estimated Net Reported Debt Net Debt including Operating Leases

Available in ModelWare

Why XBRL for Financial AnalysisWhy 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 RIXML+XBRL Results in More Detailed, Timely and Value-Added Reportsand 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