Williams-Sonoma(WSM) - 2020 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements and accompanying notes for the reporting periods Condensed Consolidated Statements of Earnings Details the company's revenues, profits, and earnings per share for the thirteen and thirty-nine week periods Thirteen Weeks Ended | Metric | Nov 3, 2019 (in thousands) | Oct 28, 2018 (in thousands) | | :--- | :--- | :--- | | Net revenues | $1,442,472 | $1,356,983 | | Gross profit | $518,172 | $494,984 | | Operating income | $101,891 | $94,384 | | Net earnings | $74,713 | $81,465 | | Basic EPS | $0.96 | $1.01 | | Diluted EPS | $0.94 | $1.00 | Thirty-nine Weeks Ended | Metric | Nov 3, 2019 (in thousands) | Oct 28, 2018 (in thousands) | | :--- | :--- | :--- | | Net revenues | $4,054,418 | $3,835,157 | | Gross profit | $1,446,364 | $1,391,090 | | Operating income | $262,188 | $235,100 | | Net earnings | $190,017 | $178,346 | | Basic EPS | $2.43 | $2.17 | | Diluted EPS | $2.39 | $2.15 | Condensed Consolidated Statements of Comprehensive Income Outlines net earnings and adjustments for other comprehensive income items like currency translation Thirteen Weeks Ended | Metric | Nov 3, 2019 (in thousands) | Oct 28, 2018 (in thousands) | | :--- | :--- | :--- | | Net earnings | $74,713 | $81,465 | | Foreign currency translation adjustments | $1,783 | $(1,830) | | Change in fair value of derivative financial instruments, net of tax | $5 | $(65) | | Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax | $(8) | $(120) | | Comprehensive income | $76,493 | $79,450 | Thirty-nine Weeks Ended | Metric | Nov 3, 2019 (in thousands) | Oct 28, 2018 (in thousands) | | :--- | :--- | :--- | | Net earnings | $190,017 | $178,346 | | Foreign currency translation adjustments | $(2,477) | $(5,968) | | Change in fair value of derivative financial instruments, net of tax | $77 | $1,064 | | Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax | $(235) | $(71) | | Comprehensive income | $187,382 | $173,371 | Condensed Consolidated Balance Sheets Provides a snapshot of the company's assets, liabilities, and stockholders' equity at the end of the period As of November 3, 2019 (in thousands) | Asset Category | Amount | | :--- | :--- | | Cash and cash equivalents | $155,025 | | Total current assets | $1,659,245 | | Property and equipment, net | $915,740 | | Operating lease right-of-use assets | $1,194,061 | | Total assets | $3,963,824 | | Liability & Equity Category | Amount | | :--- | :--- | | Total current liabilities | $1,288,910 | | Long-term debt | $299,769 | | Long-term operating lease liabilities | $1,127,403 | | Total liabilities | $2,831,931 | | Total stockholders' equity | $1,131,893 | | Total liabilities and stockholders' equity | $3,963,824 | Changes from February 3, 2019 to November 3, 2019 (in thousands) | Metric | Feb 3, 2019 | Nov 3, 2019 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $338,954 | $155,025 | $(183,929) | | Merchandise inventories, net | $1,124,992 | $1,258,541 | $133,549 | | Total assets | $2,812,844 | $3,963,824 | $1,150,980 | | Total current liabilities | $1,074,812 | $1,288,910 | $214,098 | | Total liabilities | $1,657,130 | $2,831,931 | $1,174,801 | | Total stockholders' equity | $1,155,714 | $1,131,893 | $(23,821) | Condensed Consolidated Statements of Stockholders' Equity Summarizes the changes in stockholders' equity over the thirty-nine week period ended November 3, 2019 Stockholders' Equity Changes (February 3, 2019 to November 3, 2019, in thousands) | Item | Amount | | :--- | :--- | | Net earnings | $190,017 | | Foreign currency translation adjustments | $(2,477) | | Change in fair value of derivative financial instruments, net of tax | $77 | | Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax | $(235) | | Repurchases of common stock | $(112,714) | | Dividends declared | $(117,647) | | Stock-based compensation expense | $49,084 | | Adoption of accounting pronouncements (ASU 2016-02) | $(3,303) | | Balance at November 3, 2019 | $1,131,893 | Condensed Consolidated Statements of Cash Flows Details the cash inflows and outflows from operating, investing, and financing activities Thirty-nine Weeks Ended | Cash Flow Activity | Nov 3, 2019 (in thousands) | Oct 28, 2018 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $89,950 | $179,501 | | Net cash used in investing activities | $(120,684) | $(126,522) | | Net cash used in financing activities | $(152,496) | $(279,781) | | Net decrease in cash and cash equivalents | $(183,929) | $(225,722) | | Cash and cash equivalents at end of period | $155,025 | $164,414 | Notes to Condensed Consolidated Financial Statements Provides detailed explanations of the accounting policies and financial data presented in the statements NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION The company adopted new accounting standards for leases and hedging, impacting assets, liabilities, and equity - Adoption of ASU 2016-02, Leases, in fiscal 2019 resulted in an approximate $1.2 billion increase in total long-term assets and total liabilities, and a $3.3 million reduction to opening retained earnings[33] - Adoption of ASU 2017-12, Derivatives and Hedging, in fiscal 2019 did not have a material impact on financial condition, results of operations, or cash flows[34] - ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software, effective in fiscal 2020, is not expected to have a material impact[35] NOTE B. BORROWING ARRANGEMENTS The company maintains a $500 million revolver and a $300 million term loan, with $400 million outstanding - Credit facility includes a $500 million unsecured revolving line of credit and a $300 million unsecured term loan facility[37] - The company was in compliance with all financial covenants under the credit facility as of November 3, 2019, and expects to remain so for the next 12 months[41] Borrowings as of November 3, 2019 (in thousands) | Facility | Outstanding Amount | | :--- | :--- | | Revolving line of credit | $100,000 | | Term loan | $300,000 | | Issued but undrawn standby letters of credit | $12,402 | | Letter of credit facilities | $8,221 | NOTE C. STOCK-BASED COMPENSATION Stock-based compensation expense totaled $49.5 million year-to-date, with 5.4 million shares available for future grants - Approximately 5,367,000 shares were available for future grants under the Long-Term Incentive Plan as of November 3, 2019[43] Stock-Based Compensation Expense (in thousands) | Period | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Thirteen weeks ended | $14,115 | $14,427 | | Thirty-nine weeks ended | $49,516 | $40,953 | Restricted Stock Unit Activity (Thirty-nine weeks ended November 3, 2019) | Activity | Shares | | :--- | :--- | | Balance at February 3, 2019 | 3,012,923 | | Granted | 1,036,010 | | Granted, with vesting subject to performance conditions | 238,786 | | Released | (985,540) | | Cancelled | (347,205) | | Balance at November 3, 2019 | 2,954,974 | | Vested plus expected to vest at November 3, 2019 | 3,115,488 | NOTE D. EARNINGS PER SHARE Diluted EPS for the thirty-nine weeks ended November 3, 2019 was $2.39 - Stock-based awards of 2,000 and 28,000 were excluded from diluted EPS computation for the thirteen and thirty-nine weeks ended November 3, 2019, respectively, as their inclusion would be anti-dilutive[50] Earnings Per Share (Thirteen Weeks Ended) | Metric | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Basic EPS | $0.96 | $1.01 | | Diluted EPS | $0.94 | $1.00 | Earnings Per Share (Thirty-nine Weeks Ended) | Metric | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Basic EPS | $2.43 | $2.17 | | Diluted EPS | $2.39 | $2.15 | NOTE E. SEGMENT REPORTING The company now operates as a single reportable segment, with Pottery Barn and West Elm as the largest brands by revenue - Effective fiscal 2019, the company combined e-commerce and retail businesses into a single reportable segment, managing at the overall brand level[54] Net Revenues by Brand (Thirteen Weeks Ended, in thousands) | Brand | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Pottery Barn | $556,985 | $533,469 | | West Elm | $390,341 | $339,099 | | Williams Sonoma | $205,493 | $203,936 | | Pottery Barn Kids and Teen | $228,051 | $227,331 | | Other | $61,602 | $53,148 | | Total | $1,442,472 | $1,356,983 | Net Revenues by Brand (Thirty-nine Weeks Ended, in thousands) | Brand | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Pottery Barn | $1,573,958 | $1,530,300 | | West Elm | $1,057,398 | $913,662 | | Williams Sonoma | $591,761 | $600,092 | | Pottery Barn Kids and Teen | $632,950 | $621,534 | | Other | $198,351 | $169,569 | | Total | $4,054,418 | $3,835,157 | Long-lived Assets by Geographic Location (in thousands) | Location | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | U.S. | $2,140,505 | $1,076,367 | | International | $164,074 | $50,966 | | Total | $2,304,579 | $1,127,333 | NOTE F. COMMITMENTS AND CONTINGENCIES The company is involved in ordinary course legal proceedings not expected to have a material adverse effect - The company is involved in lawsuits, claims, and proceedings incident to the ordinary course of business, which are increasing in number[59] - Management believes the ultimate resolution of current legal matters will not have a material adverse effect on the Condensed Consolidated Financial Statements[59] NOTE G. STOCK REPURCHASE PROGRAM AND DIVIDENDS The company repurchased $112.7 million in stock year-to-date and has $611.1 million remaining under its program - As of November 3, 2019, $611,101,000 remained under the current stock repurchase program[60] Stock Repurchases (Thirteen Weeks Ended) | Period | Shares Repurchased | Average Cost Per Share | Total Cost (in thousands) | | :--- | :--- | :--- | :--- | | Nov 3, 2019 | 610,349 | $66.49 | $40,583 | | Oct 28, 2018 | 742,508 | $61.15 | $45,403 | Stock Repurchases (Thirty-nine Weeks Ended) | Period | Shares Repurchased | Average Cost Per Share | Total Cost (in thousands) | | :--- | :--- | :--- | :--- | | Nov 3, 2019 | 1,838,971 | $61.29 | $112,714 | | Oct 28, 2018 | 3,883,875 | $56.70 | $220,221 | Cash Dividends Declared Per Common Share | Period | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Thirteen weeks ended | $0.48 | $0.43 | | Thirty-nine weeks ended | $1.44 | $1.29 | NOTE H. DERIVATIVE FINANCIAL INSTRUMENTS The company uses foreign currency forward contracts to hedge inventory purchases and foreign-denominated assets - The company uses foreign currency forward contracts as cash flow hedges for forecasted inventory purchases by its Canadian subsidiary (to sell Canadian dollars and purchase U.S. dollars)[65] - Non-designated foreign currency forward contracts are used to reduce exchange risk on assets and liabilities denominated in foreign currencies (to sell Australian dollars and British pounds and purchase U.S. dollars)[66] - No gain or loss was recognized for cash flow hedges due to hedge ineffectiveness for the periods presented, indicating all hedges were effective[68] Foreign Currency Forward Contracts Notional Values (in thousands) | Contract Type | Nov 3, 2019 | Oct 28, 2018 | | :--- | :--- | :--- | | Designated as cash flow hedges | $19,700 | $13,300 | | Not designated as cash flow hedges | $0 | $5,200 | NOTE I. FAIR VALUE MEASUREMENTS The company uses a three-level hierarchy to measure fair value for assets and liabilities - Fair value hierarchy: Level 1 (quoted prices in active markets for identical assets), Level 2 (observable inputs other than Level 1, corroborated by market data), Level 3 (unobservable inputs)[77] - Cash and cash equivalents are valued using Level 1 inputs[72] - Long-term debt and foreign currency derivatives are valued using Level 2 inputs[73][74] - Long-lived assets (property and equipment, right-of-use assets) are measured at fair value on a nonrecurring basis using Level 3 and Level 2 inputs, respectively, when impairment indicators exist[76] NOTE J. ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive loss was $(13.7) million, driven by foreign currency translation adjustments - Foreign currency translation adjustments contributed $(3,009) thousand, $(1,251) thousand, and $1,783 thousand to other comprehensive income (loss) for the three periods within the thirty-nine weeks ended November 3, 2019[78] Accumulated Other Comprehensive Income (Loss) (in thousands) | Component | Feb 3, 2019 | Nov 3, 2019 | | :--- | :--- | :--- | | Foreign Currency Translation | $(11,259) | $(13,736) | | Cash Flow Hedges | $186 | $28 | | Total Accumulated Other Comprehensive Income (Loss) | $(11,073) | $(13,708) | NOTE K. ACQUISITION OF OUTWARD, INC. The 2017 acquisition of Outward, Inc. for $112 million resulted in $66.6 million of goodwill - Acquired Outward, Inc. on December 1, 2017, for a contractual purchase price of $112 million[80] - Purchase consideration allocated included $18.3 million for intangible assets (3-D imaging data and core intellectual property) and $66.6 million for goodwill[82] - Goodwill is primarily attributable to expected synergies from leveraging acquired technology and talent to drive improved conversion, cost savings, and operating efficiencies[82] NOTE L. REVENUE Revenue is primarily generated from merchandise sales and recognized when control transfers to the customer - Primary revenue sources: merchandise sales via e-commerce, direct mail catalogs, and retail stores, including shipping fees[84] - Other revenue sources: sales to franchisees, wholesale transactions, breakage income from stored-value cards, and credit card issuer incentives[84] - Revenue is recognized when control of promised goods or services is transferred to customers[85] - As of November 3, 2019, gift card and other deferred revenue totaled approximately $300,354,000, with substantially all expected to be recognized within the next 12 months[93] NOTE M. LEASES The company recognizes right-of-use assets and lease liabilities for its portfolio of leased facilities - Lease liabilities and right-of-use assets are recognized for virtually all leases upon commencement, measured at the present value of fixed future minimum lease payments[97] Lease Costs (in thousands) | Cost Type | Thirteen Weeks Ended Nov 3, 2019 | Thirty-nine Weeks Ended Nov 3, 2019 | | :--- | :--- | :--- | | Operating lease costs | $68,909 | $200,020 | | Variable lease costs | $5,816 | $15,579 | | Total lease costs | $74,725 | $215,599 | Lease Information as of November 3, 2019 | Metric | Value | | :--- | :--- | | Weighted average remaining lease term | 7.43 years | | Weighted average incremental borrowing rate | 3.72% | | Total operating lease liabilities | $1,352,933,000 | | Total non-current operating lease liabilities | $1,127,403,000 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of the company's financial performance, key drivers, and strategic initiatives FORWARD-LOOKING STATEMENTS The report contains forward-looking statements concerning strategic initiatives, brand growth, and financial expectations - The report contains forward-looking statements regarding strategic initiatives, merchandise strategies, brand growth, legal proceedings, stock repurchase program, cash flow hedges, foreign currency risks, planned cash use, compliance with financial covenants, liquidity, tariff mitigation, and seasonal patterns[104] - Forward-looking statements are identified by words such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "continue," or the negative of such terms[104] OVERVIEW Net revenues grew 6.3% in Q3 2019, driven by West Elm and Pottery Barn, though tariffs impacted gross margin - Williams-Sonoma, Inc. is a specialty retailer of high-quality home products marketed through e-commerce websites, direct-mail catalogs, and 626 stores across multiple brands[106][123] - Revenue growth was primarily driven by West Elm (14.1% comparable growth) and Pottery Barn (3.4% comparable growth), while Williams Sonoma brand saw a 2.1% comparable revenue decline[108][109] - Gross profit margin decreased due to incremental impact from China tariffs and increased shipping costs from a higher mix of furniture sales, partially offset by mitigation efforts (cost reductions, production shifts, price increases)[110][111] - Key strategic initiatives include driving growth through cross-brand initiatives (The Key Rewards, B2B division) and improving customer experience via technology innovation and operational improvements[113][114][115][116] Third Quarter Fiscal 2019 Financial Highlights | Metric | Value | | :--- | :--- | | Net revenues increase | $85,489,000 (6.3%) | | Comparable brand revenue growth | 5.5% | | International revenue increase | 9.2% | | Gross profit as % of revenues | 35.9% (down from 36.5%) | | Diluted EPS | $0.94 (vs. $1.00 in Q3 FY18) | | Returned to stockholders (dividends & repurchases) | $78,289,000 | NET REVENUES Net revenues increased 6.3% in Q3 and 5.7% year-to-date, with comparable brand revenue growth of 5.5% and 5.2% respectively - International revenue increased by 9.2% for the thirteen weeks and 8.9% for the thirty-nine weeks ended November 3, 2019[119][120] Net Revenues (in thousands) | Period | Nov 3, 2019 | Oct 28, 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Thirteen Weeks Ended | $1,442,472 | $1,356,983 | 6.3% | | Thirty-nine Weeks Ended | $4,054,418 | $3,835,157 | 5.7% | Comparable Brand Revenue Growth (Decline) | Brand | Thirteen Weeks Ended Nov 3, 2019 | Thirty-nine Weeks Ended Nov 3, 2019 | | :--- | :--- | :--- | | Pottery Barn | 3.4% | 3.1% | | West Elm | 14.1% | 14.5% | | Williams Sonoma | (2.1%) | (1.6%) | | Pottery Barn Kids and Teen | 4.0% | 3.1% | | Total | 5.5% | 5.2% | COST OF GOODS SOLD Cost of goods sold as a percentage of revenue increased due to China tariffs and higher shipping costs - Increase in cost of goods sold as a percentage of net revenues was primarily driven by the incremental impact from China tariffs and increased shipping costs due to a higher mix of furniture sales, partially offset by occupancy cost leverage[127][128] Cost of Goods Sold (in thousands) | Period | Nov 3, 2019 | % Net Revenues | Oct 28, 2018 | % Net Revenues | | :--- | :--- | :--- | :--- | :--- | | Thirteen Weeks Ended | $924,300 | 64.1% | $861,999 | 63.5% | | Thirty-nine Weeks Ended | $2,608,054 | 64.3% | $2,444,067 | 63.7% | SELLING, GENERAL AND ADMINISTRATIVE EXPENSES SG&A as a percentage of revenue decreased due to leverage from higher sales and cost savings initiatives - The decrease in SG&A as a percentage of net revenues was driven by the leverage of employment and advertising costs from higher sales, continued benefits of cost savings initiatives, and overall expense discipline[130][131] Selling, General and Administrative Expenses (in thousands) | Period | Nov 3, 2019 | % Net Revenues | Oct 28, 2018 | % Net Revenues | | :--- | :--- | :--- | :--- | :--- | | Thirteen Weeks Ended | $416,281 | 28.9% | $400,600 | 29.5% | | Thirty-nine Weeks Ended | $1,184,176 | 29.2% | $1,155,990 | 30.1% | INCOME TAXES The effective tax rate increased to 25.4% year-to-date, up from 22.5% in the prior year - The lower effective tax rate in fiscal 2018 was primarily due to SAB 118 adjustments from the re-measurement of deferred tax assets related to the 2017 Tax Cuts and Jobs Act[133] Effective Tax Rate (Year-to-Date Fiscal) | Period | Effective Tax Rate | | :--- | :--- | | 2019 | 25.4% | | 2018 | 22.5% | LIQUIDITY AND CAPITAL RESOURCES The company maintains adequate liquidity with $155.0 million in cash and available credit facilities - The majority of cash and cash equivalents ($130.2 million) was held by international subsidiaries as of November 3, 2019[134] - Net cash provided by operating activities decreased year-over-year primarily due to a reduction in accounts payable due to timing of payments[138] - Net cash used in financing activities decreased primarily due to a decrease in repurchases of common stock and an increase in borrowings under the revolver[140] - The company believes its cash on hand and available credit facilities will provide adequate liquidity for business operations over the next 12 months[137] Cash and Cash Equivalents (in thousands) | Date | Amount | | :--- | :--- | | Nov 3, 2019 | $155,025 | | Oct 28, 2018 | $164,414 | Critical Accounting Policies No significant changes were made to critical accounting policies during the third quarter of fiscal 2019 - Financial statements require estimates and assumptions based on historical experience and other reasonable factors[143] - No significant changes to critical accounting policies occurred during Q3 fiscal 2019, except for those related to derivative financial instruments, fair value measurements, and leases[143] Seasonality The business is highly seasonal, with most revenues and earnings generated during the holiday selling season - A significant portion of revenues and net earnings are realized during the October through January period (holiday selling season)[144] - Levels of net revenues and net earnings are typically lower during the February through September period[144] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exposed to market risks from interest rate fluctuations and foreign currency exchange rates Interest Rate Risk Exposure to interest rate risk from variable rate debt is not considered material - The company's revolver and term loan have variable interest rates, exposing it to interest rate risk[146] - A hypothetical increase or decrease of one percentage point on existing variable rate debt would not materially affect results of operations or cash flows[146] Foreign Currency Risks Foreign currency risks are managed through hedging, though a decline in the U.S. dollar could increase costs - Approximately 1% of international purchase transactions are in currencies other than the U.S. dollar, primarily the euro[148] - A decline in the U.S. dollar relative to other foreign currencies could increase purchasing costs from vendors[148] - Foreign currency exchange rate fluctuations were not material in Q3 or year-to-date fiscal 2019/2018, but the company hedges a portion of its exposure with foreign currency forward contracts[149] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the end of the fiscal quarter Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures were deemed effective by the CEO and CFO - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of November 3, 2019[150] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the quarter - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[152] PART II. OTHER INFORMATION Item 1. Legal Proceedings Information regarding legal proceedings is incorporated by reference from Note F of the financial statements - Information on legal proceedings is contained in Note F to the Condensed Consolidated Financial Statements[154] Item 1A. Risk Factors There were no material changes to the risk factors previously disclosed in the company's Annual Report - No material changes to risk factors were reported in the current quarterly period compared to the Annual Report on Form 10-K for fiscal year ended February 3, 2019[155] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased approximately $40.6 million of its common stock during the third quarter - The stock repurchase program does not have an expiration date and may be limited or terminated at any time without prior notice[158] Common Stock Repurchases (Third Quarter Fiscal 2019) | Fiscal Period | Total Shares Purchased | Average Price Paid Per Share | Maximum Dollar Value Yet Be Purchased Under the Program | | :--- | :--- | :--- | :--- | | August 5 – September 1, 2019 | 193,942 | $65.14 | $639,050,000 | | September 2 – September 29, 2019 | 186,285 | $66.37 | $626,687,000 | | September 30 – November 3, 2019 | 230,122 | $67.73 | $611,101,000 | | Total | 610,349 | $66.49 | $611,101,000 | Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not applicable[159] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - Not applicable[160] Item 5. Other Information No other information is reported under this item - None[161] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL data - Exhibits include amendments to reimbursement agreements, CEO and CFO certifications (pursuant to Rule 13a-14(a), Rule 15d-14(a), and 18 U.S.C. Section 1350), and financial statements formatted in Inline XBRL[163][164]