Educators Provide Free Software for Analyzing Footnotes

To help bewildered investors sort through the footnotes in a year when companies are disclosing more information than ever before, Hal Varian and Marti Hearst, two faculty members at the University of California at Berkeley, have introduced a free software program called "FootPrint."

FootPrint allows investors to extract key information from the footnotes of an electronic SEC filing for use in a summary-level analysis on a separate document. For easy maneuverability, the software allows the user to view an extract within the context of the full filing at any time by simply clicking on an icon that looks like a stack of papers. Users can also make their own observations, known as toeholds, and move easily from the toeholds to the related footnotes by clicking on icons that looks like toes.

The FootPrint Web site provides an illustration of the software using Enron's 1997 10K filing and footnotes.

Mr. Varian is the dean of the School of Information Management and Systems (SIMS) at the University of California at Berkeley (UC Berkeley) and a professor in the Haas School of Business and the Department of Economics. Ms. Hearst is an assistant professor at SIMS, UC Berkeley. Mr. Varian told Business Week he began FootPrint in jest, but he now takes footnotes seriously and he is measuring such factors as the number of footnotes in a company's annual report to see if impenetrable financial reports signal trouble. ("Getting a Leg Up on Those Footnotes," Business Week, April 29, 2002.)

Download a Python script that implements FootPrint. If you don’t have it already installed, you must download Python as well as the free software. Links and instructions are provided on the download page.

-Rosemary Schlank

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