Analytic Firepower

Long/short equity, value, special situations, contrarian
Analytic Firepower
Long/short equity, value, special situations, contrarian
Contributor since: 2011
Company: Analytic Firepower
Don't get me wrong, I think you are a good analyst, but you have to get out of "robot-mode" and look at the situation as it is to interpret the reality of CALL's finances.
It is incorrect to evaluate a balance sheet "when unearned revenue is removed from current liabilities". This adjustment gives the inaccurate impression that the liability does not exist. It does exist. Deferred revenue (or any liability for that matter) is DEBT....it is something that has to be paid in the future. To calculate any ratio and excluding an enormous liability will lead you to an inaccurate result......perhaps an inconvenient truth.
The truth of the matter is that CALL must provide service to its customers over the contracted period, and that costs money, actually it costs lots of money.....In fact it costs so much money that Borislow simply has ignored one of the largest cost components. I'm sure you're familiar with the FCC rulings and litigation that Dan has continued to pretend don't exist.....they do exist and they will have a substantial impact on CALL in my opinion.
Step back for a minute and look at it from a high level. VG is in a similar business and charges a lot more to provide it. CALL pretends it does not have expenses or CAPEX.
Ryan, I think the structure of your article is good and I think the analysis is good but selective. You seem to place a bit too much emphasis on Earnings, Cash Flow, and Revenue. The trouble with CALL is that each of the items you rely upon are heavily influenced by management, and the management in my opinion are not terribly interested in generating value for their shareholders in the traditional sense.
Earnings and Cash Flow are exaggerated because CALL is not managed in a way that accurately reflects the costs involved in achieving the growth you anticipate. They have nominal CAPEX (without which it will be exceptionally difficult to achieve the growth and market share you describe). There are very few employees and the overall substance of this company is very little. In fact the pristine balance sheet you describe actually has negative equity. This, combined with the substantial (but declining) deferred revenue allows them to make "EPS" pretty much whatever they want it to be, but the earnings do not deserve much (if any) multiple because they simply are not sustainable in my opinion.
This is the last communication I received from American Tower, I have sent subsequent letters, questions and e-mails none of which have been responded to.
Maeghan Oberoi Maeghan.Oberoi@america...
12/21/11
to me

Tim,
Unfortunately at this time we're unable to accommodate your request for a call with Investor Relations. After reviewing your questions, we note that they can be answered with information which we provide on our website, in our investor presentations and in our filings with the SEC, and would like to refer you to those materials at this time.

Regards,
Maeghan

From: Tim Dooling
Sent: Tuesday, December 20, 2011 3:05 PM
To: Maeghan Oberoi
Subject: Re: FW: Would like to schedule some time w/IR

OK, no problem I am available both of those days.

A few topics I would like to cover are:

• Tower-level economics, how it works for legacy towers and acquisitions.
• MLA's - I would be interested in knowing a bit more about how they work and their terms.
• I would like to get a general sense of some of the key terms in some of your large lease agreements, specifically how the lease treats mergers and decommissioning.
• The company's balance sheet going forward, as these latest acquisitions are likely to put the company into the low 4x leverage range, which is starting to get up towards the higher end of your target range, how does this tie-out with the acquisition based growth strategy.
• Which investments are accounted for under the cost method?
• I'd like to talk a bit more detail about the nature of the company's foreign currency exposure.
• I would be interested in talking about the dispersion of value (within each tower type) between the most valuable tower and the least valuable tower (how best to stratify the types).
• The SEC investigation.
• REIT conversion; interested in talking about the decision to convert given the somewhat non-cookie-cutter REIT nature of your businesses, especially given the overseas growth strategy.
• Other bit and pieces as well, but those are the main points I'm interested in.
Please let me know what time works best,

Tim
Great comments, many thanks. Eratos, you hit on a very important point, I have asked this question directly to the company and not received any response. AMT’s conference calls are all exactly one hour in duration and neatly scripted (including the Q&A, which consistently dance around this issue). They have never disclosed any detail around aggregation levels.
AMT’s general reply to any question like this is “90% of our towers have lease expirations beyond 2020.” This response was clearly drafted by a lawyer, as it may be correct but it completely misses the point that their best towers are some of the oldest and hence soonest to expire. They have bought thousands of single-tenant and zero-tenant towers over the past few years which may very well have lease expirations beyond 2020, it is the top 5% that the investor should care about since that is where the aggregators attention is focused.
On question #2, the answer is yes I have asked and no I haven’t received a response. In my experience AMT’s first line of defense is silence, their second line is to bully…..truth and logic seem to be further down the priority list.
On question #4, the SEC investigation is a bit of a wildcard, however there is evidence that generally speaking the longer the period from beginning of the investigation until either a Wells Notice or no-action letter the more serious the potential problem. It could come tomorrow or it could come in a year, but it certainly has not gotten less serious in the past year or AMT would have let us know. One note: while the SEC is under no obligation to inform the company if it decides to terminate an investigation, it is standard practice for them to do so.
Thanks again for the comments.....TF
Luther,
Which details are you referring to? All of the facts and details in the article are correct. I would note that AMT will report earnings this week for the time period when most of the events in India took place.
I would note that AMT has underperformed the Nasdaq composite and moderately beaten the S&P 500 since this article was published 5 weeks ago. The structural issues I discuss in this article are more true than ever at the moment, and they take time to become reflected in the underlying share price. I make no recommendation in the article to buy or sell stock for any return in a 5 week period. I do however maintain a short position in this security which I expect to be a profitable position over a reasonable length of time.
TD
Wow....I agree with Gino on all points, and I don't follow your logic on several others, in particular:
"with the threat of consolidation lessened after AT&T and T-Mobile's failed union, tenancy on American's towers is likely to increase from its 2.7 level....."
Why will tenancy increase if the number of carriers remains the same? (especially in light of the MLA's that AMT is being forced into)
"Those escalators are above the 3% escalators American pays to land lease holders, who make up about 28% of its properties"
-This is simply incorrect, AMT's land lease holders account for 72% of their properties.
AMT's expansion into India is nothing short of an utter catastrophe. Please see my articles on this here:
http://seekingalpha.co...
Their operations in Uganda and Ghana are also value-destroyers. Simply look at how much AMT's management has sold since the SEC came knocking at their door last year.
There are too many issues to list in a reply, please click through to my earlier articles for full details.......TD
Some of the options strikes were adjusted for the .35 dividend they paid in December ahead of the REIT conversion.
Yes there are a host of companies currently making small-cell products. The recent industry trade show showcased a lot of very interesting software which makes deployment and provisioning of these cells automatic. They call them Self-Optimizing cells, where software automatically makes all the adjustments to the mini base stations as the network topology and usage changes.
All the things that require a truck to drive out to a cell site with a technician to tinker with, in the new network architecture this all happens seamlessly and automatically.....and cheaply.....these are things that are referred to as "liquid networks" and several other terms......net-net it harms the pricing power for traditional towers....much more quickly than AMT realizes.
Thanks for your comments:
wehnerj: Yes, I think that is exactly right, tenants care about location, location and location.....especially so with the top 5% of the towers.
alantava: ALU is behind the whole LightRadio innovation which makes towers less valuable. It goes by many names, femtocells, small cells, liquid net, mesh networking, picocells etc....the fundamental idea is that antennas are ubiquitous and IP based switching reduces the backhaul bottleneck.
I am planning on going to India personally to inspect and photograph AMT's towers there, for details check analyticfirepower.com here: http://bit.ly/GWO8CB
Finally, please excuse the typo of 1990+15 years, what I meant is that 15 years past the end of the 1990's (i.e.2000) is 2015......td
Excuse me? Not sure what you mean. Scams tend to get volatile right before they blow up.
http://bit.ly/zmcWfx
I think that is where Dan Borislow takes his magic carpet to get cleaned.....rather amazing.....td
I would suggest taking a look at the 10-K they just filed, it is a bit of a mess to say the least. Two other data points can be gathered by googling "Dan Borislow" and see what you find, he is the guy behind it all. Then put their headquarters address into google street view, it is: 5700 Georgia Avenue, West Palm Beach, Florida.....
No wonder the stock is hard to borrow.
realestatevalueinvestor: Excellent comment, here is the way I'm thinking about it:
India is overall a small portion of the historic revenue pie, however the Wall St models that I've seen had that slice of revenue growing at 20-25% for the next two years, which is much faster than the 6-7% growth (which is still optimistic in my opinion due to things like leasehold loss and new small-cell technologies).....The point is that the whole AMT strategy hinges upon the international growth story. The international growth story is a product of James Taiclet's imagination that the rest of the world's cellular networks will evolve in the same path as the US has. I feel very strongly that they will not, and recent events in India quite clearly demonstrate this.....but I digress, getting back to your question:
Looking at all of AMT's non-US Rental and Management business, which was $650 mln in 2011, and Wall St. expects to be $950 in 2012 and 1,200 in 2013.....of this Wall St. had India contributing approx $175, $225 and $275 respectively, or 27%,24% and 23% for those years. These numbers now seem quite unrealistic.
While a couple of hundred million dollars of lost revenue may not seem like much in relation to the $2.5 billion AMT generates, what is important is that the Indian situation to me throws into question the whole premise upon which AMT continues to dump billions of dollars into frontier markets with the expectation that they will behave exactly as the US......there are some great books out there which discuss how humans are prone to project their historic success into the future while ignoring the reality and unpredictability of the future....(Nassim Taleb's Fooled By Randomness is a good on)......I digress again....back to your question:
If India were to fall off the map, AMT would lose $275 of the currently baked-in revenue for 2013. If India stayed stagnant and did the same in 2013 as it did in 2011, $100 million would need to come out of growth expectations currently out there, which is 12.5% of all of AMT's expected growth for the next 2 years. Stock prices are extremely sensitive to changes in expected growth rates, and knocking 12.5% off of the current expectation would substantially change the discount rates used to value the shares. In Gordon Growth terms, (using simplistic constant growth to illustrate the point) the share price will equal the future distribution divided by the discount rate, which is equal to the cost of equity minus the growth rate. A change in the expected growth rate impacts the denominator in the equation, which affects the value of the stock substantially. I know that in reality it is a lot more complex, but since I've already digressed twice I wanted to keep this explanation straightforward.
To give you a number, if we were to take 12.5% off of the growth in AFFO between now and 2013, that would put it in the neighborhood of $3.40/share in 2013, the lower growth would impact the multiple applied, so applying a 14x multiple to the $3.40, puts the value in the $47.50 range.
I'd like to emphatically state though that the math above is not my "target" for this. What I think is more important is to look at the validity of AMT's growth strategy overall. Also there are a multitude of over issues which will catalyze over time; things like the SEC investigation which is ongoing, the loss of some critical land-leases to aggregators, increased interest rates, equity offerings, bad acquisitions etc......anyway, hope that gives you some form of an answer......great question, thanks ...TD
Google has not and will not pay one cent to MagicJack ever. MagicJack receives no royalty income.....according to their most recent filing:
Revenue consists of revenue from sales of magicJack and magicJack PLUS to retailers, wholesalers or directly to customers, license renewal fees, fees charged for shipping magicJack, international calling, call termination charges to other carriers and other miscellaneous charges for telecommunication usage, sales of telecommunications hardware, software and related services.
No Royalties...
This company's filings are a mess, and it seems clear that the author did not take the time to read them. The SEC has concerns around this company's revenue recognition policies, see filings under "Corresp" for details. There seems to be some channel-stuffing going on here, to the tune of $16 million worth of Accounts Recievable and Inventories. They recognize equipment revenue when they ship it to Radio Shack, but Radio Shack does not pay them until after it is sold....that is a problem, hence the large balances.
They also do not seem to be good investors, probably because they are a wigit business. They show $13.768 million of "Short Sales" which cost them $15.97 million to cover, (Buy High Sell Low?), additionally they bought $12.78 million of securities which they sold for $8.22 Million.....again, wrong way......extremely odd thing for a telephone company to be trading securities so actively and ineffectively..... Good luck....
Looking only very briefly under the hood on this one and you will see that sales of their one product are declining. They speculate in securities (including their own), and do not produce any value in either activity. They do not file full financials, no audit. Bombastic headlines about large % "Beats" which amounts to very small dollar amounts. The new CEO came from Oppenheimer, which is the only analyst that dares right a report on this....spooky, one-trick pony, unstable mgmt, value-destroyer...
Unfortunately, the short term is highly influenced by randomness, the shorter time frame the more random it is...so really there is no effective way to answer your question.
User 111785: AMT does not disclose who their exact customers in India are, but it is safe to assume that since the Big 3 are all large owners of Indus, that most of AMT's customers were likely to be the 2nd tier operators, essentially all of whom have been effectively shut down. See my earlier note for a fuller discussion. http://seekingalpha.co...
"AMT's filings list their largest customer in India as Idea Cellular. Idea Cellular has just lost 13 of their licenses to operate 2G service in India, including the major urban licenses they acquired through Spice. (Here is a complete list of the revoked licenses.) The implications of this action are substantial. As I discussed in an earlier note, AMT owns less than 9,000 of the 350,000 towers which exist in India. The bulk of the towers are owned by substantial local companies with ownership ties and deep common interests with the large players (Vodafone (VOD), Bharti-Airtel, BSNL, Reliance). AMT owns less than 3% of the towers in the country, with such a tiny market share it is safe to assume that many of AMT's tenants in India are among those whose licenses were revoked. AMT, of course, does not disclose its full customer list. "
Here is the wikipedia link: http://bit.ly/z1Ch4W
Thanks for the comments, here are a couple of thoughts:
Correct that India was only 7% of revenue in 2011, but what I think is important is that it was supposed to account for a much larger portion of the growth in future years. Now management is very keen to downplay India as a growth story, now Uganda, Ghana and others are the road to growth.
I also find it interesting that AMT's current management seems to think that the type of problems plaguing them in India are specific to India. Unfortunately these kinds of issues will continue to arise as long as AMT is operating in emerging countries. Things like shifting regulatory environments, weak currencies, theft and corruption theoretically are what make emerging countries emerging. Of course we even the most developed countries still are plagued by these problems.
As for aggregation companies like Tristar, there are a large number of small operations who are wasting no time in controlling cell tower leaseholds. A few things I have found out about them are, first that they are run by very experienced industry players who know what they're doing. Second, that they have access to large pools of capital. Finally and most importantly they are focused on the top 5% of the towers out there. This is because they understand what the network of 2020 is likely to look like. There are a small number of quite critical locations where a tower is likely to be valuable for a long time. These are the ones they are aggregating, they really aren't interested in a tower that does not need to exist in a "liquid" or "mesh" or "distributed" network, they are happy to let AMT endure the erosion in value. My clear impression is that these outfits mean business, and AMT knows it.
I agree that there are some favorable trends in the industry, but what makes a company valuable is its staying power. It is critical that capital assets retain their ability to deliver sustainable margins, and even more critical that the company maintain ownership of them. 4G LTE rollout already includes a large number of "underlay" small cells, cheap and easy........they have emerged because economics has created a strong set of financial incentives to create them (spectrum limitations, capacity requirements, cost etc). Despite what AMT says, their carrier customers are rational and if they can do something faster/better/cheaper they will, and they are. I'll have a bunch of examples of this stuff in my next article showing some of the stuff that came out at the MWC show last week.....it's pretty amazing.
Yes indeed. In fact yesterday at the Deutsche Bank conference the CFO discussed the likelihood of a new equity issue to fund further growth.
If AMT buys towers from T-Mobile, it seems likely that 1.) They will overpay, and 2.) They will issue a lot of new shares. Pretty bad combo in my mind.
AMT has been pretty public about not wanting to gear up more than they already are, with required distributions as a REIT and no more room for more debt it means stock.....and lots of it.....
So much for buybacks......TD
According to MSCI tonight:
"MSCI US REIT Index: There will be no additions to and no deletions from the MSCI US REIT Index."
Thanks and yes, we'll see.....MSCI is supposed to come out with their quarterly review soon, and I have a hard time seeing what the incremental good news will be.
India is a mess, it will be very telling what they choose to disclose about it in the upcoming earnings. My plans are to travel to India on March 23rd, I expect to have the details on AMT's tower locations from the Indian Communications Regulatory Authority by then, since they have chosen not to tell me where they are. Stay tuned.
TD
Hi, I'm not sure I follow your logic, AMT is very easy and cheap to borrow. Institutions are very active in stock-lending.
More great comments, here is what I think:
Snoopy1: I think that CCI is certainly the better of the two. Primarily because they don't seem to be asleep at the wheel like AMT. CCI has noticed the tectonic shift that is taking place in their markets and is moving aggressively to address it. (Next G acquisition in particular). AMT seems to be throwing good money after bad with their foreign acquisition story.
cmcfarling: Fibertower is gone (or very nearly so), but you raise a good point because Fibertower got into business because they saw the back-haul bottleneck and tried to address it. Probably would have worked if IP-based Distributed Antenna's didn't make backhaul less of a problem. What happened to Fibertower is that the price of it's product eroded, which is similar to what is going on with macrocells, the price of the service they are providing is going down.
Johnny C: great point and timing is ALWAYS the hardest part of a situation like this, and it is impossible to say with any certainty exactly when any of the catalysts will materialize. Especially when the company's reliance upon management estimations is increasing like at AMT. That said there are several things that could happen at any time, in particular:
1. SEC investigation could be in the headlines at any time. It is ongoing and it is material. (otherwise they would not have disclosed it)
2.) F/X headwinds or impairment charges cold really cause a problem in the upcoming earnings (they are due to report on February 23rd).
3.) They overpay for T-Mobiles tower assets and have difficulty funding it. (their CDS spread continues to widen).
4.) Their REIT status gets disallowed because of too many assets in their Taxable REIT Subsidiaries (TRS's).
But overall what I think is likely to happen is that slowly the market wakes up to the substance of what AMT really is and pays less for it.
Thanks for the comments, I appreciate the feedback......here is my take:
bbbbb: CCI and AMT do NOT have similar DAS strategies by any measure, Revenue/installations/... invested/customer count/EBITDA/FFO nor by any other metric. The reality is that CCI at AT&T are going full speed ahead into DAS and AMT is going full speed into Uganda/India/Ghana buying empty macrocells.
AMT's has less bargaining power with their customers now than they did during the 3G buildout, simply look at the deterioration in their operating margins, this is simply a fact no matter how they try to cloak it. Also, WiFi has already made towers less critical, walk through any major city with your IPhone and see how much data goes through the macrocell....it has already happened.
It would be nice if AMT could simply fill up the vacated pad with new tenants, unfortunately this has not happened and is not going to happen. In my earlier articles I discussed how vulnerable AMT is to changes in estimates of the useful life of their assets. If they get every dollar the estimated they would out of all their towers for the full 20 years they estimate, then AMT is only trading about 20ish times the estimated cash flows. 20 years is a lifetime (actually about 4 lifetimes in cellular-land), the clout is shifting away from 3rd party owners of shared infrastructure. The reason is that there are real alternatives now that did not exist before. This will continue.
I genuinely appreciate the debate though.....keep the comments coming......thanks....TD
Algo41: The corrected tables are now in the article, thanks for the correction....the conclusions remain very much the same even with the maintenance CAPEX adjustment swinging from positive to negative......(couple of hundred million here, a few there...)
Pone: I couldn't agree more.....15 years into the industry we are already on Generation 4. I feel pretty strongly that 15 years from now it won't look anything like we think it will.
REITs originated in the 1880s, in order to avoid double-taxation on old-fashioned real estate. (i.e. the non-depreciable kind). The whole edifice of this REIT charade is one part of the story I see falling apart.
One more point of interest: I noticed that all the links in my article that are under the influence of AMT suddenly disappeared.....the Reuters links are still good, but they changed the URL's to their press releases, and had the lawyer remove the presentation from the site I linked to....Luckily I saved copies of all the source material before publishing, if you want a copy let me know.
Thanks for the comments,
Tim
Hi and thanks for the comment, (been on the road, hence late reply).
First off, you are correct on the maintenance CAPEX, I have included the negative sign in an updated table which will be up shortly, thanks for pointing that out.
One thing though is that both FFO and AFFO can in reality be anything you want them to be, since they are both non-GAAP measures and have no standard definitions. But you are right, generally the maintenance CAPEX adjustment if an important part of what most people think of as AFFO.
As for stock compensation expense, it does reduce net income, but is added back for most FFO and AFFO calculations, so it has zero net effect on FFO and AFFO, as it is all added back (including the tax shield). This demonstrates both the variability in FFO and AFFO calculation, as well as the fact that a substantial portion of AMT's executive compensation is in the stock compensation line, which gets ignored in the AFFO calculation.
Is it really appropriate to ignore a large portion of expense like this? Perhaps it is, since I would imagine that James Taiclet would still show up for work every day just for his $2.14 million per year cash compensation.
I also think it might be appropriate to ignore the stock-compensation piece if in fact Mr. Taiclet and other executives did not in fact monetize this piece of their compensation. However as I have shown in earlier notes, they have not; preferring to sell most or all (in the case of the CFO) of the stock they can. This is dilutive, and the moment they sell their stock the value of the incentive is gone. i.e. they no longer benefit from the performance of that stock once it is sold, so the "compensation expense" if you will is realized. This of course does not get captured in the FFO calculation.
Time will tell. I am certain though that none of the people recommending this stock have actually looked at and made a simple evaluation of the towers the company has in India.
The headline risk here is significant, the govt could move forward at any time with their investigation/place charges etc. The F/X headwinds are substantial, and impairment charges seem very likely to me. Interesting how Wall St. "coverage" analysts put out puffy headlines while actually cutting their estimates......
akin to "Titanic is a Huge Ship, Going Real Fast in Atlantic" and then buried in the report is "it is currently sinking"......some things never change....
Indeed timing is always the hardest part on any of these types of situations. I am putting the finishing touches on the next article in this series which talks about likely catalysts. Things like government investigations move at a glacial pace, but they do move--and they are very difficult to get rid of. The more the government invests in an investigation the stickier it becomes. So it is impossible to predict the timing of potential enforcement action from the government, but it is very likely that the longer it takes the more severe the outcome.
The next article also goes into AMT's potential exposure to the Foreign Corrupt Practices Act, which is being rather ardently enforced at the moment by the DOJ. I have been trying to get someone at the company to speak with me about it, but my multiple attempts have thus far been not responded to. A more near-term issue is the F/X headwind and impairment of intangibles charges which will be disclosed at the upcoming earnings in February. I do know the SEC has shown particular interest in AMT's disclosure of how they measure their intangibles for impairment, so we may get some more information than we have in the past.
Finally, the much ballyhooed inclusion into some REIT indices this week has now come and gone. It seems pretty obvious that dealers would have built up inventory in advance of this theoretical wave of buying. I noticed that the volume has been light this week, which may indicate that there might not be as many buyers lining up as the dealers thought. Certainly Merrill Lynch's note out today entitled "American Tower Corp.: $4.8bn of potential stock demand among top REIT owners" was only one notch shy of financial p*rn in my opinion. Anyway, more to come from me on this....stay tuned....TD
John, thanks for publishing this.....I'm a big fan of Disclosure Insight and it was your talk at our CFA society here in San Diego that inspired me to write a series on this website about American Tower....Great insights into QCOM. As with all these, I suppose the ultimate answer is that the future will eventually show what the reality is. Sure would be nice if companies would just be transparent instead.....TD
Excellent comments, algo41...good catch, the columns in the table copied over incorrectly, the corrected table is up now....thx...
tterbeg: Touché'!! ...you are correct and I agree with your observations, I would add though that I think the company is using the taxation issue as a bit of a fig leaf, since there are many more reasons why the REIT structure is disadvantageous....(li... growth, being taxed anyway internationally, etc)....but you are correct about the double taxation. My sense is that in the final analysis, using the NOL's as a C corp, and maintaining the financial flexibility it provides, and paying cash out at dividends with a 15% tax rate, would net-net be a better result.....but your point is very well taken.
-Same for your point on the distributions, with the observation that AMT's liquidity is limited, and paying out more in dividends becomes self-limiting, and can go into reverse quickly if the actual value of the tower revenue streams ends up being less than they forecast.......for all their talk of buybacks etc, I could see them doing some kind of "transformational" acquisition which would involve selling new equity (probably for less than they are buying it back currently)......but again, your point is very well taken and appreciated....td
Thanks Gino, I agree that there is rapid value destruction going on at AMT. Spending borrowed money on overpriced acquisitions is not a hallmark of managerial prowess.
In my mind there is simply too much smoke for there not to be some fire underneath. The very promotional management, SEC Investigation, heavy acquisitions funded with debt, dubious operational leverage, increasing technological obsolescence, REIT maneuver etc.....the valuation of this business is too high in my opinion.......td
Great comment......my reading of the proxy gave me no detail as to how any adjustments to the targets are made, which is why I started to question it. Acquisitions directly affect both the revenue line and the Adjusted EBITDA measure that they use. I would imagine if the adjustment effectively raised the bar in proportion to the impact of the acquisition, they would disclose it. Instead they choose to put a footnote which refers to an uncertain "adjustment". Opaque...