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  "docSlug": "778e2cbfbfaa",
  "documentTitle": "Amdocs Limited (DOX)",
  "authorId": "54_Spruce_Point_Capital",
  "authorName": "Ben Axler",
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  "sourceTypeLabel": "Short seller",
  "presentationDate": "2019-01-23 00:00:00",
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  "notes": "Uses screenshots of financial filings (20-F) to highlight lack of transparency in asset disposal reporting.",
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      "kind": "callout",
      "text": "Declining \"Computer equipment\" and \"Accumulated depreciation\" accounts reveal asset disposals or hidden write-downs",
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      "text": "Does not break out asset purchases from disposals",
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      "kind": "callout",
      "text": "By sequestering these asset disposals in \"net capex,\" management appears to be inflating earnings on its income statement.",
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      "text": "Financial statement excerpts showing net capex and Note 8 details",
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      "text": "This is particularly noteworthy given that, as revealed by Amdocs' notes on equipment and leasehold improvements, it is clear that management is in fact disposing of fixed assets, whether through write-offs or asset sales. We observe that Amdocs' gross computer equipment has declined in a number of recent periods, revealing disposals of computer equipment or software reported under this account. We also observe that accumulated depreciation has declined in a number of recent periods, suggesting that the Company has rid itself of heavily-depreciated assets. If these changes represent legitimate asset sales, we doubt that the Company is getting much in return for what are mostly depreciated assets. Accordingly, we consider these closer to write-downs than to legitimate asset sales, and wonder why management is not reporting gains or loses.",
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      "text": "We would perhaps be able to audit Amdocs' cost capitalization more effectively if it provided greater detail on capex in its financial statements. Unfortunately, the Company has historically disclosed only net capex on its cash flow statement, and has not broken out changes in PP&E attributable to asset disposals.",
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      "text": "Effects Of Capex Treatment On Financial Statements",
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      "text": "Non-Transparent Capex Facilitates Inappropriate Capitalization While Obfuscating Earnings And FCF",
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