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— General
December 2016
SEC Compliance Checklist — General (12-16)
Company: Period:
INSTRUCTIONS
Completion of SEC Compliance Checklist — General, assists in documenting compliance with
Securities and Exchange Commission (SEC or the “Commission”) disclosure and filing
requirements.
Note: This checklist is not designed for use by “Smaller Reporting Companies” or “Emerging
Growth Companies.” See the Smaller Reporting Companies and Emerging Growth Companies
sections below for additional guidance.
The checklist should also be used to determine SEC requirements for which supporting
information should be obtained during the audit. Following this instruction page is a list of
Regulation S-X and S-K requirements primarily pertaining to commercial and industrial
companies, which are applicable to all SEC forms. Other entities (e.g., insurance companies,
banks, development-stage companies) need to follow the requirements of the articles in
Regulation S-X that apply specifically to them. The separate checklist applicable to the SEC
form being filed (e.g., Forms 10-Q, 10-K, 8-K) should also be used in addition to this general
checklist. This checklist covers the SEC disclosure and filing requirements of greatest interest
to accountants. It should not be used as a substitute for a full understanding of the filing
requirements applicable to a specific registrant.
Consider each requirement, answer “Yes” or “No” in the “Complied With” column, and then
indicate where the information is disclosed or the reason it is omitted (e.g., “not applicable,”
“test not met”) in the column provided or in a separate memorandum.
If separate financial statements (e.g., for a purchased business) are filed in addition to
consolidated financial statements of the registrant, the applicable sections of the checklist
should be separately completed for each set of statements furnished.
This checklist should not be considered “all inclusive” but should be used in conjunction with
the instructions to the SEC form being filed, and the applicable sections of Regulations S-K
and S-X. Selected SEC rules, regulations, and forms are generally available in the U.S.
Technical Library — SEC Literature collection, and on the SEC website, www.sec.gov.
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SEC Compliance Checklist — General (12-16)
Comment Letter Publications). This publication provides extracts of frequently issued SEC staff
comments, additional analysis, and links to related resources that are relevant to SEC filers.
The “smaller reporting company” category includes companies that qualified as “small
business issuers” before the new rules, as well as most companies that qualify as
“nonaccelerated filers.” In general, companies that enter the public reporting system with less
than $75 million in common equity public float qualify as smaller reporting companies.
Companies unable to calculate the public float typically qualify if they have less than $50
million in annual revenues upon entering the system.
The SEC has issued a proposal to amend the definition of a small reporting company. The
proposal would increase the public float threshold from the current $75 million to less than
$250 million. If a company does not have a public float, it would qualify as a smaller reporting
company if its annual revenues were less than $100 million, an increase from the current
threshold of less than $50 million. Further, once a company exceeds the applicable public float
or revenue threshold, it will not qualify as a smaller reporting company until its public float is
less than $200 million or, for a company without a public float, until its annual revenues are
less than $80 million. Refer to Deloitte Accounting Journal, June 29, 2016, for more
information.
Smaller reporting companies prepare and file their SEC reports and registration statements
using the same forms as other SEC reporting companies, though the information required to
be disclosed may differ. A new Article 8 of Regulation S-X contains the SEC requirements for
financial statements, while Regulation S-K contains the nonfinancial disclosure requirements.
To locate the scaled disclosure requirements in Regulation S-K, smaller reporting companies
will refer to the special paragraphs labeled “smaller reporting companies” in Regulation S-K.
Smaller reporting companies may choose to comply with scaled or nonscaled financial and
nonfinancial item requirements on an item-by-item basis in any one filing. If the smaller
reporting company requirement is more rigorous, however, the company must meet the more
rigorous standard. Currently, the smaller reporting company requirements under Item 404 of
Regulation S-K are the only place where the scaled requirements can be more rigorous than
the larger company standard.
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SEC Compliance Checklist — General (12-16)
Risk Factor Disclosure in Filings on Exchange Act Forms. Smaller reporting companies are not
required to provide risk factor disclosure in Forms 10, 10-K, and 10-Q.
The full text of this rule, as well as detailed compliance information and dates, can be found in
SEC Release No. 33-8876, Smaller Reporting Company Regulatory Relief and Simplification, on
the SEC website at www.sec.gov/rules/final/2007/33-8876.pdf.
The SEC has prepared a publication, Changeover to the SEC’s New Smaller Reporting
Company System by Small Business Issuers and Non-Accelerated Filer Companies . . . A Small
Entity Compliance Guide, which can be found on the SEC website at
http://www.sec.gov/info/smallbus/secg/smrepcosysguid.pdf. Refer to Topic 5 of Securities and
Exchange Commission Division of Corporation Finance’s Financial Reporting Manual for
interpretive information on small reporting companies.
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SEC Compliance Checklist — General (12-16)
Title I of the JOBS Act outlines the requirements for EGC status under the SEC’s reporting
framework. Under the JOBS Act, for a company to be considered an EGC, its total gross
revenues cannot exceed $1 billion in its most recently completed fiscal year. EGC status can
be held for up to a maximum of five years after an initial public offering (IPO) as long as (1)
the EGC’s total gross revenues do not exceed $1 billion during the five-year period, (2) the
EGC’s market capitalization does not exceed $700 million (i.e., the EGC does not meet the
definition of a large accelerated filer), or (3) the EGC does not issue more than $1 billion in
nonconvertible debt in a three-year period. A company that completed an IPO on or before
December 8, 2011, is not eligible for EGC classification.
Provisions of the JOBS Act that apply to EGCs include the following:
Only two years of audited financial statements are required in an IPO and other
registration statements.
The periods required for selected financial data in both registration statements and
periodic filings do not extend to periods before the first year presented in the EGCs IPO.
An EGC does not need to adopt new or revised accounting standards until they become
effective for private companies (i.e., nonissuers). The SEC staff clarified that such new
or revised standards are defined as any update to the FASB’s Accounting Standards
Codification issued after April 5, 2012.
Certain sections below have been annotated to reflect the modified reporting requirements
affecting EGCs under Title I of the JOBS Act. Registrants should refer to Deloitte’s April 15,
2014, Heads Up summarizing the provisions of, and changes related to, the JOBS Act’s
provisions and to the SEC staff’s interpretive guidance on the JOBS Act including FAQs
affecting EGCs.
On December 4, 2015, President Obama signed the FAST Act into law. Among its many
provisions, the FAST Act amends the JOBS Act and certain SEC disclosure requirements. It
also establishes a new statutory exemption for private resales of securities. Specific provisions
of the FAST Act include those related to JOBS Act changes for initial public offerings of
emerging growth companies, Form 10-K and Regulation S-K disclosure changes, a new
Section 4(a)(7) exemption for private resales, incorporation by reference for smaller reporting
companies, and an amendment to registration thresholds applicable to savings and loan
holding companies. In January 2016, the SEC issued interim final rules and form amendments
to implement certain provisions of the Fixing America’s Surface Transportation (FAST) Act. For
more information refer to Deloitte Accounting Journal Entry on January 15, 2016.
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SEC Compliance Checklist — General (12-16)
The minerals covered by the rule include tin, tungsten, tantalum, and gold as well as their
derivatives. If these minerals are found in the registrant’s end product that they manufactured
or contacted a third party to manufacture, then they would be subject to certain procedures
and reporting requirements. This would include filing a separate form (Form SD) with the SEC
annually by May 31 and may potentially be subject to certain audit requirements. Registrants
should consult with their SEC counsel to determine whether and when an independent private
sector audit (IPSA) is required.
While the conflict minerals rule does not include any specific Form 10-K or Form 10-Q
reporting requirements, registrants should consider whether there are any indirect implications
to Form 10-K or Form 10-Q (e.g., may need to be considered within Item 1A – Risk Factors.)
Registrants should refer to Deloitte’s September 11, 2012, Heads Up summarizing the
provisions of the SEC’s final rule on conflict minerals. In addition, registrants should refer to
Deloitte’s August 25, 2015, Heads Up, about Year 2 conflict minerals reporting and the
potential implications of the IPSA. Further the SEC staff has issued guidance in the form of
responses to frequently asked questions, clarifying those registrants that would be affected by
the rule and certain provisions of the rule. Similarly, the AICPA issued interpretive guidance in
the form of questions and answers for auditors, clarifying independence considerations related
to the independent private sector audit (IPSA) of an issuer’s conflict minerals report.
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SEC Compliance Checklist — General (12-16)
Abbreviations Used
ASC FASB Accounting Standards Codification
ASR Accounting Series Release
EITF Emerging Issues Task Force Consensus
FRR Financial Reporting Release or Codified Section
GAAP United States Generally Accepted Accounting Principles
IASB International Accounting Standards Board
IFRS International Financial Reporting Standards
PCAOB Public Company Accounting Oversight Board
S-K Regulation S-K
S-X Regulation S-X
SAB Staff Accounting Bulletin
SAS Statements on Auditing Standards
INDEX
Article
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SEC Compliance Checklist — General (12-16)
INDEX
Changes in and Disagreements with Accountants 304
Quantitative and Qualitative Disclosure About Market Risk
305
Controls and Procedures 307
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(1) The registrant files annual, quarterly and other reports pursuant to
section 13 or 15(d) of the Securities Exchange Act of 1934 and all
reports due have been filed
(2) For the most recent fiscal year for which audited financial
statements are not yet available the registrant reasonably and in
good faith expects to report income attributable to the registrant,
after taxes but before extraordinary items and cumulative effect of
a change in accounting principle
(3) For at least one of the two fiscal years immediately preceding the
most recent fiscal year the registrant reported income attributable
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
to the registrant, after taxes but before extraordinary items and
cumulative effect of a change in accounting principle.
Also see S-X Rule 3-01(c), Age of Financial Statements, test in Part III of
this checklist.
d. If the tests set forth in paragraph (c) are not met, the filing must include
the audited balance sheets called for in paragraph (a) above.
e. For filings made after the number of days specified in paragraph (i)(2)
below, the filing must also include a balance sheet at an interim date
within the following number of days of the date of the filing:
(1) 130 days for accelerated and large accelerated filers
(2) 135 days for all other registrants.
Definitions:
Accelerated filer. The term accelerated filer means an issuer after it first
meets the following conditions as of the end of its fiscal year:
(i) The issuer had an aggregate worldwide market value of the voting
and nonvoting common equity held by its nonaffiliates of $75
million or more, but less than $700 million, as of the last business
day of the issuer’s most recently completed second fiscal quarter
(ii) The issuer has been subject to the requirements of section 13(a)
or 15(d) of the Exchange Act (15 U.S.C. 78m or 78o(d)) for a
period of at least 12 calendar months
(iii) The issuer has filed at least one annual report pursuant to section
13(a) or 15(d) of the Exchange Act
(iv) The issuer is not eligible to use the requirements for smaller
reporting companies in Regulation S-K for its annual and quarterly
reports.
Large accelerated filer. The term large accelerated filer means an issuer
after it first meets the following conditions as of the end of its fiscal year:
(i) The issuer had an aggregate worldwide market value of the voting
and nonvoting common equity held by its nonaffiliates of $700
million or more, as of the last business day of the issuer’s most
recently completed second fiscal quarter
(ii) The issuer has been subject to the requirements of section 13(a)
or 15(d) of the Exchange Act for a period of at least 12 calendar
months
(iii) The issuer has filed at least one annual report pursuant to section
13(a) or 15(d) of the Exchange Act
(iv) The issuer is not eligible to use the requirements for smaller
reporting companies in Regulation S-K for its annual and quarterly
reports.
Note: The aggregate worldwide market value of the issuer’s outstanding
voting and nonvoting common equity shall be computed by use of the
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
price at which the common equity was last sold, or the average of the bid
and asked prices of such common equity, in the principal market for such
common equity.
f. Any interim balance sheet may be unaudited and need not be presented
in greater detail than is required by S-X Rule 10-01 (see the Checklist for
Quarterly Report on SEC Form 10-Q). The latest interim balance sheet
must be at least as current as the most recent balance sheet filed on
Form 10-Q.
g. Registered management investment companies, see S-X Rule 3-18 in
lieu of this section.
h. Foreign private issuers, other than a registered management investment
company or an employee plan, may file statements required by Item 8A
of Form 20-F in lieu of the financial statements specified in this rule.
[Note: SEC Release 33-8879 footnote 136 states that foreign private
issuers that file financial statements prepared in accordance with IFRS as
issued by the IASB will comply with IASB requirements for form and
content within the financial statements, rather than with the specific
presentation and disclosure provisions in Articles 4, 5, 6, 7, 9, and 10 of
Regulation S-X.
Note that under Rules 3-05, 3-09, 3-10, 3-14, and 3-16 of Regulation S-
X, the company also may have to provide financial statements or
financial information for entities other than the issuer. In some cases,
the company may have to provide financial statements for a
predecessor. See the definition of “predecessor” in Exchange Act Rule
12b-2 and Securities Act Rule 405. See additional guidance under Topic 2
of the SEC Financial Reporting Manual relating to financial statements or
financial information under Rule 3-05, 3-09, 3-10, and 3-14 of
Regulation S-X for entities other than the issuer.]
i. (1) For purposes of paragraph c. and d. of this section, the number of
days shall be:
(a) 60 days (75 days for fiscal years ending before December
15, 2006) for large accelerated filers
(b) 75 days for accelerated filers
(c) 90 days for all other registrants.
(2) For purposes of paragraph e. of this section, the number of days
shall be:
(a) 129 days subsequent to the end of the registrant’s most
recent fiscal year for accelerated and large accelerated
filers;
(b) 134 days subsequent to the end of the registrant’s most
recent fiscal year for all other registrants.
Rule 3-02 — Consolidated statements of income and changes in
financial position.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
a. File audited consolidated statements of income and cash flows for the
registrant and its consolidated subsidiaries and for its predecessors for
each of the three fiscal years preceding the date of the latest audited
balance sheet presented or for such shorter period as the registrant
(including predecessors) has been in existence.
[Note: EGCs are required to present two years of audited financial
statements in its IPO registration statement.]
b. Also, for any interim period (between the latest audited balance sheet
and the most recent interim balance sheet and for the corresponding
period of the preceding fiscal year) statements of income and cash flows
are required.
Interim statements may be unaudited and need not be presented in
greater detail than is required by S-X Rule 10-01 (see Checklist for
Quarterly Report on SEC Form 10-Q).
c. Registered management investment companies see S-X Rule 3-18 in lieu
of this section.
d. Foreign private issuers, other than a registered management investment
company or an employee plan, may file the financial statements required
by Item 8A of Form 20-F in lieu of the requirements of this section.
Rule 3-03 — Instructions to income statement requirements.
a. Income statements are required to comply with Regulation S-X.
b. Utilities — If the registrant is engaged primarily in the electric, gas,
water, telephone, or telegraph businesses or in holding securities of
companies engaged in such businesses, it may include unaudited
statements of income and cash flows for the latest 12-month period in
lieu of interim statements.
c. Reconciliation to prior income statements — If income statements
include operations of a business prior to the date of acquisition, or for
other reasons differ from previous reports, the statements must be
reconciled as to sales and net income, either in the statement or a note.
No reconciliations are required if they have been made in prior SEC
filings or the statements have not previously been filed with the SEC or
made public.
d. Interim statements — normal adjustments — Any unaudited interim
financial statements furnished should reflect all adjustments that are, in
the opinion of management, necessary to a fair statement of the results
for the interim periods presented. A statement to that effect should be
included. Such adjustments should include, for example, appropriate
estimated provisions for bonus and profit-sharing arrangements normally
determined or settled at year-end. If all such adjustments are of a
normal recurring nature, a statement to that effect should be made;
otherwise, information should be provided describing in appropriate
detail the nature and amount of any adjustments other than normal
recurring adjustments entering into the determination of the results
shown.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
e. Business segments — Disclosure regarding segments required by
GAAP (e.g., FASB ASC Topic 280), must be given for each year for which
an audited income statement is presented. To the extent that the
segment data complies with the provisions of S-K Item 101, the
disclosures in S-K Item 101 may be combined by cross-referencing from
the financial statements. Segment data — see tests in Part III.
Rule 3-04 — Changes in other stockholders’ equity — An analysis of the
changes in each caption of stockholders’ equity and noncontrolling interests
presented in the balance sheets shall be given in a note or separate statement.
This analysis shall be presented in the form of a reconciliation of the beginning
balance to the ending balance for each period for which an income statement is
required to be filed with all significant reconciling items described by
appropriate captions with contributions from and distribution to owners shown
separately. Also, state separately the adjustments to the balance at the
beginning of the earliest period presented for items which were retroactively
applied to periods prior to that period. With respect to any dividends, state the
amount per share and in the aggregate for each class of shares. Provide a
separate schedule in the notes to the financial statements that shows the
effects of any changes in the registrant's ownership interest in a subsidiary on
the equity attributable to the registrant.
Separate Financial Statements Required by Regulation S-X
See Rules 3-05, 3-09, 3-10, 3-14, and 3-16.
See SEC staff interpretations of various Regulation S-X Rules relating to
separate financial statements, summarized financial statement requirements,
and disclosure in SAB Topic 6-K.
See FRR Section 213, Separate Financial Statements.
In registration statements in which investors may rely on a provider of an
interest coverage agreement, a collateral value guarantee, or other credit
assurance, audited financial statements of the provider may be required.
Unaudited summarized financial information may be sufficient in some
circumstances.
See SAB Topic 1-I concerning financial statements of properties securing
mortgage loans.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
Rule 3-05 — Financial statements of businesses acquired or to be
acquired.
a. Financial statements required
(1) Financial statements of businesses acquired or to be acquired must
be furnished for the periods stated in section (b) below if:
(i) A business combination has occurred or is probable (this
encompasses the acquisition of an interest in a business
accounted for by the equity method)
(ii) Consummation of a combination between entities under
common control is probable.
(2) To determine whether Rule 3-05 applies, the determination of
whether a “business” has been acquired should be made. See S-X
Rule 11-01(d).
(3) Acquisitions of a group of related businesses that are probable or
that have occurred subsequent to the latest fiscal year-end for
which audited financial statements of the registrant have been
filed should be treated as if they are a single business
combination.
(i) The required financial statements of related businesses may
be presented on a combined basis for any periods that are
under common control or management.
(ii) Businesses should be deemed to be related if (a) they are
under common control or management, (b) the acquisition
of one business is conditional on the acquisition of each
other business, or (c) each acquisition is conditioned on a
single common event.
(4) This rule does not apply to a business that is totally held by the
registrant prior to the consummation of the transaction.
b. Periods to be presented
(1) If securities are being registered to be offered to the security
holders of the business to be acquired or if shareholder approval is
solicited for an acquisition transaction, the financial statements
per S-X Rules 3-01 and 3-02 must be furnished for the business to
be acquired (except as otherwise provided for in filings on Form N-
14, S-4, or F-4).
(2) In all cases not described in (b)(1), statements of the business
acquired or to be acquired must be filed for the periods set forth
below, or such shorter period as the business has been in
existence.
The periods for which such statements are to be filed are based on
the significant subsidiary tests (see the Significant Subsidiary Test,
S-X Rule 1-02(w) in Part III).
[Note: The statements covering fiscal years must be audited
(except as provided in Schedule 14A, Item 14 or as provided in a
registration filed on Form N-14, S-4, or F-4).]
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(i) If none of the tests exceed 20%, financial statements are
not required. However, if the aggregate impact of
individually insignificant businesses acquired since the date
of the most recent audited balance sheet filed for the
registrant exceeds 50%, financial statements covering at
least the substantial majority of the businesses acquired
(presented on a combined basis if appropriate) must be
furnished. Such financial statements must be for at least
the most recent year and any interim periods specified in S-
X Rules 3-01 and 3-02.
(ii) If any of the tests exceed 20% but none exceeds 40%,
financial statements must be furnished for at least the latest
year and any interim periods specified in S-X Rules 3-01 and
3-02.
(iii) If any of the tests exceed 40% but none exceed 50%,
financial statements must be furnished for at least the two
latest years and any interim periods specified in S-X Rules
3-01 and 3-02.
(iv) If any of the tests exceed 50%, the full financial statements
(including interim periods) specified in S-X Rules 3-01 and
3-02 must be furnished. However, financial statements for
the earliest of the three years required may be omitted if net
revenues reported by the acquired business in its most
recent fiscal year are less than $50 million. (Note: The SEC
staff would not object if an EGC presents two years of
separate financial statements for a subsidiary or investee in
its initial registration statement when under Rule 3-05 it
would be required to present three years of separate
financial statements for such a subsidiary or investee.)
(3) The determination is to be made by comparing the most recent annual
financial statements of each such business, or group of related
businesses on a combined basis, to the registrant’s most recent annual
consolidated financial statements filed at or prior to the date of
acquisition.
However, if the registrant made a significant acquisition subsequent to
the latest fiscal year-end and filed a report on Form 8-K that included
audited financial statements of such acquired business for the periods
required by this section and the pro forma financial information required
by S-X Article 11, such determination may be made by using the pro
forma amounts for the latest fiscal year in the report on Form 8-K (or
non-IPO registration statement) rather than by using the historical
amounts for the latest fiscal year of the registrant. (Note that pro forma
balance-sheet information used in measuring significance should be
based on the most recent audited balance sheet of the registrant. This
pro forma balance-sheet information may or may not have been included
in the Form 8-K or registration statement, depending on when the Form
8-K or registration statement was filed.)
For initial public offerings involving businesses that have been built by
aggregating discrete businesses that remain substantially intact, the
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
significant subsidiary tests [see Part III, S-X Rule 1-02(w)] can be
measured against the combined entities, including those to be acquired,
which comprise the registrant at the time the registration statement is
filed. See the discussion in SAB Topic 1-J (SAB 80).
The tests may not be made by “annualizing” data.
(4) Financial statements required for the periods specified in section (b)(2)
above may be omitted to the extent specified as follows:
(i) Registration statements and proxy statements need not include
separate financial statements of the acquired or to be acquired
business if it does not exceed any of the conditions of the
significant subsidiary tests [see Part III, S-X Rule 1-02(w)] at the
50 percent level, and either:
(a) The consummation of the acquisition has not yet occurred or
(b) The date of the final prospectus or prospectus supplement
relating to an offering as filed with the Commission pursuant
to §230.424(b) of Regulation C, or mailing date in the case
of a proxy statement, is no more than 74 days after
consummation of the business combination, and the financial
statements have not previously been filed by the registrant.
This rule does not apply to “blank check” issuers.
(ii) An issuer (other than a foreign private issuer required to file
reports on Form 6-K) that omits from its initial registration
statement financial statements of a recently consummated
business combination pursuant to paragraph (c)(1) above should
furnish those financial statements and any pro forma information
specified by S-X Article 11 under cover of Form 8-K no later than
75 days after consummation of the acquisition.
(iii) Separate financial statements of the acquired business need not be
furnished once the operating results of the acquired business have
been reflected in the audited consolidated statements of the
registrant for a complete fiscal year. [Note: The SEC Financial
Reporting Manual describes this requirement as “at least nine
months.” Also see S-X Rule 3-06.], unless the financial statements
have not been previously filed, or unless the acquired business is
of such significance to the issuer that omission of the financial
statements would materially impair an investor’s ability to
understand the historical financial results of the registrant [e.g., if,
at the date of acquisition, (1) the acquired business met at least
one of the significant subsidiary tests between the 70 to 80%
level, and the acquired business is included in the audited results
of the registrant for less than 21 months or (2) it is included in the
audited results of the registrant for less than 33 months and was
significant at the 80% or greater level, then the income
statements of the acquired business should continue to be
furnished.]
(iv) A separate audited balance sheet of the acquired business is not
required when the issuer’s most recent audited balance sheet is for
a date after the date the acquisition was consummated.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
c. Financial Statements of Foreign Businesses
If the business acquired or to be acquired is a foreign business [see
definition at S-X Rule 1.02(a)(l)], financial statements of the business
that meet the requirements of Item 17 of Form 20-F or financial
statements prepared under IFRS as issued by the IASB will satisfy this
section.
The requirements of S-X Rule 3-05 apply only to acquisitions made by the
registrant or its predecessor(s). Financial statements of businesses recently
acquired by the acquiree need not be furnished unless their omission would
render the acquiree’s financial statements misleading or substantially
incomplete.
See also the following:
i. SAB Topic 2 regarding business combinations
ii. SAB Topic 1-A regarding financial statements of target companies
iii. SAB Topic 1-B (SAB 55) — Allocation of expenses and related
disclosures in subsidiaries’ financial statements. Historical income
statements of subsidiaries (and divisions or lesser business components)
when presented separately should reflect all costs of doing business,
including those incurred on their behalf by the parent.
Rule 3-06 — Financial statements covering a period of 9 to 12 months
— (Not applicable to registered investment companies.)
The filing of financial statements covering a period of nine to 12 months
satisfies a requirement for statements for a period of one year if:
a. The issuer changed its fiscal year (see Change in Fiscal Years below).
b. The issuer made a significant business acquisition for which financial
statements are required under S-X Rule 3-05 and the financial
statements covering the interim period pertain to the business being
acquired.
c. The SEC so permits under S-X Rule 3-13.
If there is a requirement to file financial statements for a time period
exceeding one year but not exceeding three consecutive years, the
financial statements for one of those years may cover a period of only
nine to 12 months if the conditions described in paragraph (a), (b), or
(c), above, exist and the other financial statements filed cover the full
fiscal year(s) for all other years in the time period.
Change in Fiscal Years
Exchange Act Rules 13a-10 and 15d-10 and FRR Section 102.05. Transition
reports. A “transition period” is the short period that results from a change in
fiscal year and “transition reports” are SEC filings covering such transition
periods. [Note: Form 8-K, Item 5.03, requirements.]
Rule 3-09 — Separate financial statements of subsidiaries not
consolidated and 50%-or-less-owned persons.
a. Separate financial statements of majority owned unconsolidated
subsidiaries (“subsidiary”) are required if any of the conditions of the
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
Significant Subsidiary Test (S-X Rule 1-02(w) in Part III), substituting
20% for 10% in the test, is met. Similarly, separate financial statements
of 50%-or-less-owned persons accounted for by the equity method
(“investee”) are required if either the Investment or Income Test of the
Significant Subsidiary Test, substituting 20% for 10% in the test, is met.
(Note: The SEC staff would not object if an EGC presents two years of
separate financial statements for a subsidiary or investee in its initial
registration statement when under Rule 3-09 it would be required to
present three years of separate financial statements for such a subsidiary
or investee.)
b. Insofar as practicable, the separate financial statements must be as of
the same dates and for the same periods as the audited consolidated
financial statements required by Rules 3-01 and 3-02. However, these
separate financial statements are required to be audited only for those
years in which the Investment or Income Test for S-X Rule 1-02(w) in
Part III, substituting 20% for 10% in the test, is met. For Form 10-K:
(1) If the registrant is an accelerated filer, but the 50%-or-less owned
person is not an accelerated filer, the required financial statements
may be filed as an amendment to the report within 90 days, or
within six months if the 50%-or-less owned person is a foreign
business, after the end of the registrant’s fiscal year.
(2) If the fiscal year of any 50%-or-less owned person ends within the
registrant’s number of filing days (see definition below) before the
date of the filing, or if the fiscal year-ends after the date of the
filing, the required financial statements may be filed as an
amendment to the report within the subsidiary’s number of filing
days, or within six months if the 50%-or-less owned person is a
foreign business, after the end of such subsidiary’s or person’s
fiscal year.
(3) The term registrant’s number of filing days means:
(a) 60 days for large accelerated filers
(b) 75 days for accelerated filers
(c) 90 days for all other registrants.
(4) The term subsidiary’s number of filing days means:
(a) 60 days if the 50%-or-less owned person is a large
accelerated filer
(b) 75 days if the 50%-or-less owned person is an accelerated
filer
(c) 90 days for all other 50%-or-less owned persons.
c. Notwithstanding the requirements for separate statements in paragraph
(a) above, if financial statements of two or more subsidiaries are
required, combined or consolidated statements of such subsidiaries may
be filed subject to principles of inclusion and exclusion that clearly exhibit
the financial position, cash flows, and results of operations of the
combined or consolidated group. Also, if financial statements of two or
more investees are required, combined or consolidated statements of
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
such investees may be filed subject to the same principles of inclusion or
exclusion referred to above.
d. If the investee is a foreign business, financial statements of the business
that meet the requirements of Item 17 of Form 20-F or IFRS as issued
by the IASB will satisfy this section.
e. Where the subsidiary or investee does not meet the Investment or
Income Test using a 20% threshold, but does meet either of those tests
or the Asset Test using 10%, summarized financial information must be
furnished in a footnote — see S-X Rule 4-08(g).
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
c. When an operating subsidiary issues securities and its parent company
guarantees those securities, the registration statement, parent company
annual report, or parent company quarterly report need not include
financial statements of the issuer if:
(1) The issuer is 100% owned by the parent company guarantor
(2) The guarantee is full and unconditional
(3) No other subsidiary of the parent company guarantees the
securities
(4) The parent company’s financial statements are filed for the periods
specified by S-X Rule 3-01 and 3-02 and include, in a footnote,
condensed consolidating financial information for the same periods
with a separate column for:
(i) The parent company
(ii) The subsidiary issuer
(iii) Any other subsidiaries of the parent company on a combined
basis
(iv) Consolidating adjustments
(v) The total consolidated amounts.
Instead of the condensed consolidating financial information required by
paragraph (c)(4) above, the parent company’s financial statements may
include a footnote stating, if true, that the parent company has no
independent assets or operations, the guarantee is full and
unconditional, and any subsidiaries of the parent company other than the
subsidiary issuer are minor. The footnote also must include the narrative
disclosures specified in paragraphs (i)(9) and (i)(10) of Rule 3-10 of
Regulation S-X.
d. When a subsidiary issues securities and both its parent company and one
or more other subsidiaries of that parent company guarantee those
securities, the registration statement, parent company annual report, or
parent company quarterly report need not include financial statements of
the issuer or any subsidiary guarantor if:
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(1) The issuer and all subsidiary guarantors are 100% owned by the
parent company guarantor;
(2) The guarantees are full and unconditional;
(3) The guarantees are joint and several; and
(4) The parent company’s financial statements are filed for the periods
specified by S-X Rule 3-01 and 3-02 and include, in a footnote,
condensed consolidating financial information for the same periods
with a separate column for:
(i) The parent company;
(ii) The subsidiary issuer;
(iii) The guarantor subsidiaries of the parent company on a
combined basis;
(iv) Any other subsidiaries of the parent company on a combined
basis;
(v) Consolidating adjustments; and
(vi) The total consolidated amounts.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
Instead of the condensed consolidating financial information required by
paragraph (d)(4) above, the parent company’s financial statements may
include a footnote stating, if true, that the parent company has no
independent assets or operations, the subsidiary issuer is a 100% owned
finance subsidiary of the parent company, the parent company has
guaranteed the securities, all of the parent company’s subsidiaries other
than the subsidiary issuer have guaranteed the securities, all of the
guarantees are full and unconditional, and all of the guarantees are joint
and several.
If all of the requirements in this paragraph (d) are satisfied except that
the guarantee of a subsidiary is not joint and several with, as applicable,
the parent company’s guarantee or the guarantees of the parent
company and the other subsidiaries, then each subsidiary guarantor
whose guarantee is not joint and several need not include separate
financial statements, but the condensed consolidating financial
information should include a separate column for each guarantor whose
guarantee is not joint and several.
e. When a parent company issues securities and one of its subsidiaries
guarantees those securities, the registration statement, parent company
annual report, or parent company quarterly report need not include
financial statements of the subsidiary guarantor if:
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(iv) Consolidating adjustments
(v) The total consolidated amounts.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
unconditional and joint and several, and any subsidiaries of the parent
company other than the subsidiary guarantors are minor.
If any of the subsidiary guarantees is not joint and several with the
guarantees of the other subsidiaries, then each subsidiary guarantor
whose guarantee is not joint and several need not include separate
financial statements, but the condensed consolidating financial
information must include a separate column for each subsidiary
guarantor whose guarantee is not joint and several.
g. Recently acquired subsidiary issuers or subsidiary guarantors.
(1) A Securities Act registration statement (not a Form 10-K or 10-Q)
of the parent company must include the financial statements
specified in paragraph (g)(2) of this section for any subsidiary that
otherwise meets the conditions in paragraph (c), (d), (e), or (f) of
this section for omission of separate financial statements if:
(i) The subsidiary has not been included in the audited
consolidated results of the parent company for at least nine
months of the most recent fiscal year
(ii) The net book value or purchase price, whichever is greater,
of the subsidiary is 20% or more of the principal amount of
the securities being registered. The significance test should
be computed using net book value of the subsidiary as of the
most recent fiscal year-end preceding the acquisition.
Acquisitions of a group of subsidiary issuers or subsidiary
guarantors that are related prior to their acquisition should
be aggregated for purposes of applying the 20% test above.
Subsidiaries should be deemed to be related prior to their
acquisition if:
(a) They are under common control or management
(b) The acquisition of one subsidiary is conditioned on the
acquisition of each subsidiary
(c) The acquisition of each subsidiary is conditioned on a
single common event.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(2) Financial statements required.
(i) Audited financial statements for a subsidiary described in
paragraph (g)(1) above must be filed for the subsidiary’s
most recent fiscal year preceding the acquisition. In
addition, unaudited financial statements must be filed for
any interim periods specified in S-X Rule 3-01 and 3-02.
These financials should be audited under PCAOB standards.
(ii) The financial statements must conform to the requirements
of Regulation S-X, except that supporting schedules need
not be filed. If the subsidiary is a foreign business, financial
statements of the subsidiary meeting the requirements of
Item 17 of Form 20-F or IFRS as issued by the IASB will
satisfy this item.
h. Paragraph (h) of S-X Rule 3-10 contains definitions for 100% owned, full
and unconditional, annual report, quarterly report, no independent assets
or operations, minor, finance subsidiary and operating subsidiary.
25
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(5) All subsidiary issuer or subsidiary guarantor columns should
present the following investments in subsidiaries under the equity
method:
(i) Nonguarantor subsidiaries
(ii) Subsidiary issuers or subsidiary guarantors that are not
100% owned or whose guarantee is not full and
unconditional
(iii) Subsidiary guarantors whose guarantee is not joint and
several with the guarantees of the other subsidiaries
(iv) Subsidiary guarantors with differences in domestic or foreign
laws that affect the enforceability of the guarantees.
(6) Provide a separate column for each subsidiary issuer or subsidiary
guarantor that is not 100% owned, whose guarantee is not full
and unconditional, or whose guarantee is not joint and several
with the guarantees of other subsidiaries. Inclusion of a separate
column does not relieve that issuer or guarantor from the
requirement to file separate financial statements under paragraph
(a) of this section. However, paragraphs (b) through (f) of this
section will provide this relief if the particular paragraph is satisfied
except that the guarantee is not joint and several.
(7) Provide separate columns for each guarantor by legal jurisdiction if
differences in domestic or foreign laws affect the enforceability of
the guarantees.
(8) Include the following disclosure, if true:
(i) Each subsidiary issuer or subsidiary guarantor is 100%
owned by the parent company
(ii) All guarantees are full and unconditional
(iii) Where there is more than one guarantor, all guarantees are
joint and several.
26
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(9) Disclose any significant restrictions on the ability of the parent
company or any guarantor to obtain funds from its subsidiaries by
dividend or loan.
(10) Provide the disclosures prescribed by S-X Rule 4-08(e)(3) with
respect to the subsidiary issuers and subsidiary guarantors.
(11) The disclosure:
(i) May not omit any financial and narrative information about
each guarantor if the information would be material for
investors to evaluate the sufficiency of the guarantee
(ii) Should include sufficient information so as to make the
financial information presented not misleading
(iii) Need not repeat information that would substantially
duplicate disclosure elsewhere in the parent company’s
consolidated financial statements.
(12) If the parent company’s consolidated financial statements are
prepared on a comprehensive basis other than U.S. GAAP or
International Financial Reporting Standards as issued by the
International Accounting Standards Board (IASB), reconcile the
information in each column to U.S. GAAP to the extent necessary
to allow investors to evaluate the sufficiency of the guarantees.
The reconciliation may be limited to the information specified by
Item 17 of Form 20-F. The reconciling information need not
duplicate information included elsewhere in the reconciliation of
the consolidated financial statements.
(13) Customary release provisions should be carried forward in periodic
filings for as long as the debt is outstanding.
27
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
a. If the financial statements in a filing are as of a date the number of days
specified in paragraph (g) of this section or more prior to the date the
filing is expected to become effective or proposed mailing date in the
case of a proxy statement, the financial statements should be updated,
except as specified in the following paragraphs, with a balance sheet as
of an interim date within the number of days specified in paragraph (g) of
this section and with statements of income and cash flows for the interim
period between the end of the most recent fiscal year and the date of the
interim balance sheet provided and for the corresponding period of the
preceding fiscal year. Such interim financial statements may be
unaudited and need not be presented in greater detail than is required by
S-X Rule 10-01 — see Checklist for Quarterly Report on SEC Form 10-Q.
However, the latest interim statements must be at least as current as the
most recent statements filed on Form 10-Q. [See S-X Rule 3-01.]
b. Where the anticipated effective date of a filing, or in the case of a proxy
statement the proposed mailing date, falls within the number of days
subsequent to the end of the fiscal year specified in paragraph (g) of this
section, the filing need not include financial statements more current than
as of the end of the third fiscal quarter of the most recently completed
fiscal year unless the audited financial statements for such fiscal year are
available or unless the anticipated effective date or proposed mailing date
falls after 45 days subsequent to the end of the fiscal year and the
registrant does not meet the conditions prescribed under Regulation S-X,
Rule 3-01(c). If the anticipated effective date or proposed mailing date
falls after 45 days subsequent to the end of the fiscal year and the
registrant does not meet the conditions in Regulation S-X, Rule 3-01(c),
the filing must include audited financial statements for the most recently
completed fiscal year (see the Age of Financial Statements test in Part III
of this checklist).
c. If a filing is made near the end of a year and audited statements for that
year are not included, the filing must be updated with audited
statements if they become available before the expected effective date,
or proposed mailing date of a proxy.
d. The most recent audited financial statements included in a Securities Act
registration statement or in a Form 10 registration statement may not be
more than one year and 45 days old when the registration becomes
effective if the issuer was not subject, immediately prior to the time of
filing the registration statements, to the Exchange Act reporting
requirements.
e. Registered management investment companies, see S-X Rule 3-18 in
lieu of this section.
f. Any foreign private issuer may file financial statements whose age is
specified in Item 8.A of Form 20-F. Financial statements of a foreign
business that are furnished pursuant to S-X Rule 3-05 or 3-09 because it
is an acquired business or 50 percent-or-less-owned person may be of
the age specified in Item 8.A of Form 20-F.
g. (1) For purposes of paragraph (a) of this section, the number of days
shall be:
(a) 130 days for large accelerated filers
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(b) 135 days for all other registrants.
(2) For purposes of paragraph (b) of this section, the number of days
shall be:
(a) 60 days for large accelerated filers
(b) 75 days for accelerated filers
(c) 90 days for all other registrants.
29
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(b) The trust’s status as a “real estate investment trust” under applicable
provisions of the Internal Revenue Code as amended shall be stated in a
note referred to in the appropriate statements. Such note shall also
indicate briefly the principal present assumptions on which the trust has
relied in making or not making provisions for Federal income taxes.
(c) The tax status of distributions per unit shall be stated (e.g., ordinary
income, capital gain, return of capital).
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
31
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(b) The currency in which amounts in the financial statements are stated
shall be disclosed prominently on the face of the financial statements. If
dividends on publicly-held equity securities will be declared in a currency
other than the reporting currency, a note to the financial statements shall
identify that currency. If there are material exchange restrictions or
controls relating to the issuer’s reporting currency, the currency of the
issuer’s domicile, or the currency in which the issuer will pay dividends,
prominent disclosure of this fact shall be made in the financial
statements. If the reporting currency is not the U.S. dollar, dollar-
equivalent financial statements or convenience translations shall not be
presented, except a translation may be presented of the most recent
fiscal year and any subsequent interim period presented using the
exchange rate as of the most recent balance sheet included in the filing,
except that a rate as of the most recent practicable date shall be used if
materially different.
(c) If the financial statements of a foreign private issuer are stated in a
currency of a country that has experienced cumulative inflationary effects
exceeding a total of 100 percent over the most recent three-year period,
and have not been recast or otherwise supplemented to include
information on a historical cost/constant currency or current cost basis
prescribed or permitted by appropriate authoritative standards, the issuer
shall present supplementary information to quantify the effects of
changing prices upon its financial position and results of operations.
(d) Notwithstanding the currency selected for reporting purposes, the issuer
shall measure separately its own transactions, and those of each of its
material operations (e.g., branches, divisions, subsidiaries, joint
ventures, and similar entities) that is included in the issuer’s consolidated
financial statements and not located in a hyperinflationary environment,
using the particular currency of the primary economic environment in
which the issuer or the operation conducts its business. Assets and
liabilities so determined shall be translated into the reporting currency at
the exchange rate at the balance-sheet date; all revenues, expenses,
gains, and losses shall be translated at the exchange rate existing at the
time of the transaction or, if appropriate, a weighted average of the
exchange rates during the period; and all translation effects of exchange
rate changes shall be included as a separate component (“cumulative
translation adjustment”) of shareholders’ equity. For purposes of this
paragraph, the currency of an operation’s primary economic environment
is normally the currency in which cash is primarily generated and
expended; a hyperinflationary environment is one that has cumulative
inflation of approximately 100% or more over the most recent three-year
period. Departures from the methodology presented in this paragraph
32
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
shall be quantified pursuant to Items 17(c)(2) of Form 20-F (§249.220f of
this chapter).
(e) The issuer shall state its primary financial statements in the same
currency for all periods for which financial information is presented. If the
financial statements are stated in a currency that is different from that
used in financial statements previously filed with the Commission, the
issuer shall recast its financial statements as if the newly adopted
currency had been used since at least the earliest period presented in the
filing. The decision to change and the reason for the change in the
reporting currency shall be disclosed in a note to the financial statements
in the period in which the change occurs.
33
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
purposes, statements for a period that closely approaches the
registrant’s fiscal year. If the difference is not more than 93 days,
disclose the following:
(1) The closing date of the entity
(2) An explanation of the necessity for using different closing periods
(3) The effect of intervening events that materially affects financial
position or results of operations.
c. Statements may be retroactively combined after a combination between
entities of common control even if the respective fiscal periods do not
end within 93 days, except that the financial statements for the latest
period must be recast to dates that do not differ by more than 93 days, if
practical. The SEC has interpreted the “latest period” to be the period in
which the merger was consummated. Disclosure of the effects of
recasting must be made.
d. Due consideration should be given to the propriety of consolidating
foreign subsidiaries whose operations are affected by political, economic,
or currency restrictions. If consolidated, disclose the effect of foreign
exchange restrictions on the financial statements of the registrant and its
subsidiaries.
34
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(ii) For periods prior to the effective dates set forth in this
paragraph, FASB ASC Topic 718 and prior authoritative
35
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
guidance, shall be considered to be generally accepted
accounting principles.
b. All money amounts required to be shown in financial statements may be
expressed in whole dollars or multiples thereof, as appropriate, provided
that, when stated in other than whole dollars, an indication to that effect
is inserted immediately beneath the caption of the statement or schedule,
at the top of the money columns, or at an appropriate point in narrative
material.
c. Negative amounts (red figures) shall be shown in a manner which clearly
distinguishes the negative attribute. When determining methods of
display, consideration should be given to the limitations of reproduction
and microfilming processes.
36
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(2) Disclosure should be made of any restriction upon retained
earnings resulting from involuntary liquidation preference
exceeding par or stated value.
See discussion of SAB Topic 5-Q for the SEC’s comments concerning
Imputation of Dividends on Nonredeemable Preferred Stock With Initial
Below Market Dividend Rates (also known as “increasing rate preferred
stock”).
e. *Restrictions that limit the payment of dividends by registrant:
(1) Describe the most significant restrictions, other than as reported
under S-X Rule 4-08(d) above, on the payment of dividends by the
registrant, indicating their sources, their pertinent provisions, and
the amount of retained earnings or net income restricted or free of
restrictions.
(2) Disclose the amount of consolidated retained earnings that
represents undistributed earnings of 50%-or-less-owned persons
accounted for by the equity method. This amount is the same as
is used in the test in Part III, S-X Rule 4-08(e).
(3) Disclose the following information if the restricted net assets of
consolidated and unconsolidated subsidiaries and the parent’s
equity in the undistributed earnings of 50%-or-less-owned persons
accounted for by the equity method together exceed 25% of
consolidated net assets as of the end of the most recently
completed fiscal year. Perform S-X Rule 4-08(e) test in Part III to
determine if these disclosures are required.
(i) Describe the nature of any restrictions on the ability of
consolidated subsidiaries and unconsolidated subsidiaries to
transfer funds to the registrant in the form of cash
dividends, loans or advances (e.g., borrowing arrangements,
regulatory restraints, foreign government).
(ii) Disclose separately the amounts of such restricted net
assets for unconsolidated subsidiaries and consolidated
subsidiaries as of the end of the most recently completed
fiscal year.
[Note: For purposes of this test, restricted net assets of
subsidiaries shall mean that amount of the registrant’s
proportionate share of net assets (after intercompany
eliminations) reflected in the balance sheets of its consolidated and
unconsolidated subsidiaries as of the end of the most recent fiscal
year that may not be transferred to the parent company in the
form of loans, advances, or cash dividends by the subsidiaries
without the consent of a third party (e.g., lender, regulatory
agency, and foreign government). Redeemable preferred stocks
(S-X Rule 5-02.28) and noncontrolling interests should be
deducted in computing net assets for purposes of this test. If
restrictions on the amount of funds that may be loaned or
advanced differ from the amount restricted as to transfer in the
form of cash dividends, the amount least restrictive to the
subsidiary should be used.]
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
f. *State any significant changes in authorized or issued amounts of
bonds, mortgages, and similar debt subsequent to the date of the
latest balance sheet being filed. See FRR Section 217 regarding debt
defeasance.
g. Summarized financial information of subsidiaries not consolidated
and 50%-or-less-owned persons (see the significance test guidance in
Part III of this checklist):
(1) Summarized information as to assets, liabilities, and results of
operations [S-X Rule 1-02(bb)] must be presented on an individual
or group basis in notes to the financial statements for all
unconsolidated subsidiaries (“subsidiaries”) and for all 50%-or-
less-owned persons accounted for by the equity method
(“investees”) if either the Asset, Investment, or Income Test of the
Significant Subsidiary Test (S-X Rule 1-02(w) in Part III) is met,
applied individually to any subsidiary not consolidated or any 50%-
or-less-owned person, or on an aggregate basis to any
combination of such “subsidiaries” and “investees.”
(2) Summarized financial information must be presented, insofar as is
practicable, as of the same dates and for the same periods as the
audited consolidated financial statements and must include S-X
Rule 1-02(bb) disclosures. For disclosure purposes, summarized
information of “subsidiaries” must not be combined with the
summarized information of “investees.” If the Significant
Subsidiary Test conditions are met on a total basis by any
combination of “subsidiaries” and “investees,” the summarized
financial information required by (1) above must be provided for
all such subsidiaries and investees.
h. Income tax expense —
(1) Major components of tax expense. Disclose in the income
statements, or in a footnote, domestic and foreign components of
pretax income. The disclosure of separate components of
domestic and foreign pretax income is not required if a 5% test is
met — see Income Tax Disclosures Test in Part III. See SAB Topic
6-I.
Federal, foreign, and state income taxes. Amounts applicable
to U.S. federal, foreign, and other income taxes are to be stated
separately for each major component. The disclosure of separate
components is not required for foreign or other taxes if a 5% test
is met — see Income Tax Test in Part III.
(2) Reconciliation. Provide a reconciliation between the reported
income tax expense (benefit) and the amount computed by
multiplying pretax income (loss) by the statutory federal tax rate.
See ASC Pargraph740-10-50-12. Disclose the estimated dollar
amount for each of the reconciling items. The reconciliation may
also be presented in percentages rather than dollars.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(3) Paragraphs (h)(1) and (2) of this section shall be applied in the
following manner to financial statements which reflect the
adoption of FASB ASC Topic 740, Income Taxes.
39
SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
m. Repurchase and reverse repurchase agreements
(1) If the greater of the carrying amount or market value of securities
or other assets sold under repurchase agreements exceed 10% of
total assets of the registrant:
(i) Disclose separately in the balance sheet the aggregate
amount of liabilities incurred pursuant to repurchase
agreements including accrued interest thereon.
(ii) Disclose in a footnote a tabular presentation segregated as
to type of security and maturity date the following: (a)
carrying amount and market value of the assets sold under
the repurchase agreement including accrued interest plus
any cash or other assets on deposit, and (b) the repurchase
liability associated with such transaction or group of
transactions and the interest rate thereon.
For purposes of this footnote disclosure, do not include securities
or other assets for which unrealized changes in market value
are reported in current income or which have been obtained
under reverse repurchase agreements.
(2) If, as of the most recent balance-sheet date, the amount at risk
under repurchase agreements with any individual counterparty or
group of related counterparties exceeds 10% of stockholders’
equity (or in the case of investment companies, net asset value),
disclose (i) the name of each such counterparty or group of related
counterparties, (ii) the amount at risk with each, and (iii) the
weighted average maturity of the repurchase agreements with
each.
The amount at risk under repurchase agreements is defined as the
excess of carrying amount (or market value, if higher than the
carrying amount or if there is no carrying amount) of the securities
or other assets sold under agreement to repurchase, including
accrued interest plus any cash or other assets on deposit to secure
the repurchase obligation, over the amount of the repurchase
liability (adjusted for accrued interest).
(3) If, as of the most recent balance-sheet date, the aggregate
carrying amount of “reverse repurchase agreements” (securities or
other assets purchased under agreements to resell) exceeds 10%
of total assets:
(a) Disclose separately such amount in the balance sheet
(b) Disclose in an appropriately captioned footnote: (1) the
registrant’s policy with regard to taking possession of
securities or other assets purchased under agreements to
resell; and (2) whether or not there are any provisions to
ensure that the market value of the underlying assets
remains sufficient to protect the registrant in the event of
default by the counterparty and if so, the nature of those
provisions.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
(4) If, as of the most recent balance-sheet date, the amount of risk
under reverse repurchase agreements with any individual
counterparty or group of related counterparties exceeds 10% of
stockholders’ equity (or in the case of investment companies, net
asset value), disclose the name of each such counterparty or
group of related counterparties, the amount at risk with each, and
the weighted average maturity of the reverse repurchase
agreements with each.
The amount at risk under reverse repurchase agreements is
defined as the excess of the carrying amount of the reverse
repurchase agreements over the market value of assets delivered
pursuant to the agreements by the counterparty to the registrant
(or to a third-party agent that has affirmatively agreed to act on
behalf of the registrant) and not returned to the counterparty,
except in exchange for their approximate market value in a
separate transaction.
n. Accounting policies for certain derivative instruments Disclosures
regarding accounting policies should include to the extent material, each
of the following items:
(1) A discussion of each method used to account for derivative
financial instruments and derivative commodity instruments
(2) The types of derivative financial instruments and derivative
commodity instruments accounted for under each method
(3) The criteria required to be met for each accounting method used,
including a discussion of the criteria required to be met for hedge
or deferral accounting and accrual or settlement accounting (e.g.,
whether and how risk reduction, correlation, designation, and
effectiveness tests are applied)
(4) The accounting method used if the criteria specified in paragraph
(n)(3) above are not met
(5) The method used to account for terminations of derivatives
designated as hedges or derivatives used to affect directly or
indirectly the terms, fair values, or cash flows of a designated item
(6) The method used to account for derivatives when the designated
item matures, is sold, is extinguished, or is terminated. In
addition, the method used to account for derivatives designated to
an anticipated transaction, if the anticipated transaction is no
longer likely to occur
(7) Where and when derivative financial instruments and derivative
commodity instruments, and their related gains and losses, are
reported in the statements of financial position, cash flows, and
results of operations.
Instructions to paragraph n.
(1) For purposes of this paragraph (n), derivative financial instruments
and derivative commodity instruments (collectively referred to as
“derivatives”) are defined as follows:
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Disclosed
or
Complied Reason
With Omitted
(i) Derivative financial instruments have the same meaning as
defined by GAAP (see ASC Subtopic 815-10), and include
futures, forwards, swaps, options, and other financial
instruments with similar characteristics.
(ii) Derivative commodity instruments include, to the extent
such instruments are not derivative financial instruments,
commodity futures, commodity forwards, commodity swaps,
commodity options, and other commodity instruments with
similar characteristics that are permitted by contract or
business custom to be settled in cash or with another
financial instrument. For purposes of this paragraph,
settlement in cash includes settlement in cash of the net
change in value of the derivative commodity instrument
(e.g., net cash settlement based on changes in the price of
the underlying commodity).
(2) For purposes of paragraphs (n)(2), (n)(3), (n)(4), and (n)(7), the
required disclosures should address separately derivatives entered
into for trading purposes and derivatives entered into for purposes
other than trading. For purposes of this paragraph, trading
purposes means dealing and other trading activities measured at
fair value with gains and losses recognized in earnings [see ASC
Paragraph 320-10-25-1(a)].
(3) For purposes of paragraph (n)(6), anticipated transactions means
transactions (other than transactions involving existing assets or
liabilities or transactions necessitated by existing firm
commitments) an enterprise expects, but is not obligated, to carry
out in the normal course of business [see ASC Subtopic 815-10].
Rule 4-10 — Prescribes financial accounting and reporting standards for
registrants engaged in oil and gas producing activities and persons engaged in
the production of crude oil or natural gas in the United States under Section
503 of the Energy Policy and Conservation Act and Section 11(c) of the Energy
Supply and Environmental Coordination Act. [Also see FRR Section 406, SAB
Topic 12, SAB 113, and Industry Guide 2.]
See SAB Topic 2-D regarding financial statement requirements and
accounting for oil and gas exchange offers.
Publicly held limited partnerships — see SAB Topic 4-F; SAB Topic 4-G;
and FRR Section 405.
[Note: On December 31, 2008, the SEC issued final rules to modernize and
update its oil and gas reporting disclosures presently in Regulations S-K and S-
X, as well as Industry Guide 2 [Financial Reporting Release No. 78 (Release No.
33-8995), Modernization of Oil and Gas Reporting, issued December 31, 2008
(2008 Oil and Gas Release)]. The revised guidance was effective for
registration statements filed on or after January 1, 2010, and for annual
reports on Forms 10-K and 20-F for fiscal years ended on or after December
31, 2009. Industry Guide 2 was revised and codified in Regulation S-K, Item
1200 effective January 1, 2010. On October 29, 2009, the SEC issued SAB No.
113 to revise and rescind portions of the interpretive guidance in Topic 12, “Oil
and Gas Producing Activities,” included in the Staff Accounting Bulletin Series,
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SEC Compliance Checklist — General (12-16)
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Disclosed
or
Complied Reason
With Omitted
in order to make the related interpretive guidance consistent with the 2008 Oil
and Gas Release.]
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or
Complied Reason
With Omitted
Rules 5-01 to 5-04 should be applicable to financial statements filed for all
persons except-
(b) Employee stock purchase, savings and similar plans (see Rule 6A-
01 to 6A-05).
(d) Bank holding companies and banks (see Rule 9-01 to 9-07).
(e) Brokers and dealers when filing Form X-17A-5 (see Rule 17a-5 and
17a-10 under the Exchange Act).
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SEC Compliance Checklist — General (12-16)
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Disclosed
or
Complied Reason
With Omitted
c. If receivables include amounts due under long-term contracts (see
Item 6.d. below and FRR Section 206), state separately in the
balance sheet or the footnotes:
(1) Receivables billed but not paid under retainage provision in
contracts.
(2) Recognized sales value of performance and amounts that
had not been billed and were not billable, and the
prerequisites for billing.
(3) Billed or unbilled claims subject to uncertainty concerning
their determination or ultimate realization and the nature
and status of the principal items comprising such amount.
(4) For items (1) through (3) state the amounts to be collected
after one year. State, by year, when the amounts of
retainage [item (1) above] are expected to be collected.
Also see SAB Topics 4-E and 4-G.
See SAB Topic 11-K for disclosures required of registrants that are
not bank holding companies, but that are engaged in similar
lending and deposit activities.
See SAB Topic 1-I concerning financial statements of properties
securing mortgage loans.
4. Allowances for doubtful accounts and notes receivable. Disclose
separately on the balance sheet or in a footnote.
See Schedule II in Rule 5-04 of this checklist.
See discussion at FRR Section 401.09.
See SAB Topic 6-L for Staff’s views concerning loan loss allowance
methodology and documentation issues.
5. Unearned income.
6. Inventories.
a. State separately the major classes of inventory — e.g.,
finished goods, inventoried costs relating to long-term contracts or
programs [see Item (d) below], work in process, raw materials,
and supplies.
If the method of calculating a LIFO inventory does not allow for
the practical determination of amounts assigned to major classes
of inventory, the amounts of those classes may be stated under
cost flow assumptions other than LIFO, with the excess of such
total amount over the aggregate LIFO amount shown as a
deduction to arrive at the amount of the LIFO inventory.
b. Disclose the basis of determining the amounts. If cost is
used for any portion of the inventory, describe the nature of the
cost elements (e.g., costs in excess of manufacturing or
production costs over the amounts charged to cost of sales or
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SEC Compliance Checklist — General (12-16)
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Disclosed
or
Complied Reason
With Omitted
delivered or in-process units, initial tooling or other deferred start-
up costs, or general and administrative costs).
Describe the method by which amounts are removed from
inventory. If the “estimated average cost per unit” is used (under
a total program or similar basis of accounting), state the
assumptions (including the total number of units to be delivered,
the number of units delivered to date, and the number of units on
order).
If general and administrative costs are charged to inventory, state
the total amount of such costs incurred in each period and the
amount remaining in inventory at each balance-sheet date.
c. LIFO (See FRR Section 205.)
Replacement Cost: If LIFO is used, state the excess of
replacement or current cost over stated LIFO value.
See AICPA LIFO Issues Paper (December 1984) for guidance on
certain financial accounting and reporting issues. If guidance in
the Issues Paper is not followed, the registrant and the auditor
should be prepared to justify their position [SAB Topic 5-L].
A material change to conform to Issues Paper requires a
preferability letter from auditor (SAB Topic 6-G.2.b).
LIFO Liquidation: See SAB Topic 11-F for the disclosure of
income realized from a liquidation of the LIFO inventory.
d. Long-term contracts or programs include (1) those for which
gross profits are recognized on a percentage-of-completion
method (or any variant thereof), and (2) those accounted for on a
completed contract basis. Such contracts have been, or will be,
performed over a period of more than one year. Shorter contracts
or programs may also be included, if deemed appropriate. See
FRR Section 206.
For all long-term contracts or programs not yet complete, state
the following information:
(1) The amount of manufacturing or production costs, and any
related deferred costs, which exceed the cost of in-process
and delivered units on the basis of the estimated average
cost of all units expected to be produced (learning curve
concept), and that portion of such amount that would not be
absorbed in cost of sales based on existing firm orders at
the balance-sheet date; also, the amount of deferred costs
by type of cost.
(2) The amount of claims, or similar items subject to
uncertainty concerning their realization, and the nature and
status of the principal items comprising such amount.
(3) The amount of progress payments netted against inventory.
Disclosures related to defense and other long-term contracts
are discussed at FRR Section 206.
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SEC Compliance Checklist — General (12-16)
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Disclosed
or
Complied Reason
With Omitted
7. Prepaid expenses.
8. Other current assets. State separately in the balance sheet or the
footnotes any other items in excess of 5% of total current assets.
9. Total current assets, if appropriate.
10. Securities of related parties. [See S-X Rule 4-08(k)]. For definition
of “related party,” see S-X Rule 1-02(u).
11. Indebtedness of related parties — not current. See S-X Rule 4-
08(k).
12. Other investments. For security investments other than noncurrent
marketable equity securities (which GAAP addresses), or any other
investment, disclose the basis of determining the total amounts shown in
the balance sheet, and the total cost or total market value.
SAB Topic 5-M furnishes the SEC guidance on factors to be considered in
determining whether a decline in market value of equity securities is
other than temporary. If other than temporary, a realized loss is to be
recorded.
13. Property, plant, and equipment. State each major class (land,
buildings, machinery and equipment, leaseholds), or functional grouping
(revenue producing equipment or industry categories), and the basis of
determining the amounts. See FRR Section 209.
14. Accumulated depreciation, depletion, and amortization of
property, plant, and equipment. State amounts separately in the
balance sheet or the footnotes.
15. Intangible assets. State each class of intangible assets in excess of
5% of total assets, and the basis of determining the amounts. Explain
significant additions or deletions.
16. Accumulated depreciation and amortization of intangible assets.
Disclose the amount separately in the balance sheet or the footnotes.
17. Other assets. State separately in the balance sheet or the footnotes
any other items not properly classed in one of the preceding asset
captions in excess of 5% of total assets. Explain significant additions or
deletions. For deferred charges, state the policy for deferral and
amortization.
SAB Topic 5-A discusses SEC guidance on aborted offering expenses.
SAB Topic 5-O discusses SEC guidance on financing research and
development arrangements.
18. Total assets.
19. Accounts and notes payable.
a. State separately amounts payable to banks, factors, or other
financial institutions, holders of commercial paper, trade creditors,
related parties [see Rule 4-08(k)], underwriters, promoters, and
employees (other than related parties), and others.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
b. If significant, disclose in the notes the amount and terms
(including commitment fees and the conditions under which lines
may be withdrawn) of unused lines of credit for short-term
financing. Identify the amounts of these lines supporting
commercial paper arrangements.
c. Disclose the weighted average interest rate on short-term
borrowings outstanding as of the date of each balance sheet
presented. See SAB Topic 6-H, and FRR Section 203 as to
disclosures of compensating balances and short-term borrowing
arrangements.
20. Other current liabilities. State any item in excess of 5% of total
current liabilities separately, in the balance sheet or in the footnotes
(e.g., accrued payrolls, accrued interest, taxes, the current portion of
deferred income taxes, and the current portion of long-term debt);
remaining items may be shown in one amount.
21. Total current liabilities, if appropriate.
22. Bonds, mortgages, and other long-term debt, including
capitalized leases. State each issue or type of obligation and disclose
the general character of each type of debt — including the rate of
interest; the date of maturity, or if maturing serially, a brief indication of
the serial maturities; if the payment of principal or interest is contingent,
an indication of such contingency; an indication of priority; and if
convertible, the basis. For amounts owed to related parties, see Rule 4-
08(k). [Also see SAB Topic 4-A.]
State the amount and terms (including commitment fees and the
conditions under which commitments may be withdrawn) of unused
commitments for long-term financing arrangements.
Demand notes with repayment terms are not to be classified as long-
term (ASC Paragraph 470-10-45-10).
23. Indebtedness of related parties — not current. See S-X Rule 4-
08(k).
24. Other liabilities. State separately in the balance sheet or the footnotes
any item, not properly classed in one of the preceding liability captions,
in excess of 5% of total liabilities.
25. Commitments and contingent liabilities.
Loss Contingencies — see SAB Topic 5-Y for guidance on accounting
and disclosures. Also see SAB Topic 2-A, Questions 7 and 9 regarding
Business Combinations and SAB Topic 10-F for utilities.
Oral guarantees — see FRR Section 104.
26. Deferred credits. State separately in the balance sheet deferred
income taxes, deferred tax credits, and material items of deferred
income.
27. Preferred stock subject to mandatory redemption requirements
or preferred or common stocks whose redemption is outside the
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Where
Disclosed
or
Complied Reason
With Omitted
control of the issuer. See ASC Subtopic 480-10, FRR Section 211, and
SAB Topic 3-C.
a. Include amounts applicable to any class of stock (common or
preferred) with any of the following characteristics: (1) it is
redeemable at a fixed or determinable price on a fixed or
determinable date(s), whether by operation of a sinking fund or
otherwise; (2) it is redeemable at the option of the holder (without
regard to the probability of redemption even if the probability of
redemption is remote); or (3) it has conditions for redemption that
are not solely within the control of the issuer.
b. State on the face of the balance sheet the title of each issue, the
carrying amount, and redemption amount. If there is more than
one issue, amounts may be totaled on balance sheet and details
disclosed in a note. Stock subscriptions receivable are deducted
from stock subscribed account unless the amount has been
collected by the date of the filing and so disclosed — see SAB
Topic 4-E. If the carrying value is different from the redemption
amount, describe the accounting treatment for the difference in
the note required by Item c. below. State (on the balance sheet
or in the note), for each issue, the number of shares authorized,
issued, or outstanding, as appropriate. See S-X Rule 4-07,
Discount on Capital Shares.
c. State in a note captioned “Redeemable Preferred Stocks”: (1) a
general description of each issue, including its redemption features
and the rights (if any) of holders in the event of default [including
the effect (if any) on junior securities in the event a required
dividend, sinking fund, or other redemption payment(s) is not
made]; (2) the combined aggregate amount of redemption
requirements for all issues each year for the five years following
the date of the latest balance sheet; and (3) the changes in each
issue for each period for which an income statement is required to
be filed. See S-X Rule 4-08(d).
d. Securities included in this caption are not to be included under a
general heading “stockholders’ equity” or combined in a total with
any of the following: (1) “nonredeemable preferred stocks,” (2)
“common stocks,” or (3) “other stockholders’ equity.”
See FRR Section 211 regarding possible double debt-to-equity
ratio presentation by registrants with material amounts of
outstanding redeemable preferred stock.
Convertible or redeemable preferred stock that will be converted in
an IPO. The SEC staff has indicated financial statements in an IPO
should reflect the conversion or redemption (in a pro forma
column presented alongside the historical balance sheet) if the
event triggering conversion or redemption occurs before or
simultaneously with the effective date of registration statement.
28. Preferred stocks that are not redeemable or are redeemable
solely at the option of the issuer.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
State on the face of the balance sheet, or if more than one issue is
outstanding in a note, the title of each issue and the dollar amount
thereof. Stock subscriptions receivable are deducted from stock
subscribed account unless the amount has been collected by the date of
the filing and so disclosed. For each issue, state the number of shares
authorized, issued, or outstanding, as appropriate. Show the changes in
each class of preferred shares reported under this caption for each period
for which an income statement is required to be filed. See S-X Rule 4-07
and 4-08(d).
29. Common stocks. State on the balance sheet each class, the number of
shares issued or outstanding, and the dollar amount. If convertible,
state this fact on the balance sheet. For each class of common stock, on
the balance sheet or in a note, give the title of the issue, the number of
shares authorized, and if convertible, the basis of conversion. Stock
subscriptions receivable are deducted from stock subscribed account
unless the amount has been collected by the date of the filing and is so
disclosed — see SAB Topic 4-E. Disclose in a note or statement, the
changes in each class of common shares for each period for which an
income statement is required. The number of shares reserved for
whatever purpose is disclosed and particulars described.
30. Other stockholders’ equity.
Subordinated debt may not be shown as other stockholders’ equity or
grouped under a caption representing the combination of stockholders’
equity and subordinated debt (SAB Topic 4-A).
Captions are shown for additional paid-in capital, other additional capital,
and retained earnings (appropriated and unappropriated). Additional
paid-in capital and other additional capital may be combined with the
stock caption to which it applies.
For a period of at least 10 years after a quasi-reorganization, retained
earnings must indicate the date of the reorganization, and for a period of
at least 3 years, must indicate on the balance sheet the total amount of
the deficit eliminated (FRR Section 210). See discussion of quasi-
reorganizations at SAB Topic 5-S.
31. Noncontrolling interests in consolidated subsidiaries. If material,
disclose in the notes the amounts represented by preferred stock and the
applicable dividend requirements.
Changes in other stockholders’ equity — S-X Rule 3-04.
OTHER MATTERS:
Stock distributions: dividends or split-ups. See FRR Section 214.
Also see SAB Topic 4-C, as to the practice followed by the SEC staff if a
stock dividend, stock split, or reverse split occurs after the balance-sheet
date.
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SEC Compliance Checklist — General (12-16)
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Disclosed
or
Complied Reason
With Omitted
Accumulated or undistributed earnings in capital accounts of a
proprietorship, partnership, or Subchapter S corporation are treated as
paid-in capital when entity incorporates or terminates its election. See
SAB Topic 4-B.
Business or assets acquired in exchange for stock. If acquired
from an affiliated person, such transactions are usually recorded at
transferor’s cost. See SAB Topic 5-G.
Treatment of deferred compensation arising from the sale of capital
stock to officers or employees at prices below market. See SAB Topic 4-
E.
32. Total liabilities and equity (need not be captioned).
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Disclosed
or
Complied Reason
With Omitted
See SAB Topic 11-L regarding income statement presentation by casinos
with hotel and restaurant operations.
2. Costs and expenses applicable to sales and revenues. State
separately the amount of (a) cost of tangible goods sold; (b) operating
expenses of public utilities or others; (c) expenses applicable to rental
income; (d) cost of services; and (e) expenses applicable to other
revenues. Merchandising organizations, both wholesale and retail, may
include occupancy and buying costs under cost of tangible goods sold.
Amounts of costs and expenses incurred from transactions with related
parties should be disclosed according to Rule 4-08(k).
See SAB Topic 11-B for the disclosure if depreciation, depletion, and
amortization are excluded from cost of sales.
3. Other operating costs and expenses. State material amounts not
included under Rule 5-03.2 above.
See SAB Topic 11-B for the disclosure if depreciation, depletion, and
amortization are excluded from operating expenses.
4. Selling, general, and administrative expenses.
5. Provision for doubtful accounts and notes.
6. Other general expenses. Include items not normally included in Rule
5-03.4 above. State separately any material items.
SAB Topic 5-B addresses accounting for gains and losses from disposition
of equipment.
SAB Topic 13-A, footnote 68, addresses income statement classification
for gains or losses recognized from the sale or disposition of operating
assets. In short, the SAB requires such gains and losses (including from
the sale of a business not qualifying as a discontinued operation) to be
reported as “other general expenses,” within operating expenses,
pursuant to Regulation S-X, Rule 5-03(b)(6).
SAB Topic 14 (SAB 107) addresses accounting for share-based payment.
7. Nonoperating income. State separately in the income statement or
the footnotes amounts earned from dividends, interest on securities,
profits on securities (net of losses), and miscellaneous other income.
Material amounts included under miscellaneous other income must be
stated, indicating the nature of the transactions.
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Disclosed
or
Complied Reason
With Omitted
18. Interest and amortization of debt discount and expense. Interest
expense should not be shown net of interest income.
19. Nonoperating expenses. State separately in the income statement or
the footnotes amounts of losses on securities (net of profits) and
miscellaneous income deductions. Material amounts included under
miscellaneous income deductions must be separately stated, indicating
the nature of the transactions.
The SEC staff has indicated that it would not accept classification of
expenses incurred in anti-takeover measures to be classified as
extraordinary, except in certain “going private” transactions.
10. Income or loss before income tax expense and appropriate items
below.
11. Income tax expense. Include only taxes based on income. See FRR
Section 204. See Rule 4-08(h).
12. Equity in earnings of unconsolidated subsidiaries and 50%-or-
less-owned persons. State, parenthetically or in a footnote, the
amount of dividends received from such persons. (See Accounting Alert
05-2 regarding presentation of equity in earnings of an equity method
investee.)
13. Income or loss from continuing operations.
14. Discontinued operations. (See SAB Topic 5-Z, ASC Subtopic 205-20).
15. Income or loss before extraordinary items and cumulative effects
of changes in accounting principles.
16. Extraordinary items, less applicable tax.
17. Cumulative effects of changes in accounting principles.
See SAB Topic 5-F for the SEC’s view on accounting changes not
retroactively applied due to immateriality.
See SAB Topic 11-M regarding disclosures required of impending
changes in accounting.
See FRR Section 304.02 regarding Preferability Letters required to be
filed for changes in accounting.
18. Net income or loss.
19. Net income attributable to the noncontrolling interest.
20. Net income attributable to the controlling interest. Net income
applicable to common stock, if materially different from net income
attributable to the noncontrolling interest, is to be shown separate on the
income statement (SAB Topic 6-B).
21. Earnings-per-share data. See FASB ASC Topic 260.
See SAB Topic 3-A for SEC’s view if a registrant proposes to register
convertible securities.
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Disclosed
or
Complied Reason
With Omitted
See SAB Topic 3-C regarding calculation involving redeemable preferred
stock increases.
See SAB Topic 4-D as to the effect of “cheap stock” on EPS.
See FRR Section 202 for SEC’s views on the reporting of “cash flow” per
share.
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Disclosed
or
Complied Reason
With Omitted
c. Detailed footnote disclosure (which would normally be included
with complete financial statements) may be omitted except for
disclosure of material contingencies, long-term obligations, and
guarantees. Significant provisions of the registrant’s long-term
obligations, mandatory dividend or redemption requirements of
redeemable stocks, and guarantees of the registrant must be
disclosed along with a five-year schedule of maturities of debt. If
the material contingencies, long-term obligations, redeemable
stock requirements, and guarantees of the registrant are
separately disclosed in the consolidated statements, they may be
omitted from Schedule I.
d. Disclose separately the amounts of cash dividends paid to the
registrant for each of the last three years by consolidated
subsidiaries, unconsolidated subsidiaries, and 50%-or-less-owned
persons accounted for by the equity method, respectively. A
registrant with a consolidated shareholders deficit is considered to
have a net asset base of zero and as a result any restrictions
placed on net assets of subsidiaries with positive equity would
require parent only financials to be presented.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
or
Complied Reason
With Omitted
do not exceed 50% of common stockholders’ equity as of the beginning of the
year.
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Disclosed
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Complied Reason
With Omitted
(7) The registrant previously was a part of another entity and a pro
forma presentation is necessary to reflect operations and financial
position of the issuer as an autonomous entity; or
(8) Consummation of other events or transactions has occurred or is
probable for which pro forma information would be material to
investors.
b. A business combination or disposition of a business is considered
significant if:
(1) A comparison of the latest annual financial statements of the
business acquired or to be acquired and the registrant’s latest
annual consolidated financial statements filed at or prior to the
date of acquisition indicates that the business would meet the
significant subsidiary tests (S-X Rule 1-02(w) substituting 20% for
10%) — see Part III, Test For Significant Subsidiary; or
(2) The business to be disposed of meets the significant subsidiary
tests.
c. The pro forma effects of a business combination need not be presented if
separate financial statements of the acquired business are not included
in the filing.
d. The term “business” should be evaluated in light of the facts and
circumstances involved, and whether there is sufficient continuity of the
acquired entity’s operations prior to and after the transactions so that
disclosure of prior financial information is material to an understanding of
future operations. There is presumption that a separate entity, a
subsidiary, or a division is a business. However, a lesser component of
an entity may also constitute a business. Among the facts and
circumstances that should be considered in evaluating whether an
acquisition of a lesser component of an entity constitutes a business are
the following:
(1) Whether the nature of the revenue-producing activity of the
component will remain generally the same as before the
transaction; or
(2) Whether any of the following attributes remain with the
component after the transaction: physical facilities, employee
base, market distribution system, sales force, customer base,
operating rights, production techniques, or trade names.
e. Rule 11-01 does not apply to transactions between a parent company
and its totally held subsidiary.
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Disclosed
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Complied Reason
With Omitted
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the pro forma results should give effect to the disposition and be
presented under an appropriate caption.
(6) Pro forma adjustments to the pro forma condensed income
statement must be computed assuming the transaction was
consummated at the beginning of the earliest period presented,
and must include all and only adjustments which give effect to
events that are:
(a) Directly attributable to the transaction
(b) Expected to have a continuing impact on the registrant
(c) Factually supportable.
Pro forma adjustments to the pro forma condensed balance sheet
must be computed assuming the transaction was consummated at
the balance-sheet date (per Rule 3-01) and include adjustments
which give effect to events that are directly attributable to the
transaction and factually supportable, regardless of whether they
have a continuing impact or are nonrecurring.
All adjustments must be referenced to notes that clearly explain
the assumptions involved.
(7) Historical basic and diluted EPS data based on continuing
operations (or net income, if the issuer does not report either
discontinued operations, extraordinary items, or the cumulative
effect of accounting changes), and basic and diluted pro forma EPS
data based on continuing operations before nonrecurring charges
or credits directly attributable to the transaction must be
presented on the face of the pro forma condensed income
statement together with the number of shares used to compute
EPS data. For transactions involving the issuance of securities, the
number of shares used in the calculation of the pro forma EPS data
should be based on the weighted average number of shares
outstanding during the period, adjusted to give effect to shares
subsequently issued or assumed to be issued as if the transaction
or event had taken place at the beginning of the earliest period
presented. If a convertible security is being issued, consider the
possible dilution of the pro forma EPS data.
(8) If the transaction is structured so that significantly different results
may occur, additional pro forma presentations must be made that
give effect to the range of possible results.
[Note: The SEC requires that the description of pro forma
adjustments provide sufficient details to enable readers to
evaluate the significant assumptions. Each individual adjustment
should be cross-referenced to a separate explanatory footnote that
clearly explains and supports the adjustment and related
assumptions. Adjustments should be shown individually (not be
netted) on the face of the statements.]
SEC rules limit pro forma adjustments to those that are specifically
attributable to the transaction, factually supportable, and expected
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Disclosed
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Complied Reason
With Omitted
to have a continuing impact. Accordingly, interest income from
assumed investment of proceeds and undocumented
savings from expected expense reductions or asset sales
are not permitted. The elimination of unusual or
nonrecurring items from the historical statements that are
not related to the specific transaction is not appropriate;
however, footnote disclosure of the effects of such items is
permitted.
For pro forma income statement purposes, contrary to the
guidance provided in ASC Subtopic 805-10, the transaction should
be assumed to have occurred at the beginning of the earliest
period presented, with appropriate carryover or continuation to the
subsequent year and interim periods, if any.
Instructions:
1. The historical income statements used in the pro forma information must
not report operations of a segment that has been discontinued, or has
extraordinary items or the cumulative effects of accounting changes. If
the historical income statement includes such items, only the portion of
the income statement through “income from continuing operations”
should be used in the pro forma.
2. For a business combination, pro forma adjustments for the income
statement shall include amortization, depreciation and other adjustments
based on the allocated purchase price of net assets acquired. In some
transactions, such as in financial institution acquisitions, the purchase
adjustments may include significant discounts of the historical cost of the
acquired assets to their fair value at the acquisition date. When such
adjustments will result in a significant effect on earnings (losses) in
periods immediately subsequent to the acquisition which will be
progressively eliminated over a relatively short period, the effect of the
purchase adjustments on reported results of operations for each of the
next five years should be disclosed in a note.
3. For a disposition, the pro forma information must begin with the
historical statements of the existing entity and show the deletion of the
business to be divested, along with the pro forma adjustments necessary
to arrive at the remainder of the existing entity. Pro forma adjustments
would include adjustments of interest expense from revised debt
structures and expenses that will be or have been incurred on behalf of
the business to be divested such as advertising costs, executive salaries,
and other costs.
4. For entities that were previously a component of another entity, pro
forma adjustments should include adjustments similar to Instruction 3,
above. Adjustments may also be needed when charges for corporate
overhead, interest, or income taxes have been allocated to the entity on
a basis other than one deemed reasonable by management.
5. Adjustments to reflect the acquisition of real estate operations or
properties for the pro forma income statement should include a
depreciation charge based on the new accounting basis for the assets,
interest financing on any additional or refinanced debt, and other
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appropriate adjustments that can be factually supported. See also
Instruction 4, above.
6. If more than one transaction has occurred or is probable during a year,
the pro forma information may be presented on a combined basis;
however, in some cases (e.g., depending on the combination of probable
and consummated transactions, and the nature of the filing), it may be
more useful to present the pro forma information on a disaggregated
basis even though some or all of the transactions would not individually
meet the Significant Subsidiary Test. For combined presentations,
disclose the various transactions and the maximum variances in the pro
forma information that would occur for any of the possible combinations.
If the pro forma information is presented in a proxy or information
statement in order to obtain shareholder approval of one of the
transactions, the effects of that transaction must be clearly stated.
7. Tax effects of pro forma adjustments normally should be calculated at
the statutory rate in effect during the periods for which pro forma
condensed income statements are presented and should be shown as a
separate pro forma adjustment.
c. Periods to be presented.
(1) A pro forma condensed balance sheet at the end of the most
recent period for which a consolidated balance sheet of the
registrant is required by Rule 3-01 should be filed, unless the
transaction is already reflected in such balance sheet.
(2) Pro forma condensed income statements should be filed for only
the latest year (however, pro forma income statements for all
periods are required for discontinued operations that are not yet
reflected in the historical financial statements) and for the
subsequent interim period (from the latest year-end to the most
recent interim date for which a balance sheet is required). A pro
forma condensed income statement may be filed for the
corresponding interim period of the preceding year. A pro forma
condensed income statement should not be filed if the historical
income statement reflects the transaction for the entire period.
(3) Pro forma condensed income statements should be presented
using the registrant’s fiscal year-end. If the latest fiscal year-end
of any other entity involved in the transaction differs from the
registrant’s latest fiscal year-end by more than 93 days, the other
entity’s income statement should be brought up to within 93 days
of the registrant’s latest fiscal year end, if practicable. This
updating may be accomplished by adding subsequent interim
period results to the latest year-end information and deducting the
comparable preceding year interim-period results. Disclose the
periods combined and the sales (revenues) and income for any
periods that were excluded from or included more than once in the
condensed pro forma income statements (e.g., an interim period
that is included both as part of the fiscal year and the subsequent
interim period).
(4) Whenever unusual events enter into the results shown for the
latest year, the effect of such unusual events should be disclosed
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and consideration should be given to presenting a pro forma
condensed income statement for the most recent 12-month period
in addition to those required in Item c(2)(i) above, if the most
recent 12-month period is more representative of normal
operations.
See Rule 170 of the Securities Act regarding giving effect to proceeds
from sales of securities.
See Rule 15c1-9 of the Exchange Act regarding pro forma financial
statements that may be considered manipulative.
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Please note that the Regulation S-K requirements do not apply to a Foreign
Private Issuer filing on Form 20-F. Thus for a Foreign Private Issuer filing IFRS
(issued by IASB) financial statements, please refer to the relevant checklist on
Foreign Private Issuers.
Non-GAAP Financial Measures — Non-GAAP Financial Measures — In
May 2016, the SEC staff issued new and updated Compliance and Disclosure
Interpretations (C&DIs) regarding the use and disclosure of non-GAAP financial
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With Omitted
measures to address the SEC’s concerns of the increased use and prominence
of such measures, their potential to be misleading, and the progressively larger
difference between non-GAAP and comparable GAAP measures. As reflected in
its filing reviews and comment letters, speeches, and updated C&DI’s, the SEC
is urging registrants to take a fresh look at their use and disclosure of non-
GAAP measures, including periodic reports such as Form 10-K and earnings
releases The Deloitte publications, A Roadmap to Non-GAAP Financial Measures
is a helpful resources for engagement teams to consider when considering the
guidance around non-GAAP financial measures.
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Complied Reason
With Omitted
The following disclosure requirements are in addition to those required by ASC
Topic 280 (these additional disclosure requirements in S-K are not required,
however, in the financial statements):
(1) For foreign operations, any risk attendant to foreign operations and
dependence of any industry segments on foreign operations. [Item
101(d)(3).]
(2) The amount or percentage of total revenue contributed by class of
products or services for the latest three years for those classes
accounting for 10% or more of total revenue in any of the three latest
years (or 15% or more, if revenue did not exceed $50,000,000 in any of
the three latest years). [Item 101(c)(1)(i). See tests in Part III.] [Note:
ASC Paragraph 280-10-50-40 requires disclosure of revenues from
external customers for each product and service or each group of similar
products and services unless it is impracticable to do so.]
For interim financial information, any facts relating to the performance of
any segments or geographic areas during the reported interim period
that, in the opinion of management, indicate that the three-year
segment or area financial data or export sales may not be indicative of
current or future operations. [Item 101(b)(2) and (d)(4).]
(3) Description of segments must include disclosure of the dependence of a
segment on a single customer or a few customers, the loss of any one or
more of which would have a material adverse effect. The name of any
customer and its relationship, if any, with the registrant or its
subsidiaries should be disclosed if sales to the customer by one or more
segments are in an aggregate amount equal to 10% or more of
consolidated revenues and the loss of the customer would have a
material adverse effect on the registrant and its subsidiaries taken as a
whole. The names of other customers may be included, unless in the
particular case the effect of including the names would be misleading. A
group of customers under common control or that are affiliates should be
regarded as a single customer. [Item 101(c)(1)(vii).]
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Complied Reason
With Omitted
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With Omitted
d. Total assets.
e. Long-term obligations (including capital leases) and mandatorily
redeemable preferred stock.
f. Cash dividends declared per common share.
g. Significant trend data by segment may be shown here or in Item 101,
Description of Business.
h. Briefly describe (or cross-reference to where discussed) factors (e.g.,
accounting changes, business combinations, or dispositions of business
operations) that materially affect the comparability of the information
reflected in selected financial data. Discussion of, or reference to, any
material uncertainties should also be included if such matters might
cause the data reflected in the table not to be indicative of the
registrant’s future financial condition or results of operations.
i. If interim period financial statements are included (or are required to be
included), consider whether any or all of the selected financial data need
to be updated for such interim periods to reflect a material change in the
trends indicated. Where such updating information is necessary, provide
the information on a comparative basis unless it is not necessary to an
understanding of such updated information.
j. Additional items the registrant believes will enhance understanding and
will highlight trends in financial condition and results of operations.
k. A foreign private issuer should disclose in all filings containing financial
statements:
(1) In the forepart of the document and as of the latest practicable
date, the exchange rate in U.S. dollars of the foreign currency in
which the financial statements are denominated
(2) A history of exchange rates for the last five years, and any
subsequent interim period for which statements are presented,
setting forth the rates for period end, the average rates, and the
range of high and low rates for each year
(3) If equity securities are being registered, a five-year summary of
dividends per share stated in both the currency in which the
statements are denominated and U.S. currency based on the
exchange rates at each respective payment date.
l. A foreign private issuer must present the selected financial data in the
same currency as its financial statements. The issuer may present the
selected financial data on the basis of the accounting principles used in
its primary financial statements, but then must also present this data on
the basis of any reconciliation of such data to U.S. GAAP and S-X made
pursuant to Rule 4-01.
m. “Rate of exchange” means the noon buying rate in New York City for
cable transfers in foreign currencies as certified for customs purposes by
the Federal Reserve Bank of New York. “Average rate” means the
average of the exchange rates on the last day of each month during a
year.
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With Omitted
n. For the new revenue standard if it is adopted using the full retrospective
approach the selected financial data only needs to be adjusted for
periods that correspond to the financial statements however there should
be disclosure that prior periods are not comparable. See additional
guidance under Topic 11 of the SEC Financial Reporting Manual.
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With Omitted
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(5) If financial statements of the company, presented or incorporated
by reference in the registration statement, are required by S-X
Rule 4-08(e)(3) to include disclosure of restrictions on the ability
of subsidiaries to transfer funds to the registrant in the form of
cash dividends, loans, or advances, the discussion of liquidity must
include the nature and extent of the restrictions and the impact
the restrictions have had and are expected to have on the ability
of the parent company to meet its cash obligations.
b. Management’s Discussion and Analysis (MDA)
(1) MDA should cover the periods for which financial statements of the
registrant are required. MDA should use year-to-year comparisons,
or any other format that would enhance its understanding. Where
trend information is relevant, reference to the five-year Selected
Financial Data may be necessary.
(2) MDA should give investors and other users information relevant to
an assessment of the financial condition and results of operations
by discussing the amounts and certainty of cash flows from
operations and from outside sources. Only information that is
available without undue effort or expense and that does not clearly
appear in the financial statements needs to be included.
(3) MDA should focus on those material events and uncertainties that
cause the statements not to be necessarily indicative of future
operating results or future financial condition. Describe and give
the amounts of (a) matters that will have an impact on future
operations, but have not had an impact in the past, and (b)
matters that have had an impact on past operations, but are not
expected to have an impact on future operations.
(4) Where the consolidated statements show material changes from
year to year in one or more line items, the causes for the changes
should be described to the extent needed to understand the
businesses as a whole. If the causes for a change in one line item
also relate to other line items, no repetition is required (i.e., a line-
by-line analysis is not required). Do not give the amounts of year-
to-year changes that are readily computable from the statements.
Do not repeat numerical data contained in the consolidated
statements.
(5) Registrants are encouraged, but are not required, to supply
forward-looking information. Note that presently known data that
will materially impact future operations may be required to be
disclosed. See FRR Section 501.02.
(6) The effects of inflation and other changes in prices are to be
discussed only if considered material. This discussion may be
made in whatever manner appears appropriate under the
circumstances. All that is required is a brief textual presentation
of management’s views. No specific numerical financial data need
be presented except as required by
S-X Rule 3-20(c). However, registrants may elect to voluntarily
disclose supplemental information on the effects of changing prices
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With Omitted
as provided for in ASC Section 255-10-50 or through other
supplemental disclosures.
Registrants that elect to disclose supplementary information on the
effects of changing prices as specified by ASC Section 255-10-50
may combine such explanations with the discussion and analysis
required pursuant to S-K Item 303 or may supply such information
separately with appropriate cross-reference.
(7) Discussions of liquidity and capital resources may be combined if
the two topics are interrelated.
(8) Foreign private registrants should discuss governmental,
economic, fiscal, monetary, or political policies or factors that have
affected or will materially affect (directly or indirectly) companies’
operations, or investments by U.S. citizens.
(9) For foreign private issuers, the discussion should focus on the
primary statements presented in the registration statement or
report. Refer to the reconciliation to U.S. GAAP, and a discussion
of any aspects of the difference between foreign and U.S. GAAP
(not discussed in the reconciliation) that the registrant believes is
necessary for an understanding of the statements as a whole.
(10) FRR Section 501 provides some general guidelines and specific
examples of MDA disclosures relating to the following areas:
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a. Disclose any known trends or demands, commitments, events, or
uncertainties that will (or are reasonably likely to) result in
material increases or decreases in liquidity.
b. If a material deficiency is identified, disclose the course of action
the registrant has taken (or proposes to take) to remedy the
deficiency.
c. Disclose and describe both internal and external sources of
liquidity, including any material unused sources of liquid assets.
2. Capital Resources
a. Describe material commitments for capital expenditures at the end
of the latest fiscal period, and disclose the purpose of the
commitments and the anticipated source of funds for them.
b. Describe any known material trends, favorable or unfavorable, in
capital resources.
c. Disclose any expected material changes in the mix and the relative
cost of such capital resources. Consider changes between equity,
debt, and any off-balance-sheet financing arrangements.
d. Disclose the company’s ability to fund operations and capital
commitments for the next 12 months.
3. Results of Operations
a. Describe any unusual or infrequent events or transactions or any
significant economic changes that materially affected income from
continuing operations. In each case, indicate the extent to which
income was affected.
b. Describe other significant components of revenues or expense to
help understand the results of operations.
c. Describe trends or uncertainties that have had (or will have) a
material favorable or unfavorable impact on net sales or revenues,
or income from continuing operations.
d. Where future events will materially change the relationship
between costs and revenues (e.g., known future increases in costs
of labor or materials, or price increases, or inventory adjustments)
disclose the change in the relationship.
e. Disclose the extent to which material increases in net sales or
revenue are due to (1) increases in prices, (2) increases in volume
of sales or services, or (3) the introduction of new products or
services. [While not in the rules, material decreases in sales or
volume should be discussed.]
f. For the latest three years or for years in which the registrant has
been in business, whichever period is shorter, disclose the impact
of inflation and changing prices on net sales and revenues and on
income from continuing operations. [Note: This rule applies to all
companies. (See (b)6. under Instructions above.)]
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With Omitted
4. Off-balance-sheet arrangements
a. In a separately captioned section, discuss the registrant’s off-
balance sheet arrangements that have or are reasonably likely to
have a current or future effect on the registrant’s financial
condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures, or capital
resources that is material to investors.
b. Discuss the nature and business purpose to the registrant of such
off-balance sheet arrangements.
c. Describe the importance to the registrant of such off-balance sheet
arrangements in respect of its liquidity, capital resources, market
risk support, credit risk support, or other benefits.
d. Disclose the amounts of revenues, expenses and cash flows of the
registrant arising from such arrangements; the nature and
amounts of any interests retained, securities issued, and other
indebtedness incurred by the registrant in connection with such
arrangements; and the nature and amounts of any other
obligations or liabilities (including contingent obligations or
liabilities) of the registrant arising from such arrangements that
are or are reasonably likely to become material and the triggering
events or circumstances that could cause them to arise.
e. Disclose any known event, demand, commitment, trend or
uncertainty that will result in or is reasonably likely to result in the
termination, or material reduction in availability to the registrant,
of its off-balance sheet arrangements that provide material
benefits to it, and the course of action that the registrant has
taken or proposes to take in response to any such circumstances.
f. As used herein, the term off-balance sheet arrangement means
any transaction, agreement or other contractual arrangement to
which an entity unconsolidated with the registrant is a party,
under which the registrant has
(i) Any obligation under a guarantee contract that has any of the
characteristics identified in ASC Paragraph 460-10-15-4 (as it
relates to accounting and disclosure requirements for
guarantees), as may be modified or supplemented, and that is
not excluded from the initial recognition and measurement
provisions of ASC 460 Paragraphs 460-10-15-7 through 10)
(ii) A retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement that serves as
credit, liquidity or market risk support to such entity for such
assets;
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(iii) Any obligation, including a contingent obligation, under a
contract that would be accounted for as a derivative
instrument, except that it is both indexed to the registrant’s
own stock and classified in stockholders’ equity in the
registrant’s statement of financial position, and therefore
excluded from the scope of ASC Paragraph 815-10-15-74, as
may be modified or supplemented; or
(iv) Any obligation, including a contingent obligation, arising out of
a variable interest (as referenced in ASC Subtopic 810-10, as
may be modified or supplemented) in an unconsolidated entity
that is held by, and material to, the registrant, if such entity
provides financing, liquidity, market risk or credit risk support
to, or engages in leasing, hedging or research and development
services with, the registrant.
g. Instructions No obligation to make disclosure of an off-balance
sheet arrangement should arise in respect of an off-balance sheet
arrangement until a definitive agreement that is unconditionally
binding or subject only to customary closing conditions exists or, if
there is no such agreement, when settlement of the transaction
occurs. Registrants should aggregate off-balance sheet
arrangements in groups or categories that provide material
information in an efficient and understandable manner and should
avoid repetition and disclosure of immaterial information. Effects
that are common or similar with respect to a number of off-
balance sheet arrangements must be analyzed in the aggregate to
the extent the aggregation increases understanding. Distinctions in
arrangements and their effects must be discussed to the extent
the information is material, but the discussion should avoid
repetition and disclosure of immaterial information. For purposes
of this disclosure Item only, contingent liabilities arising out of
litigation, arbitration or regulatory actions are not considered to be
off-balance sheet arrangements. Generally, the disclosure should
cover the most recent fiscal year. However, the discussion should
address changes from the previous year if such discussion is
necessary to an understanding of the disclosure. In satisfying the
requirements of this section, the discussion of off-balance sheet
arrangements need not repeat information provided in the
footnotes to the financial statements, provided that such
discussion clearly cross-references to specific information in the
relevant footnotes and integrates the substance of the footnotes
into such discussion in a manner designed to inform readers of the
significance of the information that is not included within the body
of such discussion.
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5. Tabular Disclosure of Contractual Obligations
a. In a tabular format, the information specified below must be
provided as of the latest fiscal year-end balance-sheet date with
respect to the registrant’s known contractual obligations. The
registrant should provide amounts, aggregated by type of
contractual obligation, and may disaggregate the specified
categories of contractual obligations using other categories
suitable to its business, but the presentation must include all of
the obligations of the registrant that fall within the specified
categories. The tabular presentation may be accompanied by
footnotes to describe provisions that create, increase or accelerate
obligations, or other pertinent data to the extent necessary for an
understanding of the timing and amount of the registrant’s
specified contractual obligations. The table should include columns
for periods of less than one year, one-three years, three-five
years, more than five years, and in total. The specified categories
required to be disclosed are (1) Long Term Debt Obligations, (2)
Capital Lease Obligations, (3) Operating Lease Obligations, (4)
Purchase Obligations, and (5) Other Long-Term Liabilities
Reflected on the Registrant’s Balance Sheet under GAAP.
b. Definitions Long-Term Debt Obligations means a payment
obligation under long-term borrowings referenced in ASC Subtopic
440-10 (Commitments), as may be modified or supplemented.
Capital Lease Obligation means a payment obligation under a lease
classified as a capital lease pursuant to ASC Subtopic 840-30, as
may be modified or supplemented.
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Operating Lease Obligation means a payment obligation under a
lease classified as an operating lease and disclosed pursuant to
ASC Subtopic 840-20, as may be modified or supplemented.
Purchase Obligation means an agreement to purchase goods or
services that is enforceable and legally binding on the registrant
that specifies all significant terms, including: fixed or minimum
quantities to be purchased; fixed, minimum or variable price
provisions; and the approximate timing of the transaction.
Note that footnote 46 to SEC Interpretive Release 33-8350:
Commission Guidance Regarding Management’s Discussion and
Analysis of Financial Condition and Results of Operations, states
“…the cash requirements for items such as interest, taxes or
amounts to be funded to cover post-employment (including
retirement) benefits may not be included in the tabular disclosure,
but should be discussed if material.” However, in comment letters
to registrants the SEC staff routinely requests that cash payments
for interest be included in the tabular disclosure.
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c. The SEC’s interpretive guidance on the preparation of MDA
through FRR 72 released on December 19, 2003, contains a
discussion regarding accounting estimates and assumptions that
may be material due to the levels of subjectivity and judgment
necessary to account for highly uncertain matters or the
susceptibility of such matters to change, and that have a material
impact on financial condition or operating performance. Companies
should consider enhanced discussion and analysis of these critical
accounting estimates and assumptions that:
Per SEC 240, the SEC and the PCAOB have reporting requirements regarding
the cessation of a client-auditor relationship. The typical chronological order of
actions that must be taken by the former auditors and the SEC registrant
concerning the cessation of a client-auditor relationship is as follows:
3. The former auditors must provide the SEC registrant with a letter
stating whether the former auditors agree or disagree with
management's representations required to be made in Form 8-K,
and such SEC registrant must file the letter with the SEC within 10
business days after the filing of Form 8-K. This letter, required by
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Item 304(a)(3) of Regulation S-K, is commonly called the Exhibit
16 letter, based on the exhibit it is filed under in Form 8-K.
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(ii) The accountants advised the registrant that information had
come to their attention that caused them to be unable to
rely on management’s representations or that made them
unwilling to be associated with the financial statements
prepared by management.
(iii) The accountants did not (for any reason) expand the scope
of their audit or conduct further investigations after advising
the registrant that the scope of the audit needed to be
expanded significantly or that information had come to the
accountants’ attention that, if further investigated, may (a)
materially affect the fairness or reliability of either a
previously issued audit report or the underlying financial
statements, or the financial statements issued or to be
issued covering the period(s) subsequent to the date of the
most recent financial statements covered by an audit report
(including information that may prevent the accountants
from rendering an unqualified audit report on those financial
statements), or (b) cause the accountants to be unwilling to
rely on management’s representations or be associated with
the registrant’s financial statements.
(iv) The accountants advised the registrant that information had
come to the accountants’ attention that materially impacts
the fairness or reliability of either (a) a previously issued
audit report or the underlying financial statements, or (b)
the financial statements issued or to be issued covering the
fiscal period(s) subsequent to the date of the most recent
financial statements covered by an audit report (including
information that, unless resolved to the accountants’
satisfaction, would prevent them from rendering an
unqualified audit report on those financial statements), and
the issue was not resolved (for any reason) to the
accountants’ satisfaction prior to their departure.
2. If, during the two most recent years or any subsequent interim period,
new principal accountants (or new accountants for a significant
subsidiary on whom the principal accountants are expected to express
reliance) have been engaged, identify the new accountants and the date
of engagement.
3. If, during the two most recent years or subsequent interim period prior
to engaging new accountants, the registrant (or someone on its behalf)
consulted the new accountants regarding (a) either the application of
accounting principles to a specified transaction (either completed or
proposed) or the type of audit opinion that might be rendered on the
registrant’s financial statements, and a written report or oral advice was
provided that the new accountants concluded was an important factor
considered by the registrant in reaching a decision about the accounting,
auditing, or financial reporting issue; or (b) any matter that was the
subject of a disagreement [See Item 1.d. above] or a reportable event
[See Item 1.e. above] then:
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Disclosed
or
Complied Reason
With Omitted
a. Disclose the issue(s) that was(were) the subject of the
consultation(s).
b. Describe the views of the new accountants (as expressed orally or
in writing) on each such issue. If written views were provided, file
such as an exhibit to the filing.
c. State whether the former accountants were consulted by the
registrant regarding any such issue. If the former accountants
were consulted, provide a summary of their views.
d. File, as an exhibit to the filing, any letter provided by the new
accountants that contains any new information, clarification of the
registrant’s expression of the new accountants’ views, or the
respects in which the new accountants do not agree with the
statements made by the registrant relative to such consultations.
4. File, as an exhibit to the filing, a letter provided by the former
accountants that states whether they agree with the registrant’s
disclosures made pursuant to Items 1 through 3, above. The letter is to
state the respects of any disagreements the former accountants have
concerning the disclosures. If the former accountants’ letter is not
available at the time of the filing, the former accountants’ letter is to be
filed as an amendment within 10 business days thereafter.
Notwithstanding this 10-day requirement, the letter is to be filed within
two business days of receipt by the registrant. If the former
accountants’ letter is received on a Saturday, Sunday, or holiday on
which the SEC is not open, the two-business-day period begins to run on
and includes the first business day thereafter.
If the former accountants provide the registrant with an interim letter,
and if such letter was not included in the original document, file such
interim letter by amendment within two business days of receipt.
5. If disclosure was required of any disagreements [Item 1.d., above] or
reportable events [Item 1.e., above] and if during the year in which the
change in accountants took place (or during the subsequent year) there
were any transactions or events similar to those involved in such
disagreement(s) or reportable event(s) that were accounted for (or
disclosed) in a manner different from that which the former accountants
apparently would have required, then:
a. Disclose the existence and the nature of the disagreement or
reportable event.
b. State the effect on the financial statements if the method that the
former accountants would have apparently concluded was
required, had been followed.
c. The above disclosures are not required if the method asserted by
the former accountants ceases to be generally accepted because of
subsequent changes in authoritative standards or interpretations.
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Disclosed
or
Complied Reason
With Omitted
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Disclosed
or
Complied Reason
With Omitted
understand the disclosures required under paragraph
(a)(1)(i)(A) of Item 305; or
(ii) (A) Sensitivity analysis disclosures that express the potential
loss in future earnings, fair values, or cash flows of market
risk sensitive instruments resulting from one or more
selected hypothetical changes in interest rates, foreign
currency exchange rates, commodity prices, and other
relevant market rates or prices over a selected period of
time. The magnitude of selected hypothetical changes in
rates or prices may differ among and within market risk
exposure categories; and
(B) Registrants should provide a description of the model,
assumptions, and parameters, which are necessary to
understand the disclosures required under paragraph
(a)(1)(ii)(A) of Item 305; or
(iii) (A) Value at risk disclosures that express the potential loss
in future earnings, fair values, or cash flows of market risk
sensitive instruments over a selected period of time, with a
selected likelihood of occurrence, from changes in interest
rates, foreign currency exchange rates, commodity prices,
and other relevant market rates or prices;
(B)(1) For each category for which value at risk disclosures
are required under paragraph (a)(1)(iii)(A) of Item
305, provide either:
(i) The average, high and low amounts, or the
distribution of the value at risk amounts for the
reporting period; or
(ii) The average, high and low amounts, or the
distribution of actual changes in fair values, earnings,
or cash flows from the market risk sensitive
instruments occurring during the reporting period; or
(iii) The percentage or number of times the actual
changes in fair values, earnings, or cash flows from
the market risk sensitive instruments exceeded the
value at risk amounts during the reporting period;
(B)(2) Information required under paragraph (a)(1)(iii)(B)(1) of
Item 305 is not required for the first fiscal year-end in which
a registrant must present Item 305 information.
(C) Registrants should provide a description of the model,
assumptions, and parameters, which are necessary to
understand the disclosures required under paragraphs
(a)(1)(iii)(A) and (B) of Item 305.
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Disclosed
or
Complied Reason
With Omitted
(2) Registrants should discuss material limitations that cause the
information required under paragraph (a)(1) of Item 305 not to
reflect fully the net market risk exposures of the entity. This
discussion should include summarized descriptions of instruments,
positions, and transactions omitted from the quantitative market
risk disclosure information or the features of instruments,
positions, and transactions that are included, but not reflected fully
in the quantitative market risk disclosure information.
(3) Registrants should present summarized market risk information for
the preceding fiscal year. In addition, registrants should discuss
the reasons for material quantitative changes in market risk
exposures between the current and preceding fiscal years.
Information required by this paragraph (a)(3), however, is not
required if disclosure is not required under paragraph (a)(1) of
Item 305 for the current fiscal year. Information required by this
paragraph (a)(3) is not required for the first fiscal year-end in
which a registrant must present Item 305 information.
(4) If registrants change disclosure alternatives or key model
characteristics, assumptions, and parameters used in providing
quantitative information about market risk (e.g., changing from
tabular presentations to value at risk, changing the scope of
instruments included in the model, or changing the definition of
loss from fair values to earnings), and if the effects of any such
change is material, the registrant should:
(i) Explain the reasons for the change; and
(ii) Either provide summarized comparable information, under
the new disclosure method, for the year preceding the
current year or, in addition to providing disclosure for the
current year under the new method, provide disclosures for
the current year and preceding fiscal year under the method
used in the preceding year.
b. Qualitative information about market risk.
(1) To the extent material, describe:
(i) The registrant’s primary market risk exposures;
(ii) How those exposures are managed. Such descriptions
should include, but not be limited to, a discussion of the
objectives, general strategies, and instruments, if any, used
to manage those exposures; and
(iii) Changes in either the registrant’s primary market risk
exposures or how those exposures are managed, when
compared to what was in effect during the most recently
completed fiscal year and what is known or expected to be
in effect in future reporting periods.
(2) Qualitative information about market risk should be presented
separately for market risk sensitive instruments entered into for
trading purposes and those entered into for purposes other than
trading.
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Where
Disclosed
or
Complied Reason
With Omitted
c. Interim periods. If interim period financial statements are included or
are required to be included by Article 3 of Regulation S-X (17 CFR 210),
discussion and analysis should be provided so as to enable the reader to
assess the sources and effects of material changes in information that
would be provided under Item 305 from the end of the preceding fiscal
year to the date of the most recent interim balance sheet.
d. Safe Harbor.
(1) The safe harbor provided in Section 27A of the Securities Act of
1933 (15 U.S.C. 77z-2) and Section 21E of the Securities
Exchange Act of 1934 (15 U.S.C. 78u-5) (“statutory safe harbors”)
should apply, with respect to all types of issuers and transactions,
to information provided pursuant to paragraphs (a), (b), and (c) of
Item 305, provided that the disclosure is made by an issuer; a
person acting on behalf of the issuer; an outside reviewer retained
by the issuer making a statement on behalf of the issuer; or an
underwriter, with respect to information provided by the issuer or
information derived from information provided by the issuer.
(2) For purposes of this paragraph (d) of this Item 305 only:
(i) All information required by paragraphs (a), (b)(1)(i),
(b)(1)(iii), and (c) of Item 305 is considered forward looking
statements for purposes of the statutory safe harbors,
except for historical facts such as the terms of particular
contracts and the number of market risk sensitive
instruments held during or at the end of the reporting
period; and
(ii) With respect to paragraph (a) of Item 305, the meaningful
cautionary statements prong of the statutory safe harbors
will be satisfied if a registrant satisfied all requirements of
that same paragraph (a) of Item 305.
e. Smaller reporting companies. Smaller reporting companies, as defined
in S-K Item 10(f)(1), need not provide the information required by Item
305.
See the SEC’s publication Disclosures About Market Risk — Frequently Asked
Questions (dated August 15, 1997). This publication is available on the SEC’s
website at www.sec.gov. Q&A 18 of the publication states that the market risk
disclosure must be included in the annual report delivered to shareholders.
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Where
Disclosed
or
Complied Reason
With Omitted
Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms. Disclosure controls
and procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed by an issuer in the reports that
it files or submits under the Act is accumulated and communicated to the
issuer’s management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
Asset-Backed Issuers — A registrant that is an Asset-Backed Issuer is not
required to disclose the information required by this item.
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Where
Disclosed
or
Complied Reason
With Omitted
whether or not internal control over financial reporting is effective.
This discussion must include disclosure of any material weakness
in the registrant’s internal control over financial reporting identified
by management. Management is not permitted to conclude that
the registrant’s internal control over financial reporting is effective
if there are one or more material weaknesses in the registrant’s
internal control over financial reporting.
(4) If the registrant is an accelerated filer or a large accelerated, or
otherwise includes in its annual report a registered public
accounting firms attestation report on internal control over
financial reporting, a statement that the registered public
accounting firm that audited the financial statements included in
the annual report containing the disclosure required by this Item
has issued an attestation report on the registrant’s internal control
over financial reporting.
b. Attestation report of the registered public accounting firm.
If the registrant is an accelerated filer or a large accelerated filer,
provide the registered public accounting firm’s attestation report on the
registrant’s internal control over financial reporting in the registrant’s
annual report containing the disclosure required by this Item. (Emerging
Growth Companies are exempt from the requirement to obtain an
attestation report on the company’s ICFR from its registered public
accounting firm.)
c. Changes in internal control over financial reporting. Disclose any change
in the registrant’s internal control over financial reporting identified in
connection with the evaluation that occurred during the registrant’s last
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting.
SEC Release No. 33-9142 Internal Control over Financial Reporting in Exchange
Act Periodic Reports of Non-Accelerated Filers, effective September 21, 2010 —
The Securities and Exchange Commission has adopted a final rule to implement
Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection
Act. Section 989G affords small issuers an exemption from the internal
controls auditor attestation requirement of Section 404(b) of the Sarbanes-
Oxley Act of 2002. SOX Section 404(b) requires registered public accounting
firms that prepare or issue audit reports for an issuer to attest to, and report
on, the assessment made by the issuer's management of the company's
internal controls. Section 989G of the Dodd-Frank Act added SOX Section
404(c) to exempt from the attestation requirement smaller issuers that are
neither accelerated filers nor large accelerated filers under Rule 12b-2. As a
result, the exemption effectively applies to companies with less than $75
million in market capitalization. The release notes that the rule refers to these
issuers as "non-accelerated filers." The release removes from the applicable
rules the requirement that a non-accelerated filer include an attestation report
from a registered public accounting firm in its annual report. The release also
amends Section 210.2-02(f) of Regulation S-X to provide that an auditor of a
non-accelerated filer need not include an assessment of the issuer's internal
control over financial reporting in its audit report.
d. Instructions to Item 308
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Disclosed
or
Complied Reason
With Omitted
(1) The registrant must maintain evidential matter, including
documentation, to provide reasonable support for management’s
assessment of the effectiveness of the registrant’s internal control
over financial reporting.
(2) A registrant need not comply with paragraphs (a) and (b) of this
Item until it either had been required to file an annual report
pursuant to section 13(a) or 15(d) of the Exchange Act for the
prior fiscal year or had filed an annual report with the Commission
for the prior fiscal year. A registrant that does not comply shall
include a statement in the first annual report that it files in
substantially the following form: “This annual report does not
include a report of management's assessment regarding internal
control over financial reporting or an attestation report of the
company's registered public accounting firm due to a transition
period established by rules of the Securities and Exchange
Commission for newly public companies.”
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Where
Disclosed
or
Complied Reason
With Omitted
See S-K Item 402 for detailed disclosure requirements. General
Questions and Answers are available on the SEC website at
www.sec.gov.
Note: Under the JOBS Act, EGCs can meet the SEC’s executive compensation
reporting requirements by providing the same reduced disclosures that are
required of smaller reporting companies under Rule 12b-2 of the Exchange Act.
The JOBS Act also amends certain provisions of the Dodd-Frank Wall Street
Reform and Consumer Protection Act to exclude EGCs from their requirements.
These amendments include:
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Where
Disclosed
or
Complied Reason
With Omitted
registration statements relating to debt or preferred stock
and either ratio or both ratios may be disclosed in other
filings.
(ii) If a ratio indicates less than one-to-one coverage, disclose
the dollar amount of the deficiency.
The ratio should be disclosed for the following periods:
(a) Each of the last five years of the registrant (or for the
life of the registrant and its predecessor(s), if less),
and
(b) The latest interim period for which financial
statements are presented.
(2) The ratio should be computed using the amounts for the enterprise
as a whole including the registrant, its majority-owned
subsidiaries.
(3) The term "fixed charges" means the sum of the following:
(a) Interest expensed and capitalized,
(b) Amortized premiums, discounts and capitalized expenses
related to indebtedness,
(c) An estimate of the interest within rental expense,
(d) Preference security dividend requirements of consolidated
subsidiaries.
The term “earnings” is the amount resulting from adding and subtracting
the following items.
(i) Add the following:
(a) Pre-tax income from continuing operations before
adjustment for income or loss from equity investees,
(b) Fixed charges,
(c) Amortization of capitalized interest,
(d) Distributed income of equity investees, and
(e) Your share of pre-tax losses of equity investees for
which charges arising from guarantees are included in
fixed charges.
(ii) From the total of the added items, subtract the following:
(a) Interest capitalized,
(b) Preference security dividend requirements of
consolidated subsidiaries, and
(c) The noncontrolling interest in pre-tax income of
subsidiaries that have not incurred fixed charges.
Equity investees are investments that you account for
using the equity method of accounting.
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Disclosed
or
Complied Reason
With Omitted
(iii) Public utilities following ASC Topic 980 should not add
amortization of capitalized interest in determining earnings,
nor reduce fixed charges by any allowance for funds used
during construction.
(4) The term “preference security dividend” is the amount of pre-tax
earnings that is required to pay the dividends on outstanding
preference securities. The dividend requirement must be computed
as the amount of the dividend divided by (one minus the effective
income tax rate applicable to continuing operations).
(5) If you will use the proceeds from the sale of debt or preference
securities to repay any of your outstanding debt or to retire other
securities and the change in the ratio would be ten percent or
greater, you must include a ratio showing the application of the
proceeds, commonly referred to as the pro forma ratio.
You may show the pro forma ratio only for the most recent fiscal
year and the latest interim period. Use the net change in interest
or dividends from the refinancing to calculate the pro forma ratio.
(6) A foreign private issuer must show the ratio based on the figures
in the primary financial statement. A foreign private issuer must
show the ratio based on the figures resulting from the
reconciliation to U.S. GAAP if this ratio is materially different.
EXHIBITS
ITEM 601
Subject to rules regarding the incorporation of exhibits by reference, exhibits
must be filed as part of a registration statement or report. Each registration
statement or report must contain an exhibit index, which is to immediately
precede the exhibits filed. Each exhibit must be listed in the exhibit index
according to the number assigned to it in the exhibit table. The exhibit index
must indicate the page number in the sequential numbering system where each
exhibit can be found. Where exhibits are incorporated by reference, state this
in the index. Also, the first page of the manually signed registration statement
must list the page in the filing where the exhibit index is located.
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The following table indicates the exhibits of interest to accountants required in commonly used filing forms
(see Item 601).
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X
(100) XBRL documents
(101) Interactive data file X X X X X X X X X X
1 Where incorporated by reference into the text of the prospectus and delivered to security holders along
with the prospectus as permitted by the registration statement, or, in the case of the Form 10-K, where
the annual report to security holders is incorporated by reference into the text of the Form 10-K.
2 Where the opinion of the expert or counsel has been incorporated into a previously filed Securities Act
registration statement.
3 An exhibit need not be provided about a company if (1) with respect to such company an election has been
made under Form S-4 or F-4 to provide information about such company at a level prescribed by Form S-
2, S-3, F-2, or F-3 and (2) the form, the level of which has been elected under Form S-4 or F-4, would not
require such company to provide such exhibit if it were registering a primary offering.
4 If required pursuant to S-K Item 304.
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Where
Disclosed
Complied or Reason
With Omitted
Requirements of Exhibits
Exhibit
No.
(7) Correspondence from an independent accountant
regarding nonreliance on a previously issued audit
report or completed interim review — Any written
notice from the registrant’s current or previously
engaged independent accountant that the independent
accountant is withdrawing a previously issued audit
report or that a previously issued audit report or
completed interim review, covering one or more years or
interim periods for which the registrant is required to
provide financial statements under Regulation S-X,
should no longer be relied upon. In addition, any letter,
pursuant to Item 4.02(c) of Form 8-K from the
independent accountant to the SEC stating whether the
independent accountant agrees with the statements
made by the registrant describing the events giving rise
to the notice.
(8) Opinion re: tax matters — Auditors, as well as
attorneys (or, in lieu thereof, a revenue ruling from the
IRS), may furnish opinions regarding tax matters and
consequences to shareholders described in filings if such
tax consequences are material to the investor.
(11) Statement re: computation of per share earnings —
A statement detailing the computation of per share
earnings, unless the computations can be clearly
determined from the filed material, including the
computation of fully diluted amounts even though the
fully diluted amount is not required to be shown by ASC
Topic 260 because of materiality or because it results in
anti-dilution.
(12) Statements re: computation of ratios — A statement
detailing the computation of any ratio of earnings to
fixed charges, any ratio of earnings to combined fixed
charges and preferred stock dividends, or any other
ratios that appear in the registration statement or report.
(13) Annual report to security holders, Form 10-Q or
quarterly report to security holders — The latest
annual report to security holders, Form 10-Q (if
specifically incorporated by reference in the prospectus),
or quarterly report to security holders, if all or a portion
thereof is incorporated by reference in the filing. The
report, except for those portions incorporated by
reference in the filing, must be furnished for the
information of the SEC and is not deemed “filed.” If the
financial statements in the report have been incorporated
by reference in the filing, the accountants’ opinion must
be manually signed in one copy.
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Where
Disclosed
Complied or Reason
With Omitted
(14) Code of ethics. Any code of ethics, or amendment
thereto, that is the subject of the disclosure required by
Item 406 of Regulation S-K or Item 5.05 of Form 8-K, to
the extent that the registrant intends to satisfy the Item
406 or Item 5.05 requirements through filing of an
exhibit.
(15) Letter re: unaudited interim financial information
— A letter from the accountants that acknowledges their
awareness of the use in a registration statement of any
of their reports on unaudited interim financial
information. The letter may be filed with the registration
statement, an amendment to it, or a report on Form 10-
Q that is incorporated by reference into the registration
statement.
(16) Letter re: change in certifying accountant — A letter
from the former accountant concurring or disagreeing
with the statements made by the registrant in the Form
8-K report concerning the resignation or dismissal as the
registrant’s principal accountant.
(18) Letter re: change in accounting principles — Unless
previously filed, a letter from the independent
accountants indicating whether any change in accounting
principles or practices (or any change in the method of
applying any such accounting principles or practices) to
an alternative principle is, in their judgment, preferable
under the circumstances. No letter is required if the
change is made in response to a FASB Statement that
creates a new accounting principle, that expresses a
preference for an accounting principle, or that rejects a
specific accounting principle.
Where registrant makes an accounting change in the 4th
quarter, registrant should file a letter from its auditors
stating whether the change is preferable as an exhibit to
Form 10-K. If a letter is included with Form 10-K, a
letter is not required to be filed with the next Form 10-Q.
See SAB Topic 6-G(2)(b).
(19) Report furnished to security holders — If the
registrant sends to its stockholders, or otherwise
publishes, within the period prescribed for filing the
report, a document or statement with all or some of the
information required in Part I of Form 10-Q, the
information called for by Form 10-Q may be incorporated
by reference to the published document or statement,
provided copies are included as an exhibit to Part I of
Form 10-Q, or the registration statement.
(21) Subsidiaries of the registrant — List all subsidiaries,
the state or other jurisdiction of incorporation or
organization of each, and the names under which such
subsidiaries do business. The names of subsidiaries may
be omitted if the unnamed subsidiaries, considered in the
aggregate as a single subsidiary, would not constitute a
“significant subsidiary” as of the end of the year — see
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Where
Disclosed
Complied or Reason
With Omitted
Part III. However, the rule for omission does not apply
to banks, insurance companies, savings and loan
associations, or to any subsidiary subject to regulation
by another Federal agency.
(23) Consents of experts and counsel. Securities Act
filings — All required consents must be dated and
manually signed. Where the consent of an expert or
counsel is contained in his report or opinion or elsewhere
in the registration statement or document filed
therewith, a reference must be made in the index to the
report as to the part of the registration statement or
document or opinion containing a consent.
Exchange Act Reports — Where a consent is required,
the consent may be filed as an exhibit to the material
incorporated by reference. Such consents must be dated
and manually signed.
(31) Rule 13a-14(a)/15d-14(a) Certifications exactly as set
forth below:
CERTIFICATIONS*
I, [identify the certifying individual], certify that:
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Disclosed
Complied or Reason
With Omitted
b. Designed such internal control over financial
reporting, or caused such internal control over
financial reporting to be designed under our
supervision, to provide reasonable assurance
regarding the reliability of financial reporting and
the preparation of financial statements for external
purposes in accordance with generally accepted
accounting principles;
c. Evaluated the effectiveness of the registrant’s
disclosure controls and procedures and presented
in this report our conclusions about the
effectiveness of the disclosure controls and
procedures, as of the end of the period covered by
this report based on such evaluation; and
d. Disclosed in this report any change in the
registrant’s internal control over financial reporting
that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter
in the case of an annual report) that has materially
affected, or is reasonably likely to materially
affect, the registrant’s internal control over
financial reporting; and
The registrant’s other certifying officer(s) and I have
disclosed, based on our most recent evaluation of
internal control over financial reporting, to the
registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the
equivalent functions):
a. All significant deficiencies and material weaknesses
in the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record,
process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant’s internal control
over financial reporting.
[Date]
[Signature]
[Title]
* Provide a separate certification for each principal
executive officer and principal financial officer of
the registrant. See Rules 13a-14(a) and 15d-
14(a).
(32) Section 1350 Certifications.
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Where
Disclosed
Complied or Reason
With Omitted
a. The certifications required by Rule 13a-14(b) or
Rule 15d-14(b) and Section 1350 of Chapter 63 of
Title 18 of the United States Code (18 U.S.C.
1350).
b. A certification furnished pursuant to this item will
not be deemed “filed” for purposes of Section 18
of the Exchange Act (15 U.S.C. 78r), or otherwise
subject to the liability of that section. Such
certification will not be deemed to be incorporated
by reference into any filing under the Securities
Act or the Exchange Act, except to the extent that
the registrant specifically incorporates it by
reference.
(33) Report on assessment of compliance with servicing
criteria for asset-backed securities. [See Regulation AB,
Item 1122]
For each party participating in the servicing function
provide a report containing:
a. A statement of the party’s responsibility for
assessing compliance with the servicing criteria
applicable to it.
b. A statement that the party used the criteria in
Regulation AB, Item 1122(d) to assess
compliance.
c. The party’s assessment of compliance with the
applicable servicing criteria as of and for the
period ending the end of the fiscal year covered by
the form 10-K report. Material instances of
noncompliance must be disclosed.
d. A statement that a registered public accounting
firm has issued an attestation report on the party’s
assessment of compliance with the applicable
servicing criteria.
(34) Registered public accounting firm attestation report on
assessment of compliance with servicing criteria for
asset-backed securities. (See Regulation AB, Item 1122)
(35) Servicer compliance statement signed by an authorized
officer of the servicer to the effect that:
a. A review of the servicer’s activities during the
reporting period and of its performance under the
applicable servicing agreement has been made
under such officer’s supervision.
b. Based on such review the servicer had fulfilled all
of its obligations under the agreement in all
material respects throughout the reporting period
or, if there has been a material failure to fulfill
such obligations the nature and status thereof.
(100) XBRL-related documents.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
Complied or Reason
With Omitted
(101) Interactive data file
An Interactive Data File is:
(i) Required to be submitted and posted. Required to
be submitted to the Commission and posted on the
registrant’s corporate Web site, if any, in the
manner provided by Rule 405 of Regulation S-T if
the registrant does not prepare its financial
statements in accordance with Article 6 of
Regulation S-X and is described in paragraph
(b)(101)(i)(A), (B) or (C) of this Item, except that
an Interactive Data File: first is required for a
periodic report on Form 10-Q, Form 20-F or Form
40-F, as applicable; is required for a registration
statement under the Securities Act only if the
registration statement contains a price or price
range; and is required for a Form 8-K only when
the Form 8-K contains audited annual financial
statements that are a revised version of financial
statements that previously were filed with the
Commission that have been revised pursuant to
applicable accounting standards to reflect the
effects of certain subsequent events, including a
discontinued operation, a change in reportable
segments or a change in accounting principle, and,
in such case, the Interactive Data File would be
required only as to such revised financial
statements regardless whether the Form 8-K
contains other financial statements:
(A) A large accelerated filer that had an
aggregate worldwide market value of the
voting and nonvoting common equity held by
nonaffiliates of more than $5 billion as of the
last business day of the second fiscal quarter
of its most recently completed fiscal year
that prepares its financial statements in
accordance with generally accepted
accounting principles as used in the United
States and the filing contains financial
statements of the registrant for a fiscal
period that ends on or after June 15, 2009;
(B) A large accelerated filer not specified in
paragraph (b)(101)(i)(A) of this Item that
prepares its financial statements in
accordance with generally accepted
accounting principles as used in the United
States and the filing contains financial
statements of the registrant for a fiscal
period that ends on or after June 15, 2010;
or
(C) A filer not specified in paragraph
(b)(101)(i)(A) or (B) of this Item that
prepares its financial statements in
accordance with either generally accepted
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
Complied or Reason
With Omitted
accounting principles as used in the United
States or International Financial Reporting
Standards as issued by the International
Accounting Standards Board, and the filing
contains financial statements of the
registrant for a fiscal period that ends on or
after June 15, 2011.
(ii) Permitted to be submitted. Permitted to be
submitted to the Commission in the manner
provided by Rule 405 of Regulation S-T if the:
(A) Registrant prepares its financial statements:
(1) In accordance with either:
(i) Generally accepted accounting
principles as used in the United
States; or
(ii) International Financial
Reporting Standards as issued
by the International Accounting
Standards Board; and
(2) Not in accordance with Article 6 of
Regulation S-X; and
(B) Interactive Data File is not required to be
submitted to the Commission under
paragraph (b)(101)(i) of this Item.
(iii) Not permitted to be submitted. Not permitted to be
submitted to the Commission if the registrant
prepares its financial statements in accordance
with Article 6 of Regulation S-X.
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
Complied or Reason
With Omitted
(1) The total number of shares (or units) purchased (column
(a)). Include in this column all issuer repurchases,
including those made pursuant to publicly announced
plans or programs and those not made pursuant to
publicly announced plans or programs. Briefly disclose, by
footnote to the table, the number of shares purchased
other than through a publicly announced plan or program
and the nature of the transaction (e.g., whether the
purchases were made in open-market transactions, tender
offers, in satisfaction of the company’s obligations upon
exercise of outstanding put options issued by the
company, or other transactions).
(2) The average price paid per share (or unit) (column (b)).
(3) The total number of shares (or units) purchased as part of
publicly announced repurchase plans or programs (column
(c)).
(4) The maximum number (or approximate dollar value) of
shares (or units) that may yet be purchased under the
plans or programs (column (d)).
Instructions to paragraphs (b)(3) and (b)(4) of Item 703
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SEC Compliance Checklist — General (12-16)
Where
Disclosed
Complied or Reason
With Omitted
Items 801 and 802 list SEC Industry Guides which prescribe
additional disclosure requirements for entities in certain
industries. These guides are as follows:
(a) [Reserved]
(b) Guide 2. Disclosure of oil and gas operations.
(c) Guide 3. Statistical disclosure by bank holding companies.
(d) Guide 4. Prospectuses relating to interests in oil and gas
programs.
(e) Guide 5. Preparation of registration statements relating to
interests in real estate limited partnerships.
(f) Guide 6. Disclosures concerning unpaid claims and claim
adjustment expenses of property-casualty underwriters.
(g) Guide 7. Description of property by issuers engaged or to
be engaged in significant mining operations.
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Where
Disclosed
Complied or Reason
With Omitted
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TEST IS
MET
TEST IS
MET
Subsidiaries Not Consolidated: YES NO
Rule 4.08(g) — Summarized financial information is furnished
in the footnotes to the consolidated financial statements.
Rule 3.09(a) — On an individual basis, if C-1 is greater than
E-2 or H-1 is greater than E-2, the test is met, the potentially
significant subsidiary is significant, and separate statements
must be filed.
Notes to Test:
1. If tested subsidiary (or group) has an equity interest in other unconsolidated subsidiaries (or an
equity interest in 50%-or-less-owned persons), do not substitute its proportional share of their
assets for investments in and advances to those companies.
2. Do not eliminate receivables from other unconsolidated subsidiaries and 50%-or-less owned
persons accounted for under the equity method.
3. With respect to entities accounted for under the equity method, the asset test is applied for the
purposes of determining significance under Rule 4.08(g) for summarized financial information.
Only the investment and income tests are performed under Rule 3.09(a) to determine if
separate financial statements are required with respect to investees.
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If I-1 is: (i) a loss, (ii) less than 10% lower than I-2, or
(iii) greater than I-2, use I-1. Otherwise, use I-2 and
calculate:
20% of (I)–10% (I) (J-1) (J-2)
TEST IS
MET
YES NO
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TEST IS
MET
YES NO
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SEC Compliance Checklist — General (12-16)
Note to Test: When performing the income test, the numerator is calculated based on the registrant’s
proportionate share of the pre-tax income from continuing operations reflected in the separate financial
statements of the investee prepared in accordance with U.S. GAAP for the period in which the
registrant recognizes income or loss from the investee under the equity method adjusted for any basis
differences. In determining the basis differences that should be included for this test, the registrant
should consider ASC 323-10-35-34 and ASC 323-10-35-32A.
Performing the required tests can be complex, and the staff of the SEC has issued guidance with
respect to their interpretation of the application of Rules 3-09 and 4-08(g). Please refer to the SEC’s
Division of Corporation Finance’s Financial Reporting Manual, section 2410, Measuring Significance of
Equity Method Investees Under S-X 3-09.
I. Asset Test
Consolidated Assets of Registrant (A)
TEST IS
MET
YES NO
If (C) or (D) is greater than (B-1) but less than (B-2), the
test is met and separate audited financial statements of
the company acquired or to be acquired are required for
one fiscal year.
If (C) or (D) is greater than (B-2) but less than (B-3), the
test is met and separate audited financial statements of
the company acquired or to be acquired are required for
two fiscal years.
If (C) or (D) is greater than (B-3), the test is met and
separate audited financial statements of the company
acquired or to be acquired are required for fiscal years as
follows:
If net revenues reported by the acquired business
in its most recent fiscal year are less than $50
million, audited financial statements are required
for two fiscal years.
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SEC Compliance Checklist — General (12-16)
If E-1 is: (i) a loss, (ii) less than 10% lower than E-2, or
(iii) greater than E-2, use E-1. Otherwise, use E-2 and
calculate:
20% of (E) (F-1)
TEST IS
MET
YES NO
If (G) is greater than (F-1) but less than (F-2), the test is
met and separate audited financial statements of the
company acquired or to be acquired are required for one
fiscal year.
If (G) is greater than (F-2) but less than (F-3), the test is
met and separate audited financial statements of the
company acquired or to be acquired are required for two
fiscal years.
If (G) is greater than (F-3), the test is met and separate
audited financial statements of the company acquired or
to be acquired are required for fiscal years as follows:
If net revenues reported by the acquired business
in its most recent fiscal year are less than $50
million, audited financial statements are required
for two fiscal years.
If net revenues reported by the acquired business
in its most recent fiscal year are more than $50
million, audited financial statements are required
for three fiscal years.
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SEC Compliance Checklist — General (12-16)
Note to Test: When measuring significance under the asset test and income test, intercompany transactions
between the registrant and the acquired or to be acquired business should be eliminated in the same way that
would occur if the acquiree were consolidated.
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SEC Compliance Checklist — General (12-16)
TEST IS
MET
YES NO
If (A), (B), and (C) are all answered “yes,” the test is
met and audited balance sheets may be as of the end of
the two preceding years and audited statements of
income and cash flows may be presented for each of the
three years preceding the latest audited balance sheet
presented.
If (A), (B), or (C) is answered “no,” filings made after 45
days must include audited balance sheets at the end of
the last two years and audited statements of income and
cash flows may be presented for each of the three years
preceding the latest audited balance sheet presented.
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SEC Compliance Checklist — General (12-16)
Yes No
An entity is considered inactive if items a-e above are all checked “yes.”
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SEC Compliance Checklist — General (12-16)
TEST IS
MET
YES NO
Notes to Test:
“Restricted net assets of subsidiaries” means the amount of the registrant’s proportionate share of net assets
(after intercompany eliminations) shown in the balance sheets of consolidated and unconsolidated
subsidiaries, as of the most recent year end, which may not be transferred to the parent in the form of loans,
advances, or cash dividends by the subsidiaries without the consent of a third party (e.g., lender, regulatory
agency, foreign government).
Not all limitations on transferability of assets are considered to be restrictions for the purposes of this test,
which considers only specific third-party restrictions on the ability of subsidiaries to transfer funds outside of
the entity. For example, the presence of subsidiary debt that is secured by certain of the subsidiary’s assets
does not constitute a restriction. However, if there are any loan provisions prohibiting dividend payments,
loans, or advances to the parent by a subsidiary, these are considered restrictions for purposes of computing
restricted net assets. If a loan agreement requires that a subsidiary maintain certain working capital, net
tangible assets, or net asset levels, or if formal compensating balance arrangements exist, this is considered
to be a restriction because the lender’s intent is normally to preclude the transfer by dividend or otherwise of
funds to the parent company. Also, a provision that requires that a subsidiary reinvest all of its earnings is a
restriction because this precludes loans, advances, or dividends in the amount of such undistributed earnings
by the entity. Where restrictions on the amount of funds that may be loaned or advanced differ from the
amount restricted from transfer of cash dividends, the amount least restrictive is to be used. Redeemable
preferred stocks (S-X Rule 5-02.28) and noncontrolling interests should be deducted in computing net assets.
Disclosure that the parent intends to reinvest the undistributed earnings of a subsidiary (e.g., as the reason
for not providing income taxes on the earnings — see FASB ASC Topic 740, Income Taxes) would not
necessarily indicate restricted net assets because no third-party restriction is involved. [SAB Topic 6-K.2.a.]
Limitations on loans or advances to the parent are excluded if the transfer of funds can be accomplished by
paying dividends; conversely, limitations on dividends are excluded if funds can be transferred by a loan or
advance.
Computation of restricted net assets should be made for each subsidiary, and the total restriction should be
used in the above test.
The checklist below covers restrictions on net assets, retained earnings, and working capital that limit
amounts that may be advanced or distributed. These cover three common types of restrictive
covenants relating to advances and dividends, but agreements may contain other restrictive
covenants that could affect the net assets transferable to the parent in the form of loans,
advances, or cash dividends. Tests of the particular covenants for the company need to be made to
determine the least restrictive amount to be used for the 25% test above.
Calculation of Restricted Net Assets:
Total net assets of tested subsidiary (i.e., stockholders’ equity less redeemable
preferred stock and noncontrolling interest reflected in the subsidiary’s balance
sheet). (A)
Adjustments:
Add intercompany payables
Less intercompany receivables
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Dividend restriction:
Retained earnings (F)
Plus (or minus) applicable items of intercompany adjustments in (B)
above (G)
Adjusted retained earnings (H)
Retained earnings that must be retained under third-party restrictions
pursuant to the applicable document (I)
Net assets transferable by dividends [(H) less (I)] (J)
Restricted amount that correlates to (T); either (D), (I), or (R), from
which (E), (J), or (S) were derived (U)
Restricted net assets for purpose of test [(U) times (V)] (W)
Amounts appearing on line (W) for each consolidated and unconsolidated subsidiary should be totaled and
carried to line (A) or (B) above, in the test for disclosure of restrictions.
Should the least restrictive covenant [(W) above] be the dividend covenant, consideration should be given to
use of the second least restrictive covenant if payment of dividends in the entire amount free of the
restriction would violate certain of the other restrictive covenants.
If the subsidiary’s adjusted net assets are less than the amount of its restrictions because the pushdown of
consolidating adjustments reduced its net assets, the subsidiary’s adjusted net assets are then the amount of
the subsidiary’s restricted net assets used in the test. [SAB Topic 6-K.2.a.1.]
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Even though the subsidiary’s noncurrent assets are not in a form that is readily transferable to the parent,
the illiquid nature of the assets is not relevant for purposes of the parent-company tests. The objective of
the tests is to require parent-company disclosures when the parent company does not have control of its
subsidiaries’ funds because it does not have unrestricted access to their net assets. Practical limitations,
other than third-party restrictions, on transferability at the measurement date (i.e., most recent fiscal year-
end), such as subsidiary illiquidity, are not considered in computing restricted net assets. However, the
potential effect of any limitations other than those imposed by third parties should be considered for inclusion
in Management’s Discussion and Analysis of liquidity. [SAB Topic 6-K.2.b.]
Companies with many subsidiaries and investees may wish to develop approaches to facilitate the
determination of its parent-company disclosure requirements. For example, if the parent company’s adjusted
net assets (excluding any interest in its subsidiaries) exceed 75% of consolidated net assets, or if the total of
all of the registrant’s consolidated and unconsolidated subsidiaries’ restrictions and its equity in investees’
earnings is less than 25% of consolidated net assets, then the pushdown of consolidating adjustments to the
subsidiaries to determine the amount of their adjusted net assets [(C) above] would not be necessary
because no parent-company disclosures would be required. [SAB Topic 6-K.2.a.1.]
Insurance company subsidiaries may have restricted net assets due to statutory regulations that may prohibit
or restrict the amount of loans or dividends to parent. For most insurance companies, restricted net assets
will include the excess of GAAP net assets over statutory net assets and statutory surplus requirements, such
as the minimum legal capital requirements of the states in which insurance subsidiaries operate.
Bank subsidiaries may have restricted net assets due to restrictions of the Federal Reserve Act on loans to
affiliates; the Comptroller of Currency restricts dividends of national banks; and some regulatory agencies
restrict state banks from paying dividends or making loans and advances to their parent.
Foreign subsidiaries may have restricted net assets due to currency exchange controls that restrict loans and
dividends to the parent; foreign government incentives, such as “tax holidays” or grants, may require
earnings to be reinvested or otherwise limit dividends. Foreign withholding taxes on dividend payments
normally would not be restrictions on net assets because the withheld amounts reduce a tax liability.
5% of (D) (E)
TEST IS
MET
YES NO
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SEC Compliance Checklist — General (12-16)
If (B-1, 2, etc., individually) exceed (E), the test is met and the
individual differences exceeding (E) must be disclosed. If (B-1,
2, etc.) are individually equal to or less than (E), disclosure of
the separate types of timing differences may be omitted — i.e.,
they may be combined.
c. Components of income tax and pre-tax income (loss)(5
% test)
(1) Income tax expense
State
U.S. and 5% of
Major component Federal Foreign Local Total Col.(4)
in (1) (2) (3) (4) (5)
income statement
Current taxes
TEST IS
MET
YES NO
Amounts for each major component (i.e., U.S. federal, foreign, and
state and local, classified by current and deferred) must be stated
separately, unless the amounts in columns 2 or 3 are less than column
5.
(2) Pre-tax income (loss)
Domesti
c 5% of
(US Foreign Total Col.(3)
State, (2) (3) (4)
and
local)
(1)
Amount of pre-tax income
(loss)
TEST IS
MET
YES NO
(D-1)
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SEC Compliance Checklist — General (12-16)
(D-2)
(D-3)
(D-4)
(D-5)
Total (D-1) to (D-5) — same as (C) (E)
TEST IS
MET
YES NO
TEST IS
MET
YES NO
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SEC Compliance Checklist — General (12-16)
TEST
IS MET
YES NO
If (C) is equal to or exceeds (B) for any year, the test is met,
and disclosure is required.
II. Test for disclosure of class of product or services.
(Use this test if total consolidated revenue is less than
$50,000,000 in each of the three last fiscal years; otherwise,
see I. above.)
Latest 1st Prior 2nd Prior
Year Year Year
Consolidated revenue (D)
15% of (D) (E)
Amount of revenue
contributed by any class of
similar products or services (F)
TEST
IS MET
YES NO
If (F) is equal to or exceeds (E) for any year, the test is met,
and disclosure is required.
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S-K ITEM 503(D) — WORKSHEET FOR COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES.
Interim
Line Preceding Fiscal Years [(1)(ii)(A)] Period
No. Fifth Fourth Third Second First [(1)(ii)
(B)]
If debt securities are
registered —
Ratio of earnings to fixed
changes
[See Item 503(d)]
Computation of earnings (3)
Registrant’s pretax income from
continuing operations before
adjustment for income or loss
from equity investees 1
Plus fixed charges 2
Plus amortization of capitalized
interest 3
Plus distributed income of equity
investees 4 `
Plus registrants share of pre-tax
losses of equity investees for
which charges arising from
guarantees are included in fixed
charges. 5
Less interest capitalized 6
Less preference security dividend
requirements of consolidated
subsidiaries 7
Less the noncontrolling interest in
pre-tax income of subsidiaries
that have not incurred fixed
charges (Note: Equity investees
are investments that you
account for using the equity
method of accounting. Also,
public utilities following FASB
ASC Topic 980 should not add
amortization of capitalized
interest in determining earnings,
nor reduce fixed charges by any
allowance for funds used during
construction). 8
Total earnings, before fixed
charge addition (sum of lines 1
through 8) 9
Computation of fixed charges
Interest expensed and capitalized 10
Plus amortized premiums,
discounts and capitalized
expenses related to
indebtedness 11
Plus an estimate of the interest
within rental expense 12
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SEC Compliance Checklist — General (12-16)
Interim
Line Preceding Fiscal Years [(1)(ii)(A)] Period
No. Fifth Fourth Third Second First [(1)(ii)
(B)]
Plus preference security
requirements of consolidated
subsidiaries 13
Total fixed charges (sum of lines
10 through 13) 14
Total earnings and fixed charges
(line 9 plus line 14) 15
If preferred stock is registered
by the registrant —
Ratio of earnings to combined
fixed charges and preferred
stock dividends
Total fixed charges — line 14 17
Plus preference security dividend,
which represents the amount of
pre-tax earnings required to pay
the dividends on outstanding
securities. The dividend
requirement must be computed
as the amount of the dividend
divided by (1 minus the effective
income tax rate applicable to
continuing operations). 18
Total combined fixed charges and
preferred stock dividends (line
17 plus line 18) 19
Ratio (line 15 divided by line 19) 20
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About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private
company limited by guarantee (“DTTL”), its network of member firms, and their related
entities. DTTL and each of its member firms are legally separate and independent entities.
DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please
see www.deloitte.com/about for a detailed description of DTTL and its member firms.
Please see www.deloitte.com/us/about for a detailed description of the legal structure of
Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients
under the rules and regulations of public accounting.
121