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SEC 6010
NONFINANCIAL STATEMENT DISCLOSURES SEC
REGULATION S-K
.1 General
.2 Regulation S-K disclosures common to SEC filings and annual shareholder reports
.1 GENERAL
Since its initial adoption, Regulation S-K (reprinted at SEC 6900) has evolved to become a
complete compendium of non-financial statement disclosure requirements applicable to
Securities Act and Exchange Act filings.
In general, Regulation S-K is not self-executed: inclusion of the information specified in S-K is
required only to the extent that a form or schedule governing a document specifically directs
inclusion of the information prescribed by an item of S-K. There are two exceptions to this general
rule. The SEC policies in the General section of S-K with respect to projections and securities
ratings are applicable to all disclosure documents, without direct reference in the schedule or
form to the specific provision of S-K setting forth such policies, and whether or not the schedule
or form incorporates any item of S-K. Likewise, the Industry Guides (reprinted at SEC 6940) listed
in S-K are applicable to the disclosure documents indicated in the list, whether or not the
applicable form or schedule refers to S-K or to the Industry Guide.
In the early 1980s, SEC implemented the "Integrated Disclosure" process. The first step in this
process principally consisted of the adoption of the "Basic Information Package", i.e., those
financial statements and related nonfinancial statement disclosures common to 1933 and 1934
Act filings and reports. Nonfinancial statement disclosures dealing with Selected Financial Data,
Management's Discussion and Analysis (MDA) and Supplementary Financial Information (S-K
Items 301, 303 and 302) became a part of the package and S-K Items 301 and 303 were
concurrently adopted in their present form. FRR 36 issued in 1989 provides additional interpretive
guidance as to the preparation of MDA (SEC 4930.501). In 1996, based on recommendations of
the Task Force on Disclosure Simplification, the SEC amended various disclosure provisions of
Regulation S-K. In 1997 the SEC adopted Item 305 of Regulation S-K which requires disclosure
of certain quantitative and qualitative information about market risk exposures. In 1998, the SEC
adopted Plain English disclosure rules which revised S-K Items 101, 501, 502, 503 and 508. In
1999, the SEC adopted Item 306 of Regulation S-K which requires the inclusion of an audit
committee report in all proxy and information statements relating to votes of shareholders. In
1999, the SEC also adopted a new subpart of Regulation S-K, the 1000 series ("Regulation M-
A"), which contains the disclosure requirements for issuer and third-party tender offers, tender
offer recommendation statements and going-private transactions.
When it was initially adopted in 1977, Regulation S-K was intended to be a repository of standard
issuer-related disclosure requirements that would be used in multiple forms to be filed under both
the Securities Act and the Exchange Act. The Regulation evolved into a centralized source of all
content requirements for periodic reports and registration statements. Thus S-K serves as the
central tool of integration through its application of standardized issuer-related disclosure
provisions to both Securities Act and Exchange Act documents.
S-K disclosures are organized into three broad categories:
(1) Registrant-oriented, (2) Transaction-oriented and (3) General or Technically-oriented. These
broad categories can be further divided into eleven categories:
S-K Description
Item #
REGISTRANT
ORIENTED
Business
Information
S-K 101 Description of business
S-K 102 Description of property
S-K 103 Legal proceedings
Specialized
Operations
S-K 801 Securities Act industry
guides
S-K 802 Exchange Act industry
guides
Financial
Information
S-K 301 Selected financial data
S-K 302 Supplementary financial
information
S-K 303 Management's discussion
and analysis of financial
condition and results of
operations
S-K 304 Changes in and
disagreements with
accountants on accounting
and financial disclosure
S-K 305 Quantitative and qualitative
disclosures about market
risk
S-K 306 Audit committee report
Management and
Certain Security
Holders
S-K 401 Directors, executive
officers, promoters and
control persons
S-K 402 Executive compensation
S-K 403 Security ownership of
certain beneficial owners
and management
S-K 404 Certain relationships and
related transactions
S-K 405 Compliance with Section
16(a) of the Exchange Act
Securities of
Registrant
S-K 201 Market price of and
dividends on the registrant's
common equity and related
stockholder matters
TRANSACTION
ORIENTED
Securities of
Registrant
S-K 202 Description of registrant's
securities
Registration
Statement and
Prospectus
Provisions
S-K 501 Forepart of registration
statement and outside front
page of prospectus
S-K 502 Inside front and outside
back cover pages of
prospectus
S-K 503 Prospectus summary, risk
factors and ratio of earnings
to fixed charges
S-K 504 Use of proceeds
S-K 505 Determination of offering
price
S-K 506 Dilution
S-K 507 Selling security holders
S-K 508 Plan of distribution
S-K 509 Interests of named experts
and counsel
S-K 510 Disclosure of Commission
position on indemnification
for Securities Act liabilities
S-K 511 Other expenses of issuance
and distribution
S-K 512 Undertakings
Roll-up
Transactions
S-K 901 Definitions
S-K 902 Individual partnership
supplements
S-K 903 Summary
S-K 904 Risk factors and other
considerations
S-K 905 Comparative information
S-K 906 Allocation of roll-up
consideration
S-K 907 Background of the roll-up
transaction
S-K 908 Reasons for and
alternatives to the roll-up
transaction
S-K 909 Conflicts of interest
S-K 910 Fairness of the transaction
S-K 911 Reports, opinions and
appraisals
S-K 912 Source and amount of
funds and transactional
expenses
S-K 913 Other provisions of the
transaction
S-K 914 Pro forma financial
statements; selected
financial data
S-K 915 Federal income tax
consequences
TECHNICALLY
ORIENTED
General Non-disclosure oriented -
Instructions expresses the Commission
position on projections and
forward looking information
and the voluntary disclosure
of security ratings.
Miscellaneous
S-K 601 Exhibits
S-K 701 Recent sales of
unregistered securities; use
of proceeds from registered
securities
S-K 702 Indemnification of directors
and officers
Mergers and
Acquisitions
(Regulation M-A)
S-K Definitions
1000
S-K Summary term sheet
1001
S-K Subject company
1002 information
S-K Identity and background of
1003 filing person
S-K Terms of the transaction
1004
S-K Past contacts, transactions,
1005 negotiations and
agreements
S-K Purpose of the transaction
1006 and plans or proposals
S-K Source and amount of
1007 funds or other consideration
S-K Interest in securities of the
1008 subject company
S-K Persons/assets, retained,
1009 employed, compensated or
used
S-K Financial statements
1010
S-K Additional information
1011
S-K The solicitation or
1012 recommendation
S-K Purposes, alternatives,
1013 reasons and effects in a
going-private transaction
S-K Fairness of the going-
1014 private transaction
S-K Reports, opinions,
1015 appraisals and negotiations
S-K Exhibits
1016
The organization of S-K complements the 1933 Act registration Forms S-1, S-2 and S-3 which
recognize that registrants should include in the prospectus (other than by incorporation) differing
levels of information when registering securities because of variations in the periods of time they
have been subject to 1934 Act reporting and the extent to which their securities are "followed" in
the marketplace by analysts and others.
Under Integrated Disclosure, Regulation S-K also governs certain annual shareholder report
disclosures. One Integrated Disclosure objective is to facilitate the use of annual shareholder
reports in SEC filings. For example, the SEC encourages the incorporation by reference of all, or
any portion, of the disclosures required by Parts I and II of Form 10-K from the shareholder
report. Since Integrated Disclosure requires both the shareholder report and Form 10-K to contain
identical disclosures prescribed by Part II of Form 10-K, use of the incorporation by reference
technique would facilitate preparation of the Form 10-K.
Certain Regulation S-K disclosure items are discussed in SEC 6010.2 below in terms of their
applicability to annual shareholder reports. It must be understood that these S-K disclosures are
the same as those required in 1933 and 1934 Act filings. Refer to SEC 5300 for a discussion of
auditor involvement with nonfinancial statement disclosures.
Regulation S-K should be read in conjunction with Regulation S-T, which governs the preparation
and submission of documents in electronic format (see SEC 6960).
Regulation S-K is reprinted in full at SEC 6900.
.2 REGULATION S-K DISCLOSURES COMMON TO SEC FILINGS AND ANNUAL
SHAREHOLDER REPORTS
Regulation 14A of the 1934 Act contains rules with respect to registrants which solicit proxies
(Rule 14a-3) or furnish information statements equivalent in disclosure content to proxy
statements (Rule 14c-3). These rules also apply to annual shareholder reports for specified
disclosures. (Rule 14a-3 is reprinted at SEC 7200; Rule 14c-3 is substantially equivalent.) Rules
14a-3 and 14c-3 require shareholder reports to include the disclosures required by the following
Regulation S-K items:
.21 S-K Item 201 - Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
Item 201 requires disclosure of:
1. The principal trading market or markets for a registrant's common stock and
the quarterly market prices during the past two years and any subsequent interim
period for which financial statements are included.
2. The approximate number of common stockholders as of the most recent
practicable date.
3. The frequency and amount of any dividends declared during the past two
years and any subsequent interim period for which financial statements are
required to be presented.
4. Any restriction on a registrant's present or future ability to pay dividends.
5. For foreign registrants, any governmental restrictions on the export or import of
capital, currency or dividend remittance restrictions, taxation of dividends to U.S.
holders, and information as to ADR holdings and arrangements.
.22 S-K Item 301 - Selected Financial Data
This item requires in comparative columnar form a Five-Year Summary of Selected Financial
Data which will highlight significant trends in a registrant's financial condition and results of
operations. This information is required on a consolidated basis only.
The minimum disclosures under Item 301 are:
1. Net sales or operating revenues
2. Income (loss) from continuing operations
3. Income (loss) per common share from continuing operations
4. Total assets
5. Long-term obligations, including long-term debt, capital leases and
redeemable preferred stock as defined in S-X Rule 5-02.28.
6. Cash dividends declared per common share
Any additional data necessary to highlight trends should be given. At its option, a registrant may
furnish any additional tabular data it considers significant.
.23 S-K Item 303 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
In 1980, the SEC adopted an entirely restructured Management's Discussion and Analysis as
part of Integrated Disclosure. See FRP Section 501 (SEC 4930.501) for discussion of SEC
interpretive views on MDA presentations including FRR 36 issued in 1989. Details are discussed
at SEC 6200. In summary, S-K Item 303 requires a registrant to:
1. Discuss financial condition, changes in financial condition and results of
operations for the most recent three fiscal years.
2. Provide information with respect to liquidity, capital resources and results of
operations by identifying capital needs, commitments, trends, uncertainties,
material changes and effects of inflation.
3. Discuss, on an optional basis, forward-looking information.
.231 Regulation S-K Item 303 - Effects of Inflation
In 1987 the SEC adopted final rules governing the disclosure of the effects of inflation and other
changes in prices. These rule amendments were made as a result of the FASB's issuance of FAS
89: "Financial Reporting and Changing Prices," which made voluntary the previous FAS 33
requirement that certain publicly traded companies disclose supplemental information of the
effects of inflation and other changes in prices. These rule amendments delete references to the
previous FASB requirements, while continuing to encourage registrants to voluntarily present
quantified supplemental disclosures on the effects of inflation and other price changes. However,
Regulation S-K continues to require registrants to discuss, where material, the impact of inflation
and changing prices on their financial statements in Management's Discussion and Analysis.
These rules provide management with considerable flexibility in developing disclosure that is
most appropriate for their particular circumstances.
.24 S-K Item 302 - Supplementary Financial Information
The disclosure requirements comprising S-K Item 302 are:
1. Quarterly Financial Data - All registrants, except small business issuers and
foreign private issuers, that have securities registered pursuant to sections 12(b)
(other than mutual life insurance companies) or 12(g) of the Exchange Act must
provide the selected quarterly financial data. See SEC 4300.1 for Firm policy
regarding association with S-K Item 302, Supplementary Financial Information.
2. Information about oil and gas producing activities specified in FAS 69
(paragraphs 9-34), where such activities are "significant" as defined under
paragraph 8 of that standard.
.241 Quarterly Financial Data Required by Regulation S-K Item 302(a)
All registrants, except small business issuers and foreign private issuers, that have securities
registered pursuant to sections 12(b) (other than mutual life insurance companies) or 12(g) of the
Exchange Act must provide the selected quarterly financial data required by Regulation S-K Item
302(a). Quarterly data is required only for the two latest fiscal years in shareholder reports and
Form 10-K. For 1933 Act filings, any subsequent quarterly periods must be presented.
The quarterly data disclosure includes net sales, gross profit (defined as net sales less costs and
expenses associated directly with or allocated to products sold or services rendered), income
(loss) before extraordinary items and cumulative effect of a change in accounting, per share data
based on such income (loss), and net income (loss) for each full quarter within the two most
recent fiscal years and any subsequent interim period for which income statements are
presented. As an administrative practice, the SEC also requires that net income per share be
disclosed.
When the data varies from amounts previously reported on Form 10-Q, a reconciliation to
amounts previously reported is required along with a description of the reason for the difference.
However, if a company filed a Form 10-Q/A amending a previously filed Form 10-Q, no
reconciliation is required if the company also published quarterly reports to shareholders and
previously made detailed disclosure to shareholders in such reports of the change reported on
Form 10-Q/A (see SAB Topic 6-G.1a, Question 7 at SEC 4940).
The registrant must describe the effect of any disposal of segments of a business and
extraordinary, unusual, or infrequently occurring items recognized in each quarter as well as the
aggregate effect of, and the nature of, year-end or other adjustments which are material to the
results of a quarter.
.2411 Auditor Involvement with Quarterly Financial Data
In December 1999 the SEC amended Rule 10-01(d) of Regulation S-X and Item 310(b) of
Regulation S-B to require that a company's interim financial statements be reviewed by an
independent public accountant prior to the Company's filing its Form 10-Q or 10-QSB with the
SEC.
Regulation S-K Item 302 states, in effect, that if the primary financial statements to which the
quarterly information relates have been reported on by an accountant, appropriate professional
standards and procedures, as enumerated in the Statements of Auditing Standards issued by the
Auditing Standards Board of the American Institute of Certified Public Accountants, shall be
followed by the reporting accountant with regard to the quarterly data.
SAS 71/AU 722, "Interim Financial Information," and PwC Audit database 10.2, "Reviews of
interim financial information," set forth appropriate professional standards and procedures and
Firm policy to be followed for interim financial information disclosed in SEC and shareholder
reports. (See also SEC 5300.3 and SEC 2300.97.)
.25 Regulation S-K Item 304 - Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
Whenever the principal accountant (or an independent accountant engaged to audit a significant
subsidiary and on whom the principal accountant expressed reliance in its report) of an SEC
registrant has resigned (or indicated it has declined to stand for re-election) or was dismissed, the
registrant is required to disclose information required by S-K Item 304(a). Typically, the disclosure
required by S-K Item 304(a) is provided on Form 8-K (see SEC 3150.6 for a detailed discussion
of such disclosure requirements). The disclosure required by Item 304(a) need not be repeated in
subsequent filings, except that it must be provided (notwithstanding prior disclosure) if required
pursuant to Item 9 of Schedule 14A, "Independent Public Accountants," under the proxy rules.
Disclosure under S-K Item 304(b) may be required in either 1933 or 1934 Act filings. S-K Item
304(b) generally states that if during the fiscal year in which the change in accountants took place
or during the subsequent fiscal year, there have been transactions or events similar to those
which involved a disagreement or reportable event and such transactions or events were material
and were accounted for or disclosed in a manner different from that which the former accountant
would have concluded was required, the registrant shall state the existence and nature of the
disagreement or reportable event and also state the effect on the financial statements if reported
in the manner required by the former accountant. Disclosure is not required, however, if the
method asserted by the former accountant ceased to be generally accepted because of
subsequently issued authoritative standards or interpretations. It should be noted that compliance
with S-K Item 304 is required for initial public offerings on Form S-1.
.26 Regulation S-K Item 305 - Quantitative and Qualitative Disclosures About Market Risk
In 1997 the SEC adopted new rules that require disclosures of certain quantitative and qualitative
information about market risk exposures. The SEC staff also published a release that contains
frequently asked questions and answers about the new rules. See SEC 6200.53-54 and SEC
6900.
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