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40 2005 Securities & Disclosure Update: Governance, Controls & Liabilities Overview of Current Form 8-K Requirements by Patricia Peterson Jeff Brandel February 16, 2005

41 Accelerated Filing Four business days for most items Business Combinations May constitute the first public announcement for purposes of Rule 165 and Rule 14d-2(b) or Rule 14a-12 Check one or more boxes on the Form 8-K cover page to indicate that it is simultaneously satisfying its filing obligations under those rules

42 Multiple 8-K Items A single Form 8-K may identify by item number and caption all applicable affected items Certifications CEO and CFO certifications are not required for Form 8-K SEC has urged companies to evaluate their disclosure controls to ensure timely and accurate disclosure

43 Category 1: Registrant s Business and Operations Item 1.01 Entry into a Material Definitive Agreement Material definitive agreements not made in the ordinary course of business Parallels Item 601(b)(10) of Regulation S-K Report any material amendment to material definitive agreement Brief description of the terms and conditions required Notrequired to report letters of intent or other non-binding agreements; however, binding terms that are material must be reported

44 Category 1: Registrant s Business and Operations Item 1.01 Entry into a Material Definitive Agreement [cont.] Agreements with named executive officers and directors must be reported Option plans and awards may need to be reported

45 Category 1: Registrant s Business and Operations Item 1.02 Termination of a Material Definitive Agreement Material definitive agreement not made in the ordinary course of business is terminated, other than by expiration or completion, and termination of the agreement is material to the company Triggered by receipt of notice of termination even if subject to conditions and/or the termination is not scheduled to occur for some time

46 Category 1: Registrant s Business and Operations Item 1.02 Termination of a Material Definitive Agreement [cont.] Consider avoiding notice of termination that triggers cure period; such a notice is required to be reported Consider deleting agreements that are no longer material from material contract list in 10-K

47 Category 1: Registrant s Business and Operations Item 1.03 Bankruptcy or Receivership Substance of former 8-K Item 3 Disclosure of a company s entry into bankruptcy or receivership

48 Category 2: Financial Information Item 2.01 Completion of Acquisition or Disposition of Assets Completion of an acquisition or disposition of a significant amount of assets, other than in the ordinary course of business Source of funding required where a material relationship exists between the company and the source of funding Other disposition includes facility closing and 10% asset write-down

49 Category 2: Financial Information Item 2.02 Results of Operations and Financial Condition Former 8-K Item 12 Company s public announcement or release of material non-public information regarding the company s results of operations or financial condition Guidance included in June 13, 2003 Frequently Asked Questions regarding the use of non-gaap financial measures

50 Category 2: Financial Information Item 2.03 Creation of a Direct Financial Obligation Under an Off-Balance Sheet Arrangement of a Registrant Company becomes obligated under a direct financial obligation that is material to the company A long-term debt obligation as defined in Item 303(a)(5)(ii)(A) of Regulation S-K A capital lease obligation as defined in Item 303(a)(5)(ii)(B) of Regulation S-K An operating lease obligation as defined in Item 303(a)(5)(ii)(C) of Regulation S-K A short-term debt obligation that arises other than in the ordinary course of business

51 Category 2: Financial Information Item 2.03 Creation of a Direct Financial Obligation Under an Off-Balance Sheet Arrangement of a Registrant [cont.] Direct or contingent liability for an obligation that is material arising out of an off-balance sheet arrangement Required whether or not the company is a party to the transaction or agreement creating the contingent obligation Not required if a company security is sold under an effective registration statement and the final prospectus contains all of the information Consider establishing quantitative targets regarding a material amount of debt that will trigger reporting obligations

52 Category 2: Financial Information Item 2.04 Triggering Events that Accelerate or Increase a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement Causes the increase or acceleration of a direct financial obligation and the consequences of the event are material Causes an off-balance sheet arrangement to increase or be accelerated Causes a contingent obligation under an off-balance sheet arrangement to become a direct obligation and the consequences of such event are material As in Item 2.03, disclosure required whether or not the company is a party to the relevant agreement Consider any cross-default or cross-acceleration provisions

53 Category 2: Financial Information Item 2.05 Costs Associated with Exit or Disposal Activities Commits to an exit or disposal plan or disposes of a long-lived asset under material charges will be incurred under GAAP terminates employees under a plan of termination as described in paragraph 8 of FASB Statement of Financial Accounting Standards No. 146, under which material charges will be incurred under GAAP A commitment is a final determination regarding a cause of action

54 Category 2: Financial Information Item 2.06 Material Impairments Material charge for impairment to one or more assets is required under GAAP No disclosure is required if the plan is disclosed in the timely filed periodic report for that period Impairments include impairments of securities and goodwill Consider disclosure under Item 2.01 also when impairment is significant

55 Category 3: Securities and Trading Markets Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing Receipt of notice from the common equity s principal listing exchange or association of noncompliance for continued listing or if the exchange has applied or taken all necessary steps to de-list

56 Category 3: Securities and Trading Markets Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing [cont.] Company has notified the relevant exchange of material non-compliance Exchange issues a public reprimand letter or similar communication regarding violation of a rule or standard of the exchange

57 Category 3: Securities and Trading Markets Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing [cont.] Company takes definitive action to cause listing to be withdrawn or terminated Company takes action to transfer the listing Disclosure is required even if a grace period or cure period Two 8-K s may be required, one reporting notice of noncompliance, the second reporting the actual delisting Consider amending 8-K if company regains compliance and remains listed

58 Category 3: Securities and Trading Markets Item 3.02 Unregistered Sales of Equity Securities Sale of equity securities not registered under the Securities Act of 1933 Mirrors the requirement in Forms 10-K and 10-Q No disclosure if sell less than 1% of the outstanding securities of the class Only share actually outstanding included in 1% threshold Consider implementing monitoring system for the 1% threshold

59 Category 3: Securities and Trading Markets Item 3.03 Material Modifications Rights of Securities Holders Material modifications to the rights of any class of registered securities Disclose the general effect of the modifications on those rights Required by Form 10-Q Items 2(a) and (b) Not required to make duplicative disclosure in its subsequently filed periodic reports

60 Category 4: Matters Related to Accountants and Financial Information Item 4.01 Changes in Registrants Certifying Accountant Former 8-K Item 4 s requirements mandating disclosure of the resignation, dismissal or engagement of an independent accountant

61 Category 4: Matters Related to Accountants and Financial Information Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review Conclusion that previously issued financial statements no longer should be relied upon due to an error in such financial statements as addressed in Accounting Principles Board Opinion No. 20 If a company is advised or notified by its independent accountant that disclosure should be made to prevent future reliance on a previously issued audit report financial statements

62 Category 5: Corporate Governance and Management Item 5.01 Changes in Control of Registrant Former 8-K Item 1 Management has knowledge that a change in control has occurred An arrangement known to the company that may result in a change in control

63 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers 5.02(a) Departure of Directors Due to a Disagreement or Removal for Cause Director resigns or refuses to stand for re-election due to a disagreement with the company - Disagreement must be known to an executive officer of the company Director is removed for cause

64 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers 5.02(a) Departure of Directors Due to a Disagreement or Removal for Cause [cont.] Expands the scope of former 8-K Item 6 Company must file written correspondence provided by the director as an exhibit regardless of whether the director request that such correspondence be filed

65 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers 5.02(a) Departure of Directors Due to a Disagreement or Removal for Cause [cont.] Company must provide the director with a copy of the disclosures and must provide the director with the opportunity to state in writing whether or not he or she agrees with the disclosures

66 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers 5.02(a) Departure of Directors Due to a Disagreement or Removal for Cause [cont.] Copy of such letter must be filed on Form 8-K within two business days of receipt by the company Appropriate disclosure controls and procedures are required (FAQ Question 24 (11/23/04))

67 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers Item 5.02(b) Departures of Principal Officers and Other Departures of Directors Retirement, resignation or termination of a principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer or similar person

68 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers Item 5.02(b) Departures of Principal Officers and Other Departures of Directors [cont.] A director retires, resigns, is removed or declines to stand for re-election and the company is not required to provide a disclosure under 5.02(a)

69 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers 5.02(c) Appointment of New Officers Appointment of a new principal executive officer, president, principal financial officer, principal accounting officer, principal operating officer or similar person

70 Category 5: Corporate Governance and Management Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers 5.02(d) Election of New Directors New director is elected other than by an election at an annual meeting or a special meeting

71 Category 5: Corporate Governance and Management Item 5.03 Amendments to Articles of Incorporation or By-Laws; Change in Fiscal Year Amendment to articles of incorporation or by-laws if the amendment was not proposed in a previously filed proxy or information statement Change of fiscal year by means other than submission to a vote of security holders or by an amendment to articles of incorporation or by-laws Only applies to companies with equity securities registered under Section 12 of the 1934 Act

72 Category 5: Corporate Governance and Management Item 5.04 Temporary Suspension of Trading Under Registrant s Employee Benefit Plans Former 8-K Item 11 Suspension of trading under an employee benefit plan Must be filed no later than the fourth business day after a company receives the notice required under ERISA or the same date the company transmits a timely notice to an affected officer or director Consider filing a copy of the notice given to officers and directors as an exhibit to the Form 8-K

73 Category 5: Corporate Governance and Management Item 5.05 Amendments to the Registrant s Code of Ethics of Waiver of a Provision or the Code of Ethics Former 8-K Item 10 Amendment or waiver of a code of ethics provision applicable to the principal executive officer, principal financial officer, principal accounting officer or controller related to any element of the code of ethics definition set forth in Item 406(b) of Regulation S-K

74 Category 5: Corporate Governance and Management Item 5.05 Amendments to the Registrant s Code of Ethics of Waiver of a Provision or the Code of Ethics [cont.] Form8-K not required if required information is disclosed on its website within four business days and company s website address and its intention to provide disclosure of amendments and waivers through its website is disclosed in its most recent Form 10-K

75 Category 5: Corporate Governance and Management Item 5.05 Amendments to the Registrant s Code of Ethics of Waiver of a Provision or the Code of Ethics [cont.] Information posted on the website must remain posted for at least 12 months

76 Category 6: Reserved

77 Category 7: Regulation FD Item 7.01 Regulation FD Disclosure Former 8-K Item 5 Disclosures under Regulation FD of material nonpublic information that has been disclosed selectively to a broker, dealer, investment advisor or stockholder.

78 Category 8: Other Events Item 8.01 Other Events Former 8-K Item 5 Information deemed of importance to security holders

79 Category 9: Financial Statements and Exhibits Item 9.01 Financial Statements and Exhibits Former 8-K Item 7 Financial statements of businesses acquired, pro forma financial information and the filing of exhibits

80 Limited Safe Harbor from Section 10(b) / Rule 10b-5 Liability Safe harbor from potential liability under Section 10(b) and Rule 10b-5 for following items: 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 and 4.02(a) Safe harbor does not affect the SEC s ability to enforce the Form 8- K filing requirements under any of these items and does not protect a company from potential liability for material misstatements or omissions Safe harbor extends only until the due date of the periodic report covering the period in which the Form 8-K was not timely filed

81 Eligibility to Use Forms S-2 and S-3 and Rely on Rule 144 Failure to timely file a Form 8-K pursuant to items 1.01, 1.02, 2.03, 2.04, 2.05, 2.06 and 4.02(a) does not disqualify a company from eligibility to use Forms S-2 and S-3 Company must file all required Form 8-Ks prior to filing a Form S-2 or S-3 Failure to timely file a Form 8-K will not affect a shareholder s ability to rely on Form 144