The SEC guideline Bulletin is too important to let it slip by. Although Judge already posted it once.
NOW we will see the true extent of the problem in April 10Q filings. The SEC is just asking for your Public Company Y2K balance sheet. Exposure on one side and remediation plans on the other. Woe to the COO who comes to the board meeting in March with only the exposure (liabilities) and no remediation plans (assets.) I have felt that either the Y2K issue is overblown or companies have, for competitive reasons, not disclosed their exposure. I tend to lean toward the latter, which is why I'm in TPRO. Obviously some are dragging their feet which is why this was amended to stronger and more detailed language from October 8, 1997
sec.gov
The Year 2000 issue affects virtually all companies and organizations.2
2 In a June 1997 report to Congress, the Commission noted the readiness of the securities industry and public companies to meet the challenges of the Year 2000 issue. This report is available on the Commission's web site at sec.gov.
Summary: ÿ The Divisions remind public operating companies, investment advisers, and investment companies to consider their disclosure obligations relating to anticipated costs, problems and uncertainties associated with the Year 2000 issue. This Bulletin, originally issued on October 8, 1997, is revised to provide more specific guidance under the existing Commission rules and regulations due to the importance of the Year 2000 issue and some uncertainty expressed by members of the accounting and legal professions regarding what should be disclosed.1
Supplementary Information: ÿ This legal bulletin represents the Divisions' staff views. This bulletin is not a rule, regulation, or statement of the Securities and Exchange Commission. Right, just ignore it, make our day, punk....
I. ÿ The Year 2000 Issue
Blah, Blah, two date fields, etc........
II. ÿ Disclosure by Public Companies Regarding the Year 2000 Issue
Many companies must undertake major projects to address the Year 2000 issue. Each company's potential costs and uncertainties will depend on a number of factors, including its software and hardware and the nature of its industry. Companies also must coordinate with other entities with which they electronically interact, both domestically and globally, including suppliers, customers, creditors, borrowers, and financial service organizations. If a company does not successfully address its Year 2000 issues, it may face material adverse consequences. Companies should review, on an ongoing basis, whether they need to disclose anticipated costs, problems and uncertainties associated with Year 2000 consequences, particularly in their filings with the Commission. Public companies may have to disclose this information in Commission filings because:
the form or report may require the disclosure, or
in addition to the information that the company is specifically required to disclose, the disclosure rules require disclosure of any additional material information necessary to make the required disclosure not misleading.3
The following is a discussion of certain requirements.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Companies should include disclosure in their "Management's Discussion and Analysis of Financial Condition and Results of Operations" 4 if:
the cost of addressing the Year 2000 issue is a material event or uncertainty that would cause reported financial information not to be necessarily indicative of future operating results or financial condition, or
the costs or the consequences of incomplete or untimely resolution of their Year 2000 issue represent a known material event or uncertainty that is reasonably expected to affect their future financial results, or cause their reported financial information not to be necessarily indicative of future operating results or future financial condition.
Description of Business
If Year 2000 issues materially affect a company's products, services, or competitive conditions, companies may need to disclose this in their "Description of Business."5 In determining whether to include disclosure, companies should consider the effects of the Year 2000 issue on each of their reportable segments.
Form 8-K
A company's Year 2000 costs or consequences may reach a level of importance that prompts it to consider filing a Form 8-K. At their option, companies would file these reports under Item 5 of Form 8-K. In considering whether to file a Form 8-K, companies should be particularly mindful of the accuracy and completeness of information in registration statements filed under the Securities Act that incorporate by reference Exchange Act reports, including Form 8-Ks.6
Accounting Considerations
The Emerging Issues Task Force considered the issue of how to properly reflect the costs of modifying computer software for Year 2000 projects in the financial statements. In July 1996, the EITF concluded that these costs should be charged to expense as they are incurred.7
Specific Disclosure Considerations
If a company determines that it should make Year 2000 disclosure, the applicable rules or regulations should be followed. If a company has not made an assessment of its Year 2000 issues or has not determined whether it has material Year 2000 issues, the staff believes that disclosure of this known uncertainty is required. Can you say TAVA CD here?? In addition, the staff believes that the determination as to whether a company's Year 2000 issues should be disclosed should be based on whether the Year 2000 issues are material to a company's business, operations, or financial condition, without regard to related countervailing circumstances (such as Year 2000 remediation programs or contingency plans). If the Year 2000 issues are determined to be material, without regard to countervailing circumstances, the nature and potential impact of the Year 2000 issues as well as the countervailing circumstances should be disclosed. As part of this disclosure, the staff expects, at the least, the following topics will be addressed:
the company's general plans to address the Year 2000 issues relating to its business, its operations (including operating systems) and, if material, its relationships with customers, suppliers, and other constituents; and its timetable for carrying out those plans; and
the total dollar amount that the company estimates will be spent to remediate its Year 2000 issues, if such amount is expected to be material to the company's business, operations or financial condition, and any material impact these expenditures are expected to have on the company's results of operations, liquidity and capital resources.
The disclosure must be reasonably specific and meaningful, rather than standard boilerplate.
Now we're going to see the TAVA name emerge, great time to have it spread all over 10Q's associated with the word "solution".
Zebra |
