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Important Reminders for Upcoming 10-Q Filings

​As calendar year filers begin preparing their Forms 10-Q for the third quarter, there are a few items they should keep in mind.

Potential Impact of SEC's New Disclosure Update and Simplification Release

As discussed in greater detail in our client alert (available here), on August 17, 2018, the Securities and Exchange Commission (the “SEC") adopted several dozen amendments (available here) to “simplify compliance without significantly altering the total mix of information" (the “Final Rules").  Ironically, the first effect of the Final Rules that companies may encounter is one that requires additional disclosure.  The Final Rules require Form 10-Q to contain a statement of changes in stockholders' equity and to disclose the amount of dividends per share for each class of shares with respect to the interim period, pursuant to revised Rule 3-04 of Regulation S-X.  Previously, this information was only required in Form 10-K.  The adopting release for the Final Rules notes that “[t]he extension of the disclosure requirement in Rule 3-04 of Regulation S-X may create some additional burden for issuers . . . because it will require disclosure of dividends per share for each class of shares, rather than only for common stock, and disclosure of changes in stockholders' equity in interim periods," but the SEC staff “expect[s] this burden will be minimal, as the required information is already available from the preparation of other aspects of the interim financial information such as the balance sheet and earnings per share."  The required analysis of changes in stockholders' equity for the “current and comparative year-to-date periods, with subtotals for each interim period," can be presented in a note to the financial statements or in a separate financial statement.

The Final Rules become effective 30 days from publication in the Federal Register.  As of the date of this blog post, the Final Rules have not been published in the Federal Register.  Moreover, the adopting release does not indicate (1) whether the amendments should be applied only to periodic reports covering periods ending on or after the effective date, or (2) whether the amendments should be applied to all periodic reports filed after the effective date.  Accordingly, assuming the Final Rules are published in the Federal Register sometime this month, it is unclear whether companies with a September 30 quarter-end will be required to include the new disclosures in their upcoming 10-Qs.  We understand that the SEC staff expects to issue guidance on the applicability of the Final Rules, but in the meantime, companies should be mindful of the new requirements and the procedures they will need to have in place to comply with them.

Cover Page Changes Due to New Inline XBRL Rules

As noted in our August 17, 2018 blog post (available here), as a result of the elimination of the requirement to post Interactive Data Files on a filer's website, the cover pages for various SEC forms, including annual reports on Form 10-K and quarterly reports on Form 10-Q, will be modified to eliminate references to “posting" Interactive Data Files, effective September 17, 2018.  The revised cover pages will read as follows:[1]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  o    No  o

Cover Page Changes Due to New Smaller Reporting Company Definition

As noted in our July 6, 2018 blog post (available here), changes to the definition of “smaller reporting company," which became effective on September 10, 2018, resulted in amendments to the cover pages of registration statements and periodic reports.  Specifically, a registrant may now check both the Smaller Reporting Company box and the Non-Accelerated Filer box.  As a result, the parenthetical next to the “non-accelerated filer" line that says “(Do not check if a smaller reporting company)" should be deleted from the cover pages.[2] 


   [1]   For the revised Form 10-Q cover page text, see page 137 of SEC Release No. 33-10514, Inline XBRL Filing of Tagged Data (June 28, 2018) (available here).

   [2]   For the revised Form 10-Q cover page text, see page 104 of SEC Release No. 33-10513, Smaller Reporting Company Definition (June 28, 2018) (available here).


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