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1998-01-13 21:27:01


Corporate Disclosure Non-Rules from SEC



This document is not what I would call hard-hitting. If the investing public is waiting for the SEC to do something significant in forcing 2000-threatened companies to blow the whistle on themnselves, then the public has been smoking something funny.

Pay close attention to the word "if." It is used throughout the document. It basically boils down to this: "If a company thinks it should announce its imminent demise, it should do so according to the proper forms."

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Revised January 12, 1998

Action:   Publication of Divisions of Corporation Finance and Investment Management Staff Legal Bulletin . . .

Supplementary Information:   This legal bulletin represents the Divisions' staff views. This bulletin is not a rule, regulation, or statement of the Securities and Exchange Commission. Further, the Commission has not approved or disapproved its content. . . .

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. 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 . . . .

If a company determines that it should make Year 2000 disclosure, the applicable rules or regulations should be followed. . . . 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.


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