Points to Remember When Preparing Your Form 10-K

James Moloney and Lori Zyskowski are partners at Gibson Dunn & Crutcher LLP. This post is based on a Gibson Dunn publication by Mr. Moloney and Ms. Zyskowski.

With all of the substantive issues impacting disclosures in companies’ upcoming annual reports, there are a few technical points reporting companies should bear in mind when preparing their annual report. Note that some of these issues are easy to miss given that they are not yet reflected in the official PDF of Form 10-K.

Addition of Item 16 (Form 10-K Summary). In 2016, the U.S. Securities and Exchange Commission (the “SEC”) adopted an interim final rule that amended Part IV of Form 10-K to add new Item 16. This item provides that “a registrant may, at its option, include a summary in its Form 10-K.” While the SEC’s interim final rule shows what Item 16 will look like, the PDF of Form 10-K included in the SEC’s official forms list still does not include Item 16. Interestingly, this PDF of Form 10-K—which is hosted on the SEC’s website, but is not directly linked from the SEC’s official forms list—has been updated to include Item 16 (but not the next item in our list). Even if a company chooses not to include a Form 10-K summary, pursuant to Exchange Act Rule 12b-13, the company should include the item number and caption (i.e., “Item 16. Form 10-K Summary”) in Part IV and state that the item is not applicable. In addition, companies should remember to revise the table of contents to include new Item 16.

Edits to Form 10-K Cover Page to Address Items Related to Emerging Growth Companies. As discussed in our blog post (available here), in April 2017, the SEC adopted technical amendments to conform certain rules and forms to self-executing provisions of the Jumpstart Our Business Startups Act related to emerging growth companies (“EGCs”). The SEC’s adopting release is available here. The amendments modified the cover page of Form 10-K, along with the cover pages of various other forms including Form 10-Q, to include two additional checkboxes. The first checkbox allows the company to indicate whether it is an EGC. The second checkbox allows the company to make an irrevocable election not to use the extended transition period for complying with new or revised accounting standards. The PDF of Form 10-K included in the SEC’s official forms list still does not reflect these revisions, so companies will need to look to the adopting release (or to their recently filed Forms 10-Q) to see how the 10-K cover page should be revised.

Hyperlinking to Old Exhibits. This will be the first time calendar year-end companies will file a Form 10-K under the SEC’s new exhibit hyperlinking rules, which we blogged about in March 2017 (available here). While calendar year-end companies have had some experience with the hyperlinking process in connection with their recent quarterly and current reports, there are a few issues that may arise for the first time in connection with the Form 10-K filing.

  • Exhibits Originally Filed As Part of a Single ASCII File. Before EDGAR permitted exhibits to be separately filed in connection with a registration statement or report filing, the exhibits simply appeared after the registration statement or report in a single, large file. While the staff of the Division of Corporation Finance (the “Staff”) has not given formal guidance as to how to handle this issue, informal discussions with the Staff have indicated that filers should hyperlink to the ASCII filing containing the exhibit and clearly identify the hyperlinked exhibit that is being incorporated by reference from the ASCII filing. For example, a hyperlink description might say: “3.1 Certificate of Incorporation of ABC Company (incorporated by reference to Exhibit 3.1 of ABC Company’s Annual Report on Form 10-K for the Year ended December 31, 1999).” Alternatively, filers may choose to voluntarily re-file the old exhibit with the current Form 10‑K filing.
  • Exhibits Originally Filed in Paper. Companies are required to include a hyperlink to each exhibit identified in the exhibit index, unless the exhibit is filed in paper pursuant to a temporary or continuing hardship exemption under Rules 201 or 202 of Regulation S-T.
  • Location of Exhibit Index. Prior to adoption of the hyperlinking rule, Item 601 of Regulation S-K stated that the exhibit index should “precede immediately the exhibits.” Now Item 601 requires that the index “appear before the required signatures.” This language change clarifies that only one exhibit index is required and it should appear before the signature page of the Form 10-K. As a result, only one exhibit list should appear in Form 10-K filings going forward.

With all of the substantive issues that will be impacting how companies make disclosures in their Form 10-K disclosures, filers should remember these technical points to ensure a smooth transition for compliance with the new disclosure requirements.

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