The pharmaceutical companies listed below (the “Companies”) jointly submit this letter in support of the Securities and Exchange Commission’s (the “Commission”) proposed semiannual reporting rule. As public companies, including several with longstanding reporting practices, the Companies are well-positioned to offer perspective on how this proposal would function in practice.
Companies:
- Bristol Myers Squibb Company
- Eli Lilly and Company
- Gilead Sciences, Inc.
- Johnson & Johnson
- Merck & Co., Inc.
- Pfizer Inc.
- Roivant Sciences Ltd.
- Viatris Inc.
- Zoetis Inc
Summary
Collectively, we support providing issuers with the option to elect semiannual reporting and appreciate the Commission’s continued commitment to reduce the regulatory burden of operating as a public company. If the proposal is adopted, some of our Companies currently anticipate electing semiannual reporting on Form 10-S while continuing to furnish voluntary quarterly earnings releases to keep investors informed. Fewer mandated periodic filings would reduce external costs and free up meaningful internal resources each year.
Additional Comments
In addition to the above, we offer the following additional comments:
- Timeline. The Companies welcome the earliest timeline that the Commission could reasonably accomplish, as early as the first quarter of 2027. With participation being voluntary, there is no need for a lengthy transition period.
- Eligibility. The Companies support broad eligibility. The optionality in the proposal allows each issuer to exercise judgment on the disclosure cadence that best balances investor expectations and preparer reporting efforts.
- Earnings Release Treatment. Because earnings releases are voluntary communications rather than mandated filings, the Companies support retaining their furnished status.
Amendments to Regulation S-X and Comfort Letters
We support the Commission’s proposed amendments to Regulation S-X to address the staleness requirement for financial statements in registration statements and ensure alignment with the new optional semiannual reporting approach. Amending the requirements governing the staleness of financial statements in registration statements is necessary to avoid a significant extended blackout period for semiannual filers’ ability to access the capital markets.
In addition, we recommend that the SEC encourage the Public Company Accounting Oversight Board (“PCAOB”) to similarly revise the 135-day staleness requirement contained in PCAOB Auditing Standard 6101, Letters for Underwriters and Certain Other Requesting Parties. The current standard generally prohibits PCAOB-registered audit firms from providing comfort letters on financial information older than 135-days.
These existing staleness thresholds would be an obstacle for companies who wish to adopt semiannual reporting.
Conclusion
The Companies believe this proposal is a meaningful step toward modernizing the financial reporting environment. Investors will continue to receive timely, material information through Regulation FD reporting practices including Form 8-K filings and, for most Companies, voluntary earnings releases — while issuers are provided the option to gain meaningful relief from the Form 10-Q administrative burden. We encourage the Commission to adopt the rule.
We are happy to discuss any aspect of these comments at the Commission’s convenience.
Comment Letter on the SEC’s Proposal to Replace Quarterly Reporting with Semiannual Reporting
More from: Donald Zakrowski, Eli Lilly
Donald A. Zakrowski is Senior Vice President, Finance, and Chief Accounting Officer at Eli Lilly & Co. This post is based on his SEC comment letter.
The pharmaceutical companies listed below (the “Companies”) jointly submit this letter in support of the Securities and Exchange Commission’s (the “Commission”) proposed semiannual reporting rule. As public companies, including several with longstanding reporting practices, the Companies are well-positioned to offer perspective on how this proposal would function in practice.
Companies:
Summary
Collectively, we support providing issuers with the option to elect semiannual reporting and appreciate the Commission’s continued commitment to reduce the regulatory burden of operating as a public company. If the proposal is adopted, some of our Companies currently anticipate electing semiannual reporting on Form 10-S while continuing to furnish voluntary quarterly earnings releases to keep investors informed. Fewer mandated periodic filings would reduce external costs and free up meaningful internal resources each year.
Additional Comments
In addition to the above, we offer the following additional comments:
Amendments to Regulation S-X and Comfort Letters
We support the Commission’s proposed amendments to Regulation S-X to address the staleness requirement for financial statements in registration statements and ensure alignment with the new optional semiannual reporting approach. Amending the requirements governing the staleness of financial statements in registration statements is necessary to avoid a significant extended blackout period for semiannual filers’ ability to access the capital markets.
In addition, we recommend that the SEC encourage the Public Company Accounting Oversight Board (“PCAOB”) to similarly revise the 135-day staleness requirement contained in PCAOB Auditing Standard 6101, Letters for Underwriters and Certain Other Requesting Parties. The current standard generally prohibits PCAOB-registered audit firms from providing comfort letters on financial information older than 135-days.
These existing staleness thresholds would be an obstacle for companies who wish to adopt semiannual reporting.
Conclusion
The Companies believe this proposal is a meaningful step toward modernizing the financial reporting environment. Investors will continue to receive timely, material information through Regulation FD reporting practices including Form 8-K filings and, for most Companies, voluntary earnings releases — while issuers are provided the option to gain meaningful relief from the Form 10-Q administrative burden. We encourage the Commission to adopt the rule.
We are happy to discuss any aspect of these comments at the Commission’s convenience.