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14310 Financial Statement Requirements of Schedule TO
us SEC - Financial Reporting Manual
NOTE: If the tender offer consideration includes registered securities, the financial statement requirements of Forms S-4 or F-4 should be followed. |
14310.1 Instructions to Item 10 of Schedule TO provide the following:
a. If material, the financial information required by Item 1010(a) and (b) of Regulation M-A for the issuer in an issuer tender offer and for the offeror in a third-party tender offer must be filed. See Section 14400.
b. Other guidance included in Instructions to Item 10:
1. Financial statements must be provided when the offeror's financial condition is material to a security holder's decision whether to sell, tender or hold the securities sought. The facts and circumstances of a tender offer, particularly the terms of the tender offer, may influence a determination as to whether financial statements are material, and thus required to be disclosed.
2. Financial statements are not considered material when:
i) the consideration offered consists solely of cash;
ii) the offer is not subject to any financing condition; and either:
iii) the offeror is a public reporting company under Section 13(a) or 15(d) of the 1934 Act that files reports electronically on EDGAR, or
iv) the offer is for all outstanding securities of the subject class.
3. The filer may incorporate by reference financial statements contained in any document filed with the SEC, solely for the purposes of this schedule, if:
i) the financial statements substantially meet the requirements of this item;
ii) an express statement is made that the financial statements are incorporated by reference;
iii) the information incorporated by reference is clearly identified by page, paragraph, caption or otherwise; and
iv) if the information incorporated by reference is not filed with this schedule, an indication is made where the information may be inspected and copies obtained.
Financial statements that are required to be presented in comparative form for two or more fiscal years or periods may not be incorporated by reference unless the material incorporated by reference includes the entire period for which the comparative data is required to be given.
4. If the offeror in a third-party tender offer is a natural person, and that person's financial information is material, the net worth of the offeror must be disclosed. If the offeror's net worth is derived from material amounts of assets that are not readily marketable or there are material guarantees and contingencies, the nature and approximate amount of the individual's net worth that consists of illiquid assets and the magnitude of any guarantees or contingencies that may negatively affect the natural person's net worth must be disclosed.
5. Pro forma financial information is required in a negotiated third-party cash tender offer when securities are intended to be offered to remaining target security holders in a subsequent merger (two-tier transaction) and the acquisition of the target company is significant to the offeror. The offeror must disclose the financial information specified in Item 3(f) and Item 5 of Form S-4 in the schedule filed with the SEC, but may furnish only the summary financial information specified in Item 3(d), (e) and (f) of Form S-4 in the disclosure document sent to security holders. When pro forma financial information is required, then the bidder's historical financial statements for all periods stipulated in Item 1010(a) are required as well.
6. The materials sent to security holders may contain the summarized financial information specified by Item 1010(c) instead of the financial information required by Item 1010(a) and (b). In that case, the full financial information required by Item 1010(a) and (b) must be incorporated by reference or disclosed in the Schedule TO. If summarized financial information is sent to security holders, instructions on how more complete financial information can be obtained must be disclosed. If the summarized financial information is prepared on the basis of a comprehensive body of accounting principles other than U.S. GAAP or IFRS as issued by the IASB, the summarized financial information must be accompanied by a reconciliation as described in Instruction 8 below.
Note: When financial information is considered material and the offeror elects to incorporate that information by reference, the disclosure materials disseminated to security holders must nonetheless contain at least summarized financial information specified by Item 1010(c). In addition, when that summarized financial information is disseminated to security holders instead of full financial information required by Item 1010(a) and (b), the full financial information must be provided in the Schedule TO or incorporated by reference. See the Division of Corporation Finance's July 2001 Interim Supplement to Publicly Available Telephone Interpretations, Section H7.
7. If the offeror is a non-reporting company, the financial statements required need not be audited if audited financial statements are not available or obtainable without unreasonable cost or expense. A statement to that effect and the reasons for their unavailability must be disclosed.
8. If the financial statements required by this Item are prepared on the basis of a comprehensive body of accounting principles other than U.S. GAAP or IFRS as issued by the IASB, a reconciliation to U.S. GAAP in accordance with Item 17 of Form 20-F must be provided, unless a reconciliation is unavailable or not obtainable without unreasonable cost or expense. At a minimum, however, when financial statements are prepared on a basis other than U.S. GAAP or IFRS as issued by the IASB, a narrative description of all material variations in accounting principles, practices and methods used in preparing those financial statements from U.S. GAAP must be presented.
Note: If a bidder's financial statements prepared on a basis other than U.S. GAAP or IFRS as issued by the IASB are not required to be filed in conjunction with an all-cash tender offer based on Reg. M-A, but the bidder includes its financial statements anyway (for example, in order to comply with a foreign jurisdiction's rules and regulations), a U.S. GAAP reconciliation is required unless it is not available. If a U.S. GAAP reconciliation is not provided in this circumstance, the following disclosures should be provided:
i) The headnote to those financial statements should explain why the bidder's financial statements are included, that they are not required to be filed under the SEC's rules, and that they don't include all the disclosures that would be required under the SEC's rules, such as a U.S. GAAP reconciliation.
ii) Narrative description of the GAAP differences that normally would be required under Instruction 3 to Item 8.A.5 of Form 20-F is encouraged but not required.
This guidance is included in the Division of Corporation Finance's July 2001 Interim Supplement to Publicly Available Telephone Interpretations, Section H10.
14310.2 A manually signed copy of the accountant's report is not required to be filed with the SEC in connection with a Schedule TO. See the Division of Corporation Finance's July 2001 Interim Supplement to Publicly Available Telephone Interpretations, Section H11. (Last updated: 6/30/2009)
14310.3 Previously issued historical financial statements of the issuer (in an issuer tender offer) or of the bidder (in a third-party tender offer) to be included in a Schedule TO (because they are considered material under 14310.1 (b.1) and 14310.1 (b.2) above) are not required to be recast to reflect a subsequent discontinued operation or a subsequent organizational change causing a change to its reportable segments. This is because previously issued financial statements are not considered to be "reissued" merely by disclosure included in a Schedule TO. However, sufficient information about the subsequent discontinued operation or change in reportable segments must be provided in the Schedule TO so that security holders are informed of those changes and their impact on the reported financial statements. The effect of the discontinued operation should be reflected through pro forma financial information prepared in accordance with S-X Article 11. Segment information under both the old basis and the new basis of segmentation should be presented, to the extent practicable, for all periods for which a statement of comprehensive income has been filed in the Schedule TO.
14310.4 During the tender offer period, an issuer's periodic report on Form 10-K or Form 10-Q may become due and be filed in the normal course. There is no per se requirement to amend the Schedule TO to update information previously disclosed based on current information derived from the newly filed Form 10-K or 10-Q. However, management must evaluate whether the newly filed Form 10-K or 10-Q contains a "material change in information" previously disseminated to security holders. If that newly filed periodic report contains a material change in information, such as, for example, a significant change in the company's business or a material event, the registrant should file an amendment to the Schedule TO in order to summarize the nature of the material change and/or incorporate the newly filed Form 10-K or 10-Q. Because the SEC generally has required that at least five business days remain in the offer period after disseminating information about a material change, the registrant may need to extend the offer period to allow security holders time to receive and consider the new information. If the newly filed periodic report does not contain a material change in information, the registrant may nevertheless choose to file an amendment to the Schedule TO.
This is a work of the U.S. Government
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