SEC requires a separately captioned subsection of MD&A about off-balance sheet arrangements

• Also  requires a tabular presentation of aggregate contractual obligations
• SEC summary 12.01.05

Applies to:

• Domestic issuers - per S-K 303(a)(4)
• Small business issuers, with some modification -
  per S-B 303(c)
• Foreign private issuers - per Form 20-F Item 5
• Canadian issuers -- per Form 40-F Gen. Instr B
• But doesn't apply to Form 6-K reports
• Discussion of application to foreign private issuers

S-K 303(a)(4)(ii)

• Final release commentary

Covers specified contractual arrangements with unconsolidated entities including:

• Guarantees

• Refers to FASB FIN 45
• Final release commentary

• Retained or contingent interests

• Final release commentary

• Certain derivative instruments

• Refers to FASB 133
• Final release commentary

• Variable interests

• Refers to FASB FIN 46
• Final release commentary

Applies to definitive agreements

• Or when transaction closes
• S-K 303(a)(4) Instr 1

Excludes contingent liabilities

• Those arising out of
  litigation, arbitration or regulatory actions
• S-K 303(a)(4) Instr 3

S-K 303(a)(4)(i)

• Final release commentary
• "Either have, or are reasonably likely to have, a current or future effect on the registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors"
• Conforms to reasonably likely standard
  otherwise applicable to MD&A

• A lower threshold than more likely than not
• An even lower threshold was included in proposal release

S-K 303(a)(4)(i)

• Final release commentary
• Separately captioned section in MD&A
• Required disclosures about off-balance sheet arrangements, including:

• Their nature and business purpose
• Their importance to registrant
• Amount of related revenues, expenses and cash flows
• Interests retained, securities issued,
  indebtedness incurred
• Other related obligations including contingent liabilities reasonably likely to become material
• Potential termination or reduction thereof
• Such other information registrant believes necessary

• Generally, covers most recent fiscal year

• S-K 303(a)(4) Instr 4

• Aggregate specific items into categories

• S-K 303(a)(4) Instr 2

• Can cross-reference to financial statement footnotes

• S-K 303(a)(4) Instr 5

S-K 303(a)(5)

• Final release commentary
• To aggregate information about contractual obligations
  in a single location
• Potential termination or reduction thereof
• Form of table provided
• Table to be included in annual report

• Interim reports to disclose any material changes

• Generally, categories in table are standard US GAAP items

• But also includes purchase obligations
• To capture capital expenditures over a five-year period

• More detailed sub-categories can be used
• Additional footnoted detail may be required
• Doesn't apply to small business issuers

• Presentation / style requirements

• Can cross-reference to financial statement footnotes

Safe harbor - Forward-looking information

• S-K 303(c)

• Final release commentary
• Incorporates Securities Act § 27A / Exchange Act § 21E
• Doesn't apply to historical information
• Doesn't apply to contractual obligation table

SEC January 2002 MD&A interpretive guidance

• Superseded in relevant part

Disclosure of Contingent Liabilities or Commitments

• Tabular/textual disclosure about contingent liabilities or commitments was not adoptedA
• See Proposal release II C 2
• Instead SEC refers to its January 2002 MD&A interpretive guidance about whether it would be beneficial to investors to include tabular disclosure of aggregate commercial commitments

Sarbanes-Oxley Act - mandated study of off-balance sheet disclosures / special purpose entities Required by SOX Act § 401(c)

Final release 33-8182 2003

• SEC summary
• Proposal release 33-8144 2002

• Comment letters
• SEC summary of comments

SEC Chief Accountant Speech 2004

• News report
• SEC to closely examine off-balance sheet disclosures

SEC staff report 2005

• Text
• SEC summary 12.01.05

MD&A

Consolidation