GlossaryGuide

This item requires disclosure if the company believes that previously issued financial statements should not be relied upon because of an error in the statements. Disclosure is also required if the auditor believes that its previously issued audit reports or interim reviews on financial statements should not be relied upon. In both cases, the company… Continue reading Item 4.02 – Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review | 8-K Explained

Companies must disclose if they dismiss their independent auditor, if the auditor resigns or declines to stand for re-appointment, and if the company hires a new auditor. A change of auditors is sometimes, but not always, a cause for concern. It depends on the reasons for the change. The following circumstances are widely seen as… Continue reading Item 4.01 – Changes in Registrant’s Certifying Accountant | 8-K Explained

Under this item, companies must disclose material changes to instruments that define the rights of shareholders (such as a company’s governing documents) or material limitations on the rights of security holders that result from the issuance or modification of another class of securities. Examples of such changes could include loan terms restricting dividend payments, the… Continue reading Item 3.03 – Material Modification to Rights of Security Holders | 8-K Explained

Private sales of securities exceeding 1 percent of a company’s outstanding shares of that class (or 5 percent for smaller reporting companies) would be reported under this item. Public offerings registered with the SEC need not be disclosed under this item. Investors can use the information provided under this item to determine the amount of… Continue reading Item 3.02 – Unregistered Sales of Equity Securities | 8-K Explained

If a stock exchange notifies a company that it no longer satisfies the requirements for continued listing, this must be disclosed. For example, the stock may have been trading below the minimum price requirement for a certain period of time. The company may have a grace period to return to compliance, and will have to… Continue reading Item 3.01 – Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing | 8-K Explained

A company must disclose certain material write downs (also called impairments) in an 8-K. (If the company determines the impairment when routinely preparing its financial statements for its periodic report, the company may make the disclosure in the periodic report rather than in an 8-K.) A write down may occur when a company significantly lowers… Continue reading Item 2.06 – Material Impairments | 8-K Explained

This item requires disclosure of restructuring plans under which the company will incur material charges. For example, the 8-K may report the company’s decision to close some of its plants or stores or to lay off workers. The company also must disclose its estimates of the costs involved, once it is able to determine them.… Continue reading Item 2.05 – Costs Associated with Exit or Disposal Activities| 8-K Explained

Defaults on loans or other events that trigger the acceleration or increase of a financial obligation must be disclosed in an 8-K if the consequences of the event are material to the company. For example, if a company defaults on a loan, its creditors typically have the right to demand immediate payment of the entire… Continue reading Item 2.04 – Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement| 8-K Explained

The basic terms of material financial obligations that the company takes on must be reported. These financial obligations include any long-term debt, capital or operating lease, and short-term debt outside the ordinary course of business. This item also requires disclosure of material financial obligations, whether direct or contingent, that arise out of off-balance sheet arrangements.

Many companies announce their quarterly and annual results simultaneously in a press release and an 8-K (which includes the press release as an exhibit). The documents often include an announcement that the company will hold a conference call (sometimes called an analyst or earnings call) shortly after the release to discuss the results. The financial… Continue reading Item 2.02 – Results of Operations and Financial Condition | 8-K Explained