The release of earnings has become an increasingly complex exercise, given the various regulations that are implicated under the federal securities laws. While companies are not required to release earnings, almost all public companies choose to do so. As a result, these companies must consider the federal securities laws, including:
- Regulation FD, which seeks to prevent selective disclosure of material nonpublic information;
- Regulation G, which regulates disclosure of non-GAAP financial measures;
- Section 21E of the Exchange Act, which provides a safe harbor for forward-looking statements; and
- the Form 8-K disclosure requirements.
To ensure continued compliance with the federal securities laws, public companies may find it useful to consider the actions taken in connection with the release of earnings and how each of those actions serves to satisfy the applicable federal securities law requirements. By understanding how each action functions as a step in the earnings release process, companies will hopefully be better positioned when things do not go as planned.
We provide a table (available on the Jones Day web site here) that summarizes the key actions involved in the release of operating results for a completed quarterly or annual fiscal period and the key securities law requirements that each action is intended to address. While there is more than one way to satisfy some of the applicable securities law requirements, the table focuses on the actions typically taken by public companies in connection with the earnings release process. To highlight when certain actions should occur, the table divides the key actions in the earnings release process into four phases: pre-earnings call, earnings release, earnings call, and post-earnings call.
Please note that this summary is not a substitute for a review of the applicable securities laws and related regulations as they may apply to specific circumstances. Special circumstances may warrant different or additional actions in order to comply with the rules and regulations of the federal securities laws.