Impact of COVID-19 on Quarterly Reporting; New Statement from SEC Chairman and Director of Division of Corporation Finance: Considerations for U.S. Public Companies Preparing for Their First Earnings Cycle Since the Onset of the COVID-19 Pandemic

Sullivan & Cromwell LLP - April 9, 2020
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The evolving impact of COVID-19 will be a key focus for public companies as they prepare to report financial results for the first quarter of 2020.  For companies with a December 31 fiscal year, this will be the first reporting cycle since the onset of the COVID-19 emergency around the globe.  COVID-19 and the unprecedented measures taken by governmental authorities worldwide in response to the pandemic, including government-mandated closures, stay-at-home orders and extraordinary actions to stabilize markets and mitigate recessionary pressures, have affected, and will continue to affect, economic and financial market conditions globally, as well as the operations, financial results and prospects of companies across virtually all industries and geographies.  The importance of the upcoming earnings cycle and related disclosure considerations was highlighted in a statement released on April 8, 2020 by the SEC Chairman, Jay Clayton, and the Director of the Division of Corporation Finance, William Hinman.

Although the COVID-19 pandemic presents a unique set of fact-specific challenges for each issuer, this memorandum highlights general topics issuers should consider as they prepare for upcoming earnings announcements, quarterly reports or other public disclosures.  This memorandum focuses on considerations for U.S. domestic issuers, but many of the considerations addressed are also applicable to foreign private issuers with securities listed on United States securities exchanges, and foreign private issuers which are not SEC-reporting companies but may be considering undertaking exempt securities offerings (such as pursuant to Rule 144A) in the United States.  We addressed additional disclosure considerations for banking institutions in our memorandum to clients dated April 6, 2020.