SEC Mandates Use of XBRL for Financial Statements

The Securities and Exchange Commission has adopted rules that will require companies to provide their financial information in interactive data format using eXtensible Business Reporting Language (“XBRL”), a computer language that defines or “tags” data using certain standard definitions. The new format will allow readers to download financial information directly into spreadsheets which, according to the SEC, will facilitate the comparison of financial and business performance across companies, reporting periods and industries. Companies will be required to tag their financial statements and footnotes, as well as any applicable financial statement schedules.

The requirement to provide interactive data in XBRL format will be phased-in in the following three stages:

• Domestic and foreign large accelerated filers that use U.S. generally accepted accounting principles and have a worldwide public float above $5 billion will be required to provide interactive data in XBRL format beginning with their first periodic report on Form 10-Q, Form 20-F or Form 40-F for a fiscal period ending on or after June 15, 2009.
  
• All other domestic and foreign large accelerated filers using U.S. GAAP will be required to provide interactive data in XBRL format beginning with their first periodic report on Form 10-Q, Form 20-F or Form 40-F for a fiscal period ending on or after June 15, 2010.
  
• All other filers using U.S. GAAP (including smaller reporting companies) and all foreign private issuers that prepare their financial statements in accordance with International Financial Reporting Standards will be required to provide interactive data in XBRL format beginning with their first periodic report on Form 10-Q, Form 20-F or Form 40-F for a fiscal period ending on or after June 15, 2011.

Foreign private issuers that do not prepare their financial statements in accordance with U.S. GAAP or IFRS are not required to provide interactive data in XBRL format.

The requirement to provide interactive data in XBRL format does not eliminate or alter the requirement that financial statements and schedules be filed in the traditional format; rather it adds a requirement that financial information in interactive data format be included as an exhibit to a company’s Securities Exchange Act reports. Initially, a company’s financial statement footnotes and schedules will be tagged individually as a block of text; however, after a year of a company being required to provide interactive data in XBRL format, more detailed tagging of the footnotes and schedules is required. Under the current rules, management’s discussion and analysis and executive compensation disclosures will not need to be provided in XBRL format. The interactive data exhibits are excluded from the officer certification requirements of Rule 13a-14 and Rule 15d-14 under the Securities Exchange Act.

Companies are also required to include interactive data exhibits to their Securities Act registration statements. However, an interactive data exhibit will only be required to be submitted with a Securities Act registration statement after a price or price range has been determined and at any time thereafter when the financial statements have been changed. In addition, interactive data in XBRL format will not be required to be included as an exhibit to a Securities Act registration statement (i) in connection with an initial public offering or (ii) that does not contain financial statements, but instead incorporates by reference all required financial statements from a company’s periodic reports.

Generally, the interactive data exhibit will be required to be submitted at the same time as the filing to which it relates. However, a company’s initial interactive data exhibit need not be submitted until 30 days after the earlier of the due date or filing date of the filing to which it relates.  Similarly, a company’s first interactive data exhibit that includes detailed tagging of footnotes and schedules need not be submitted until 30 days after the earlier of the due date or filing date of the filing to which it relates.

In addition to submitting an exhibit that contains interactive data to the SEC, companies are required to post the interactive data on their websites. Hyperlinking to the SEC’s website does not satisfy this requirement. The interactive data must be posted on a company’s website for at least 12 months.

A company that fails to provide the required interactive data will not be deemed as having timely filed its Securities Exchange Act reports and will be ineligible to use Form S-3, Form F-3 and Form S-8. In addition, during the period of ineligibility, a company will not be deemed to have available adequate information for purposes of the resale exemption safe harbor provided by Rule 144 under the Securities Act.

The full set of rules regarding interactive data in XBRL format may be found in the SEC adopting release, which is available at http://www.sec.gov/rules/final/2009/33-9002.pdf. The SEC subsequently made technical corrections to the rules contained in its adopting release. Such technical corrections are available at http://www.sec.gov/rules/final/2009/33-9002a.pdf. In addition, the SEC has issued a set of Compliance and Disclosure Interpretations regarding interactive data in XBRL format, which are available at http://www.sec.gov/divisions/corpfin/guidance/interactivedatainterp.htm.