MATERIALES INELÁSTICOS MATERIALES ELÁSTICOS

1. General

a) A reconciliation is required for each annual and interim period required to be included in a registration statement or annual report.

b) Form 20-F provides two levels of reconciliation to US GAAP - Item 17 and Item 18. Item 18 requires the same information as Item 17 plus all of the disclosures required by U.S. GAAP and Regulation S-X. With certain

limited exceptions, Item 18 is required for securities offerings. Some of these exceptions include:

• offerings pursuant to reinvestment plans • offerings upon the conversion of securities • offerings of investment grade securities

Item 17 is acceptable in these instances and for purposes of the annual report. Many foreign issuers elect to file their annual reports under Item 18 and provide all of the disclosures required by U.S. GAAP and Regulation S-X. Issuers that file using Item 17 may be required to provide certain additional information in the MD&A to assist the U.S. investor in understanding the financial statements. [SAB 1D].

2. First-time entrants to U.S. reporting system

a) If a foreign registrant has not previously filed financial statements with the Commission on a reconciled basis, it is only required to provide

reconciliations of the financial statements and selected financial data to U.S. GAAP for the two most recently completed fiscal years and for any interim periods required in the registration statement. In each subsequent year, on a prospective basis, an additional year of the reconciliation is required. This accommodation also applies to financial statements filed pursuant to SX 3-05 and 3-09.

NOTE: While reconciliations to U.S. GAAP are initially only

required for two years, the registrant’s financial statements still need to be presented in the registration statement for all of the periods required by Item 8 of revised Form 20-F. Similarly, selected financial data still needs to be presented for five years, even though the oldest three years need not be reconciled to U.S. GAAP.

b) First time registrants that elect to prepare the financial statements in

accordance with U.S. GAAP may provide income statements and statements of cash flows for only their two most recent fiscal years. However, selected financial data still needs to be presented for five years under home-country GAAP if U.S. GAAP financial data is not available for the oldest three years. MD&A need only discuss the two years presented in the financial statements. [R33-7053]

c) Predecessor financial statements and selected financial data must be

presented in the same comprehensive body of accounting as the registrant. A foreign entity that is a predecessor of a U.S. domestic company must present financial statements in U.S. GAAP and U.S. dollars.

3. Issuers of investment grade debt

Forms F-1, F-2, F-3 and F-4 allow registration of investment grade securities utilizing the simpler reconciliation requirements of Item 17 of Form 20-F. 4. “Backdoor” listings by foreign companies

a) Foreign companies sometimes obtain a “backdoor” listing through a reverse acquisition with a U.S. public shell. Even though substantially all of the operations are conducted outside of the U.S., the registrant would not be considered a foreign private issuer.

b) To facilitate timely reporting, the staff would not object if the financial statements included in the Form 8-K are prepared using a foreign GAAP, provided a reconciliation to U.S. GAAP that complies with Item 18 of Form 20-F is provided.

c) The first Form 10-K and any registration statement should include financial statements prepared using U.S. GAAP for all periods presented, including those prior to the reverse acquisition. Financial statements in a foreign GAAP reconciled to U.S. GAAP would not be acceptable.

5. Financial Statements of Foreign Acquired Businesses or Foreign Equity Investees a) The reporting requirements of Form 8-K do not apply to foreign private

issuers. However, foreign private issuers must comply with SX 3-05 in registration statements.

b) If financial statements are required to be filed by registrants (domestic or foreign) for foreign acquirees or foreign equity investees, these statements may be prepared on a basis other than U.S. GAAP. Reconciliations to U.S.

GAAP must be provided only when the foreign acquiree or foreign equity investee is significant to the registrant at the 30% level or greater.

Refer to Topic Two for the tests of significance. [Item 17(c)(2)(v) and (vi) of Form 20-F]

6. If reconciliation is required, the financial statements of foreign acquirees or foreign investees need only comply with the reconciliation requirements of Item 17 of Form 20-F, rather than Item 18. Even though the significance level of an acquisition may require the presentation of three years of audited financial statements in a registration statement or other transactional filing, the

reconciliation only needs to be reconciled for the most recent two years and any required interim period.

7. If three years of audited financial statements of an acquired foreign business would be required based on the level of significance, a registrant may elect to present the acquired business’ statements for only two years if they are prepared using U.S. GAAP, rather than foreign GAAP with a reconciliation. In applying this accommodation, the registrant’s primary financial statements must also be prepared in accordance with U.S. GAAP if post-acquisition periods are considered in determining the years presented.

8. A foreign or domestic registrant may apply SAB 80 in determining the periods for which audited financial statements of acquired foreign businesses are required in an IPO. Assuming that the businesses acquired are reporting in the U.S. for the first time, financial statements of foreign businesses required to be presented under the SAB for three years need only be reconciled to U.S. GAAP for the two most recent fiscal years. Financial statements required to be presented under the SAB for two years must be reconciled to U.S. GAAP for both years. Most recent interim period and corresponding prior year financial statements also would be reconciled to U.S. GAAP.