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Responses to ACSPC Request for Public Input


Question 20. Is segment information useful for smaller companies? Please explain.

The following answers have been received:

08/02/2005 17:44:12   Useless. If the revenue is small. Discussion in the MD&A would be sufficient. Segment information is a burden for smaller companies as it requires more sophisticated software than smaller companies can afford or have the expertise.

08/02/2005 23:36:32   Yes- for companies that have different segments.

08/03/2005 01:39:17   It can be. It should be voluntary. Small firms still have a reason to help investors feel comfortable understanding their business; however, this information is used inappropriately by competitors.

08/03/2005 08:55:04   Do not know

08/03/2005 08:58:39   Not if you are regulated.

08/03/2005 10:40:26   No

08/03/2005 12:17:58   self evident. less is much better, none is best. the oversight agency needs to be investigated. has gotten out of control and replacement would seem to be in order

08/03/2005 15:01:40   It can be. Most do not have segments since they are so small.

08/03/2005 15:22:49   Not sure of what you want here.

08/03/2005 16:58:51   For some companies it might be.

08/03/2005 18:01:35   Please look into item no 29

08/03/2005 18:30:29   x

08/03/2005 19:54:33   I have no opinion on this question.


08/04/2005 09:39:15   No. Most small companies do not have meaningful segments.

08/04/2005 10:40:16   I would guess it is only useful if there are plans that the segments would be sold at sometime in the future.

08/04/2005 12:09:05   We don't have segments, so I'm going to skip this question.

08/04/2005 13:38:24   N/A

08/04/2005 14:20:27   Not really, it is just more work.

08/04/2005 18:05:44   Yes

08/05/2005 10:54:31   If they truly have a segment.

08/05/2005 12:38:34   Segment information is useful if it is truthful and not MISLEADING!!

08/05/2005 12:44:28   For some companies segmentation is valuable, but this can usually be determined by company management and accounting personnel.

08/05/2005 15:34:53   Does not apply to us

08/05/2005 15:43:46   Again, in the small bank environment the regulatory reporting process has a 5 decade history as would be a better model to look at to determine whether segment report has any value in this small niche of the reporting sector.

08/05/2005 16:45:38   Unsure.

08/05/2005 19:33:08   Not sure.

08/06/2005 13:52:06   Yes, if it is relevant.

08/08/2005 09:29:48   Not unless they have different lines of businesses.

08/08/2005 11:10:11   yes, in that it can show where a company is growing or struggling; and no, it usually involves a very core segment that is a vast majority of the revenues and so the rest of the segments deal in rather small numbers and percentages of the whole picture.

08/08/2005 14:06:10   It can be in certain circumstances. It just depends on the individual company. Segment reporting should be applicable to all companies, not just large ones.

08/08/2005 15:43:24   Only if it is truly significant and necessary for an understanding of the companies operations and performance.

08/08/2005 21:39:10   Segment information is less useful to investors of small companies than for large companies due to the amounts that are being discussed. This information also serves to convey to competitors a breakdown of revenue that pose a competitive threat.

08/09/2005 09:30:31   No.

08/09/2005 16:26:34   Yes...it helps understand the progress, value and risk of companies that have significant segments.

08/09/2005 17:25:10   Although I believe small companies in general don't have as many segments as larger ones, I think that those that do should continue reporting major items like revenues, expenses and assets by segment.

08/10/2005 09:04:41   no comment

08/10/2005 16:00:18   No!

08/10/2005 17:18:15   Segment info is useful, regardless of size. Disclosures need to be the same for all public companies.

08/10/2005 22:09:27   Depending what you refer to as "segment". For example we had some 34 different families of product in one of our companies that sold to most major manufacturers, OEM as well as second and third tier suppliers world wide. there were times we could not get proper information as to what industries they were serving since some of the produst the purchased were used on a variety of their products and markets. Markets also change due to seasonality, most of the time we were aware of those impending changes. For example we did not have a customer (end user) that rerpresented more then 8% of our business at any time.

08/11/2005 08:35:22   Nope.

08/12/2005 13:12:10   No opinion.

08/12/2005 16:35:01   Possibly - depending on circcumstances.

08/13/2005 12:39:43   Yes, helps to provide more insight in the company

08/15/2005 13:08:27   It's less useful as smaller companies are less likely to be clearly segmented and more likely to be sharing costs, customers and the like.

08/15/2005 14:27:30   Not very in most cases. Like many things in current public accounting, it supports and analytical process of which amateur investors are not capable and that professionals can generate from other information available in the financials themselves, the notes and MD&A.

08/15/2005 15:10:05   not sure

08/15/2005 15:13:01   Sure. Many small companies are very complex with many segments and this helps with the analysis. I also believe the information is not that difficult to compile.

08/15/2005 15:14:45   Yes. Everyone should know where the numbers originate. The problem is in the lack of standardization capabilities.

08/15/2005 16:33:43   sure- there may be smaller business with different segments- that is fine.

08/15/2005 16:41:14   if there are segments - yes

08/15/2005 18:59:52   Simplified segment reporting is useful, but often the segments are too narrowly defined with the result that a lot of number crunchins is required for little value.

08/16/2005 09:51:21   Yes. It is important for an investor to understand what is driving the financial performance of any company, large or small.

08/16/2005 10:10:36   Yes.

08/16/2005 10:21:17   Judgement needs to be applied, so that small companies are not forced to disclose small confidential details about their business (segments), which create competitive disadvantages, especially vis a vis bigger corporations.

08/16/2005 10:26:28   not really, they tend only to have one segment !

08/16/2005 10:42:02   I'm not sure that the segment information that is required is really useful in understanding larger companies, either.

08/16/2005 10:44:16   In our environment (banking) yes.

08/16/2005 11:18:54   No, I don't believe it is useful. Again, who is investing in smaller companies? Is it the type of people who are going to be able to analyse this data and compare it to other companies? I don't think so.

08/16/2005 11:52:16   NO. No one can undestand the numbers so no one ever reads them. I have never yet had any one comment on our segment data.

08/16/2005 12:15:34   No. Because the segments would be so small, I don't think that there would be added usefullness. Larger medical companies like Medtronic which are billion dollar companies report in one segment.

08/16/2005 12:40:54   Not really, may negatively affect competitve posture

08/16/2005 13:04:14   Perhaps to the investor, but such disclosures seems to be unfair for small companies. Disclosing the gross profit margins for a segment may very well be telling your competition exactly what your mark-up percentage is if you only have one product in a segment. We only have one product line and the disclosure of sales and cost of sales effectively tells our competition what our margins are.

08/16/2005 13:12:04   It is very dangerous in in context of competitive information

08/16/2005 13:19:29   I do not understand the question, therefor have no response.

08/16/2005 13:20:23   Yes. Just like it is for any company. Understanding geographical, industry or other risks (as highlighted by proper segment reporting) may be even more important in understanding the risk of a smaller company. It would be foolish to exempt small companies from this requirement.

08/16/2005 13:25:32   Another Big GAAP/Small GAAP question. Most smaller companies operate in fewer or single segments. To the extent they are in more segments, investors should know the information.

08/16/2005 13:27:00   No. Smaller comapnies are evolving their business and such information doesn't really add anything. Small companies don't manage their business by segments. The business of larger companies is more mature so that segement information would be more meaningful.

08/16/2005 13:30:33   No

08/16/2005 14:08:05   Yes. Investors still want to know how the business is doing.

08/16/2005 14:23:10   Segment information for smaller companies is much more useful to their competitors than anyone else.

08/16/2005 15:15:12   No. As stated previously for our company, at least, the information in total is seldom used.

08/16/2005 16:08:50   Segment information can be very tricky for smaller companies with multiple locations. Without the ability to aggregate information, the company could possibly be divulging competitive information. While great for investors, it would also be great for competitors who would ultimately hurt the company and its investors.

08/16/2005 16:16:04   NA

08/16/2005 16:45:09   Not normally. A small company in very very different businesses should disclose segment information. A small company in similiar segments should not have to. Again, the investor and the company should make the decision.

08/16/2005 18:35:41   I would love to say "No" so we wouldn't have to show the information to our competitors. But I believe the right answer is Yes.

08/16/2005 21:29:07   Uncertain.

08/17/2005 12:28:22   No, generally too small to worry about

08/17/2005 12:36:00   If by this you're referring to reporting on different lines of business, it's not applicable to us and I don't have an opinion.

08/17/2005 12:48:33   Depnds on company.

08/17/2005 18:49:27   This is the wrong question - the right question is is segment information useful to a company's stockholders adn teh answer is, sure, if the segment is material - the rules are good here.

08/17/2005 19:31:08   Segment information is useful for a small company since it gives investors a better picture of the makeup of the business.

08/17/2005 21:27:12   It depends on the diversity of the product lines. The gepgraphic information required is way too complex.

08/17/2005 22:55:14   In my experience, smaller companies are rarely operating in more than one segment.

08/18/2005 08:03:31   Yes, it shows tendency very clearly.

08/19/2005 02:56:12   Rather than seeing changes in the segment reporting, it would make more sense to change the core income statement structure. Most people who follow our stock ignore the income statement and just use the segement reporting because its more meaningful.

08/19/2005 11:44:44   If the entity truly has multiple lines or segments of business it is useful.

08/19/2005 13:49:01   For certain smaller companies the segment data is useful, and for some less so. Segment data importance is dependent on the significance of the data, much the same way as the significance of internal controls varies among companies. A review of the data must be made in order to make an assessment; there is not a ‘one size fits all´ rule that can be applied. However, a requirement to report segment data that compromises a company´s competitive edge is unacceptable.

08/19/2005 14:40:28   Not necessarily.

08/19/2005 17:03:28   It could be depending on the type of business.

08/21/2005 03:34:34   Segment info is less important in smaller companies, which don't have that many segments.

08/21/2005 22:19:50   Yes.

08/22/2005 14:21:23   Yes, because it gives a breakdown of activities that might otherwise be hidden.

08/22/2005 15:20:23   Yes. Even in small companies different divisions behave differently from a financial perspective. The breakdown is useful for investors to understand and estimate future results.

08/22/2005 15:47:02   No.

08/22/2005 17:54:28   Segment information is useless in a small company. It is probably actually negative, since it causes confusion in most cases.

08/22/2005 17:56:59   Yes, so investors can see trends.

08/22/2005 19:27:18   No. It's slicly a small pie too small and hurts the competitive enviroment. Segments should neot be required for companies with under $500 million in revenue.

08/23/2005 00:42:38   this is the one area where it is a competetive liability. information is useful however.

08/23/2005 15:56:30   No opinion. We have only one segment.

08/23/2005 16:06:08   While I think segment information is useful for all sized companies, I think it should not be required for S-B filers.

08/23/2005 16:49:34   In some cases perhaps, but not in most.

08/23/2005 18:10:00   Depends on the maturity of segments.

08/23/2005 21:11:03   no opinion

08/24/2005 10:14:02   Not useful and in fact puts small companies at a competetive disadvantage. The smaller the company the more transparrent the financial statements become to competetors when the business areas are carved into segments.

08/24/2005 12:24:07   current requirements are fine.

08/24/2005 14:30:13   If you have segments, yes. It provides the pieces to understand a business better.

08/24/2005 16:19:27   Subjective question based on the complexity of the organization. Maybe the rules could be amended based for smaller companies.

08/24/2005 16:26:56   The usefulness of segment information for smaller companies is dependent upon individual circumstances, and should not be proscribed uniformly.

08/24/2005 16:54:47   No more so than in large

08/25/2005 15:23:41   N/A

08/25/2005 17:02:43   The information might be useful, but it may place smaller companies at competitive disadvantages in the marketplace.

08/26/2005 12:41:42   I think segment information is useful. The problem with small companies is that it most likely provides competitors with highly useful information. If small companies had the option of discussing on a qualitative basis - this may work.

08/26/2005 13:07:22   No Comment.

08/26/2005 15:31:29   N/A

08/26/2005 16:22:08   Yes.

08/26/2005 17:28:04   It is not useful since in smaller companies there often is not a clear segregation of responsibilities as management and senior personnel may be involed in all aspects of the business.

08/27/2005 11:21:03   Yes. It isn't that hard to keep track of, and it lets investors see proportions of company resources and results between segments. 'Cost vs. benefit' analysis says 'yes' to such reporting.

08/29/2005 07:07:37   Depends on the business.

08/29/2005 10:21:15   We believe it helps us manage our business in-house and we actively look at segment results monthly.

08/29/2005 10:21:25   We believe it helps us manage our business in-house and we actively look at segment results monthly.

08/29/2005 11:21:29   Yes, if applicable. It may give an investor a better view of the company.

08/29/2005 14:18:47   The segment information is as useful for smaller companies as it is for the larger companies. How useful it is, is driven by the manner of presentation. When there are different components to a firm that are managed differently and subject to different economic environments, it´s important for investors to understand the goings-on in those components; whether the whole firm is large or small is irrelevant.

08/29/2005 14:53:30   As a shareholder with a vested interest in the Company my answer is NO. Please explain. I believe that segment information is much more valuable to the Company´s competitors than it is to me as a shareholder of the Company.

08/29/2005 15:31:21   Our company is a small community bank. Segment information would not be useful.

08/29/2005 16:10:53   Somewhat, but at what cost? I have spend almost 45 minutes working on this---I am stopping now to run my company.

08/29/2005 16:20:53   N/A

08/29/2005 17:12:26   We are currently a one bank holding company in just one segment. I would think most small companies would not have a lot of different segments, but it would be another standard where their needs to be a balance between benefits and costs.

08/29/2005 17:36:32   Yes

08/29/2005 19:02:32   Yes it is. That is what you can't get from a large conglomerate that limits understanding of their reports. The investor cannot judge the performance of each part of the business.

08/29/2005 19:05:24   Per SFAS 131, the objective related to disclosure of segment information is to provide information about the different types of business activities in which a company engages and the different economic environments in which it operates to enable users to better understand the company´s performance, its prospects for future net cash flows, and to make more informed judgments regarding the company as a whole. Smaller companies tend to have a more straightforward structure and, as a result, the revenue, profitability, and cash flow drivers are relatively transparent. For most smaller companies, we believe segment information provides little, if any, incremental useful information to users.

08/29/2005 21:00:01   Not for the majority of small biotech companies. Even for other small companies, segment information could be eliminated. As long as the MD&A verbally discussed the segments that the business operates in, the financial information could be eliminated.

08/29/2005 22:40:58   No, it is not useful. Small companies do not have the internal reporting in place for segments, in addition many employees perform multiple functions that cannot be accurately allocated to segments of a small company.

08/30/2005 15:04:16   Segment information is a valuable tool for investors to assess different components of the company especially in smaller companies

08/30/2005 15:07:00   Segment info is useful but perhaps the threshhold for requiring it could be increased.

08/30/2005 16:27:18   Not particularly, most of the larger companies in our segment are diversified multinational concerns that have little in common with a company our size.

08/30/2005 17:08:46   Yes, we believe segment information is useful for investors of smaller companies for the same reasons that segment information is useful for investors of larger companies.

08/30/2005 17:23:36   NA

08/30/2005 18:26:14   Providing segment information has placed our company at a competitive disadvantage because none of our competitors are public companies subject to this disclosure requirement.

08/30/2005 18:48:02   It depends on the company but sometimes yes.

08/30/2005 18:51:48   We believe that the current rules for segment information are useful for smaller companies.

08/30/2005 21:07:56   Yes, exposes volatility

08/30/2005 23:57:28   No. There is no standardized basis for segment report. It is difficult to compare with other companies even in the same industry. Of course, is is better than just an income statement, but not much useful.

08/31/2005 10:19:14   In some instance segment reporting is useful for smaller companies, depending on the mix of the products and services they provide.

08/31/2005 10:21:37   It is detrimental to disclose as competition gains insight.

08/31/2005 14:00:16   Usefulness of segment information depends on the company. Our company is managed via several divisions or operations so we discuss the details of these operations quite extensively in our MD&A. The segment footnote is simply a duplication of information we would provide anyway.

08/31/2005 14:12:37   We believe that segment information is extremely useful to investors of all companies, large and small. Because of the structure of many small companies, it is not uncommon that these companies only operate in a single segment. However, for those that operate in multiple, material segments, these disclosures are often one of the most useful to investors.

08/31/2005 14:25:37   I would not know and could not comment on.

08/31/2005 14:32:46   We do not deal with segment information due to the simple nature of our operations.

08/31/2005 15:19:27   No - potentially risky for small companies in that it forces disclosure of information that could provide other companies with a competitive advantage and insight in the companies business model.

08/31/2005 16:16:33   No comment.

08/31/2005 16:29:59   No, so much from the cost side is allocated that segment income is useless. the present implication being that if a segment is gone then that income would be gone, were as in actuality the revenue is gone but many of the allocated costs remain. The segment info should just be revenue.

08/31/2005 17:16:33   no comment

08/31/2005 18:22:30   Segment information is useful for smaller companies. However, because they are small, typically there is only one segment, and if there are two segments, then one of the segments is really small as compared to information on a larger company and thus is rather meaningless. To illustrate, if a large company has three segments, each of them may be significantly in excess of the size of a small public company, and thus information about each of the large company's segments may be of significantly more interest than information about the small company in total, let alone a segment of the small company that may represent 15% of the small company.

08/31/2005 18:23:08   Depends on the size of the segments. Maybe segment over X% of company are included vs. all segments. It would also depend if the size criteria for small companies changed.

08/31/2005 19:16:05   20. Segment reporting is very detrimental to smaller companies. It gives large competitors far more insight into the small company than will be received by the small company back from the large corporation. As small company, I believe that a higher percentage of our competitors are small private companies, and again the small public company may damage itself in the competitive environment. One other concern is that a number of our competitors are now foreign companies that are far more able to keep competitive information out of the public eye.

08/31/2005 20:55:07   Segment reporting is not all that usefull for a small company. You end up breaking out very small slices(dollar wise) to report. I am sure it provides little or no value to investors.

09/01/2005 00:55:31   N/A

09/01/2005 11:40:19   No, I believe this is more useful in larger companies and the cost to comply is high.

09/01/2005 14:30:54   In certain instances, segment information is a very important tool in small companies. However, these types of disclosures can be can be cost prohibitive. If a company manages its business in segments it generally accounts for them that way and should, from a business perspective, report them that way.

09/01/2005 17:12:34   Yes

09/04/2005 07:42:16   In many cases segment information is too detailed for small companies since the activity is limited in the first place.

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Modified: 10/13/2005