United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territorie ...

business law, a forward-looking statement or safe harbor statement is a statement that cannot sustain itself as merely a historical

fact A fact is a datum about one or more aspects of a circumstance, which, if accepted as true and proven true, allows a logical conclusion to be reached on a true–false evaluation. Standard reference works are often used to check facts. Scient ...

. A forward-looking statement predicts,

projects A project is any undertaking, carried out individually or collaboratively and possibly involving research or design, that is carefully planned to achieve a particular goal. An alternative view sees a project managerially as a sequence of even ...

, or uses future events as expectations or possibilities. These statements can often be misleading, as they can be mistaken for factual statements, while they are actually speculation. According to

United States Code In the law of the United States, the Code of Laws of the United States of America (variously abbreviated to Code of Laws of the United States, United States Code, U.S. Code, U.S.C., or USC) is the official compilation and codification of the ...

15 Section 78u-5, a forward-looking statement may include future economic performance, such as revenues or income, plans for future operations, or use of a report written by an outside reviewer.

United States law

Under U.S. law, section 27A of the

Securities Act of 1933 The Securities Act of 1933, also known as the 1933 Act, the Securities Act, the Truth in Securities Act, the Federal Securities Act, and the '33 Act, was enacted by the United States Congress on May 27, 1933, during the Great Depression and after ...

, as amended, and section 21E of the

Securities Exchange Act of 1934 The Securities Exchange Act of 1934 (also called the Exchange Act, '34 Act, or 1934 Act) (, codified at et seq.) is a law governing the secondary trading of securities (stocks, bonds, and debentures) in the United States of America. A landma ...

, as amended, businesses must comply to standards of communication that limit risk factors. These acts were put into place partially to protect investors from ambiguous language, preventing them from making a poorly informed investment decision based on speculative statements. The Private Securities Litigation Reform Act of 1995 provides a " safe harbor" for certain forward-looking statements. Businesses usually include a form of a disclaimer that states that any instance of a forward-looking statement found in their material is only true at the time it was written, and they further claim that they are under no obligation to update such written statements if conditions change or that unexpected occurrences happen to affect the statement afterwards. Such forward-looking statements, however, must be identifiable by the use of certain prescribed words. This act allows companies to make speculative statements based on current market trends or research directions without fear of major repercussion, while ensuring that potential investors are informed of the speculative nature of the statements.

Linguistic perspective

Sentences and

phrase In syntax and grammar, a phrase is a group of words or singular word acting as a grammatical unit. For instance, the English expression "the very happy squirrel" is a noun phrase which contains the adjective phrase "very happy". Phrases can consi ...

s are forward-looking statements when they include any tense from

present The present (or here'' and ''now) is the time that is associated with the events perception, perceived directly and in the first time, not as a recollection (perceived more than once) or a speculation (predicted, hypothesis, uncertain). It is ...

future The future is the time after the past and present. Its arrival is considered inevitable due to the existence of time and the laws of physics. Due to the apparent nature of reality and the unavoidability of the future, everything that currently ...

or similar inflection. Words like "believe", "estimate", "anticipate", "plan", "predict", "may", "hope", "can", "will", "should", "expect", "likely", "is likely to", "intend", "is designed to", "with the intent", "potential", the negative of these words or such other variations thereon or comparable terminology, may indicate forward-looking statements, but their absence does not mean that a statement is not forward-looking.

Examples

Below are some hypothetical examples of forward-looking statements: *Company'' X'' plans on building a new facility in Asia by 2018, expanding our current market share. *We anticipate the value of our company to continue to rise for over the next few years, increasing

dividends A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-in ...

for shareholders. *We predict that our product will revolutionize the healthcare industry, improving the quality of healthcare for millions of patients. An example of a safe harbor disclaimer that is generally given during earnings release of a company is this statement by

Oracle An oracle is a person or agency considered to provide wise and insightful counsel or prophetic predictions, most notably including precognition of the future, inspired by deities. As such, it is a form of divination. Description The word '' ...

:Oracle – Safe Harbor Statement
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"Our discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. Throughout today’s discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-K and Form 10-Q for a more complete discussion of these factors and other risks, particularly under the heading “Risk Factors.” A PDF copy of our press release and financial tables which include a GAAP to non-GAAP reconciliation can be viewed and downloaded on the Oracle Investor Relations website at Oracle.com/investor."

Notes

The Register ''The Register'' is a British technology news website co-founded in 1994 by Mike Magee, John Lettice and Ross Alderson. The online newspaper's masthead sublogo is "''Biting the hand that feeds IT''." Their primary focus is information tec ...

's interpretation of Judge Chandler's decision, "lies...

annot Annot (; oc, Anòt) is a commune in the Alpes-de-Haute-Provence department in the Provence-Alpes-Côte d'Azur region of southeastern France. The inhabitants of the commune are known as ''Annotains'' or ''Annotaines'' The commune has been awa ...

obtain shelter as forward-looking statements

References

{{reflist * Schneider, Carl W.; Dubow, Jay A., "''Forward-looking information - navigating in the safe harbor''", Business Lawyer, August, 1996.

External links

History and legal analysis of forward-looking statements
Communication United States business law