CPA

Thomas Evan Morris

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DIVESTITURES AND CARVE-OUT EXPERIENCE

INDEPENDENT CONSULTANT (2015-Present)

DC Blox (Private)-$600M Debt and Equity Restructuring with Carve-Outs 2023-2025

Diversey (Public, acquired by Solenis)-$3.2B Carve-Out from Sealed Air Corp and Various Divestitures 2018-2019

DIVESTITURES AND CARVE-OUT CLIENTS IN PUBLIC ACCOUNTING (DELOITTE/ARTHUR ANDERSEN)

Verizon Communications, Inc.(Public)

Southern Company (Public)

Cementos Argos, S.A. (Argos U.S.A) (Public)

Medaphis Corporation (Public)

MCI (Public)

Merrill Lynch (Public)

APTEAN (formerly CDC a public corporation)

Crowley Maritime Corporation (Private)

Atlanta Gas & Light Co. (Public)

DIVESTITURES AND CARVE-OUT GAAP ACCOUNTING EXPERIENCE

ASC 205-10 and ASC 205-20 (Presentation of Financial Statements — Discontinued Operations): Governs presentation of a component or group of components as discontinued operations if it represents a strategic shift with a major effect on operations and financial results.

ASC 810 (Consolidation): Covers deconsolidation upon loss of control (ASC 810-10-40), gain/loss recognition, and elimination of intercompany items. Relevant for carve-outs from consolidated subsidiaries.

ASC 805 (Business Combinations), particularly ASC 805-50 (Transactions Between Entities Under Common Control): Provides guidance on historical cost carryover basis in common-control reorganizations before a carve-out (e.g., pushdown or predecessor basis considerations). ASC 805-50-30-5 addresses basis in common-control transfers.

ASC 350 (Intangibles — Goodwill and Other): Allocation and impairment testing of goodwill and indefinite-lived intangibles for the carve-out entity as a standalone reporting unit (e.g., ASC 350-20-35 for impairment, ASC 350-20-40 for disposal of a portion of a reporting unit).

ASC 360 (Property, Plant, and Equipment): Impairment testing and accounting for long-lived assets held for sale or disposal (links to ASC 205-20).

ASC 740 (Income Taxes): Tax allocation methods (e.g., separate-return method) in consolidated groups for carve-out statements.

ASC 220-10-S99-3 (via SAB Topic 1.B.1, codified): Requires reflection of all costs of doing business, including reasonable allocations of shared parent expenses (e.g., overhead, salaries, rent).

ASC 250 (Accounting Changes and Error Corrections): Considerations for materiality and consistency when items immaterial to the parent become material in the carve-out.

ASC 842 (Leases): Attribution or usage charges for shared leased assets.

Key ASC Topics for Divestiture Accounting (Parent Perspective)

ASC 205-20: Discontinued operations classification and presentation (post-tax results and gain/loss on disposal separately from continuing operations). Requires a strategic shift with major effect.

ASC 810-10-40: Deconsolidation accounting — recognize gain/loss based on fair value of consideration, retained interest, and carrying amount of net assets.

ASC 360-10: Impairment and disposal of long-lived assets (held-for-sale classification under ASC 360-10-45 if criteria met).

ASC 805: Determining if the divestiture involves a "business" (inputs + substantive processes + outputs).

ASC 610 (Other Income) or specific revenue topics: For gains/losses on asset disposals not qualifying as a business.

SEC Guidance (Critical for Filings and Often Analogized by Private Entities)

SAB Topic 1.B (Allocation of Expenses...): Codified partly in ASC 220-10-S99-3 — mandates inclusion of all costs of doing business with systematic allocations.

SEC FRM (Financial Reporting Manual-e.g., Sections 2065, 2935): Expectations for Rule 3-05 carve-outs in acquisitions/divestitures, abbreviated statements, and pro forma info (Article 11 of Regulation S-X).

SAB Topic 5.Z.7 (codified in ASC 505-60-S99-1): Spin-off considerations and modifications to legal entity approach.

Rule 3-05 of Regulation S-X (17 CFR § 210.3-05) The special separate financial statement requirements of the SEC for acquired (or to be acquired) businesses

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