Federal Register, Volume 67 Issue 179 (Monday, September 16, 2002)

[Federal Register Volume 67, Number 179 (Monday, September 16, 2002)]
[Rules and Regulations]
[Pages 58480-58507]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-23072]

[[Page 58479]]

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Part III

Securities and Exchange Commission

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17 CFR Parts 210, 229, 240, and 249

Acceleration of Periodic Report Filing Dates and Disclosure Concerning
Web Site Access to Reports; Final Rule

Federal Register / Vol. 67, No. 179 / Monday, September 16, 2002 /
Rules and Regulations

[[Page 58480]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, 240 and 249

[Release Nos. 33-8128; 34-46464; FR-63; File No. S7-08-02]
RIN 3235-AI33

Acceleration of Periodic Report Filing Dates and Disclosure
Concerning Web Site Access to Reports

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting amendments to our rules and forms to
accelerate the filing of quarterly and annual reports under the
Securities Exchange Act of 1934 by domestic reporting companies that
have a public float of at least $75 million, that have been subject to
the Exchange Act's reporting requirements for at least 12 calendar
months and that previously have filed at least one annual report. The
changes for these accelerated filers will be phased-in over three
years. The annual report deadline will remain 90 days for year one and
change from 90 days to 75 days for year two and from 75 days to 60 days
for year three and thereafter. The quarterly report deadline will
remain 45 days for year one and change from 45 days to 40 days for year
two and from 40 days to 35 days for year three and thereafter. The
phase-in period will begin for accelerated filers with fiscal years
ending on or after December 15, 2002. We also are adopting amendments
to require accelerated filers to disclose in their annual reports where
investors can obtain access to their filings, including whether the
company provides access to its Forms 10-K, 10-Q and 8-K reports on its
Internet website, free of charge, as soon as reasonably practicable
after those reports are electronically filed with or furnished to the
Commission.

DATES: Effective Date: November 15, 2002. Compliance Dates: The phase-
in period for accelerated deadlines of quarterly and annual reports
will begin for reports filed by companies that meet the definition of
``accelerated filer'' as of the end of their first fiscal year ending
on or after December 15, 2002. These accelerated filers must comply
with the new disclosure requirements concerning website access to
reports for their annual reports on Form 10-K to be filed for fiscal
years ending on or after December 15, 2002. Registrants voluntarily may
comply with the new filing deadlines and disclosure requirement before
the compliance dates.

FOR FURTHER INFORMATION CONTACT: Jeffrey J. Minton, Special Counsel, or
Elizabeth M. Murphy, Chief, Office of Rulemaking, at (202) 942-2910,
Division of Corporation Finance, U.S. Securities and Exchange
Commission, 450 Fifth Street, NW., Washington, DC 20549-0312.

SUPPLEMENTARY INFORMATION: We are adopting amendments to Rules 3-01,\1\
3-09 \2\ and 3-12 \3\ of Regulation S-X \4\ and Item 101 \5\ of
Regulation S-K \6\ under the Securities Act of 1933 (``Securities
Act''),\7\ Forms 10-Q \8\ and 10-K \9\ under the Securities Exchange
Act of 1934 (``Exchange Act'') \10\ and Exchange Act Rules 12b-2,\11\
13a-10 \12\ and 15d-10.\13\
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\1\ 17 CFR 210.3-01.
\2\ 17 CFR 210.3-09.
\3\ 17 CFR 210.3-12.
\4\ 17 CFR 210.1-01 et seq.
\5\ 17 CFR 229.101.
\6\ 17 CFR 229.10 et seq.
\7\ 15 U.S.C. 77a et seq.
\8\ 17 CFR 249.308a.
\9\ 17 CFR 249.310.
\10\ 15 U.S.C. 78a et seq.
\11\ 17 CFR 240.12b-2.
\12\ 17 CFR 240.13a-10.
\13\ 17 CFR 240.15d-10.
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Table of Contents

I. Background and Overview of Rule Amendments
A. The Exchange Act Reporting System
B. Proposing Release
C. Final Rule Amendments
1. Phase-In of Accelerated Deadlines
2. Definition of Accelerated Filer
3. Conforming Amendments for Other Commission Filings
4. Disclosure Concerning Website Access to Company Reports
II. Discussion of Amendments
A. Reporting Deadlines for Annual and Quarterly Reports
1. Proposed Rules
2. Comments on the Proposal
3. Final Rules
B. Definition of ``Accelerated Filer''
1. Proposed Rules
2. Comments on the Proposal
3. Final Rules
C. Conforming Amendments
1. Timeliness Requirements in Other Commission Filings
2. Time Allowed to Incorporate Form 10-K Information From
Definitive Proxy or Information Statements
3. Form 10-K Schedules Required by Article 12 of Regulation S-X
4. Financial Statement Filing Requirements in Rule 3-05 of
Regulation S-X and Item 7 of Form 8-K
D. Website Access to Information
1. Proposed Rules
2. Comments on the Proposal
3. Final Rules
III. Paperwork Reduction Act
IV. Cost-Benefit Analysis
V. Consideration of Burden on Competition, and Promotion of
Efficiency, Competition and Capital Formation
VI. Final Regulatory Flexibility Analysis
VII. Update to Codification of Financial Reporting Policies
VIII. Statutory Authority and Text of Rule Amendments

I. Background and Overview of Rule Amendments

A. The Exchange Act Reporting System

The Exchange Act requires public companies to make information
publicly available to investors on an ongoing basis to aid in their
investment and voting decisions.\14\ Issuers that have been subject to
the reporting requirements for a certain period of time also can
incorporate information from their Exchange Act reports into their
registration statements under the Securities Act. Investors purchasing
securities in public offerings therefore also rely on Exchange Act
disclosure.
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\14\ See Sections 13(a) and 15(d) of the Exchange Act [15 U.S.C.
78m(a) and 78o(d)]. The following types of companies are subject to
the obligation to provide information to the secondary markets
through reports filed with the Commission:
A company that has registered a class of equity or debt
securities under Section 12(b) of the Exchange Act [15 U.S.C.
78l(b)] so that the securities can be listed and traded on a
national securities exchange;
A company that has registered a class of equity securities under
Section 12(g)(1) of the Exchange Act [15 U.S.C. 78l(g)(1)] and
Exchange Act Rule 12g-1 [17 CFR 240.12g-1] because it had total
assets of more than $10 million and the class of equity securities
is held by more than 500 record holders as of the last day of the
company's fiscal year (and cannot rely on an exemption from such
registration);
A company that has voluntarily registered a class of equity
securities under Section 12(g) of the Exchange Act;
Under Section 15(d) of the Exchange Act, a company that has
filed a registration statement under the Securities Act that became
effective and has not met the thresholds for suspension of the
reporting requirements; and
Under Exchange Act Rules 12g-3 and 15d-5 [17 CFR 240.12g-3 and
240.15d-5], a company that has succeeded to the obligation of
another reporting company.
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The Commission's rules under the Exchange Act now require
disclosure at quarterly and annual intervals, with specified
significant events reported on a more current basis.\15\ Specifically,
a domestic issuer subject to the Exchange

[[Page 58481]]

Act must, among other obligations, file the following reports: \16\
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\15\ See, for example, Exchange Act Rules 13a-1, 13a-11, 13a-13,
15d-1, 15d-11 and 15d-13 [17 CFR 240.13a-1, 13a-11, 13a-13, 15d-1,
15d-11 and 15d-13]. In addition, Section 409 of the Sarbanes-Oxley
Act of 2002 [Pub. L. 107-204, section 409, 116 Stat. 745 (2002)]
added Section 13(l) of the Exchange Act [17 U.S.C. 78m(l)], which
also requires disclosure on a rapid and current basis of such
additional information concerning material changes in the financial
condition or operations of the issuer as the Commission determines,
by rule, is necessary or useful for the protection of investors and
in the public interest.
\16\ Reporting companies that are foreign private issuers, as
defined in Exchange Act Rule 3b-4(c) [17 CFR 240.3b-4(c)], are
subject to different requirements for periodic reports. They are not
required to file quarterly reports. They file annual reports on Form
20-F [17 CFR 249.220f]. Instead of current reporting on Form 8-K,
foreign issuers provide reports on Form 6-K [17 CFR 249.306].
Certain Canadian issuers may file different reports under the
Multijurisdictional Disclosure System. Foreign government issuers,
as defined in Exchange Act Rule 3b-4(c), also are subject to
different reporting requirements. They file annual reports on Form
18-K [17 CFR 249.318]. Foreign private issuers may elect to file the
forms used by domestic reporting companies. If they do so, they are
subject to the same deadlines as domestic companies.
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[sbull] An annual report on Form 10-K (or Form 10-KSB in the case
of a small business issuer \17\) no later than 90 calendar days after
the end of its fiscal year; \18\
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\17\ The term ``small business issuer'' is defined in Exchange
Act Rule 12b-2 as a U.S. or Canadian issuer with less than $25
million in revenues and public float that is not an investment
company.
\18\ Form 10-K (and Form 10-KSB [17 CFR 249.310b]) provides a
comprehensive overview of the reporting company on an annual basis.
The form currently consists of four parts (Form 10-KSB has three
parts, but the categories of required information are similar). Part
I requires disclosure regarding the company's business, its
properties, legal proceedings and matters submitted to a security
holder vote. Part II requires disclosure regarding the market for
the company's common equity, sales of unregistered securities, the
use of proceeds from recent sales of securities, specified financial
statements and information, management's discussion and analysis of
financial condition and results of operations and quantitative and
qualitative disclosure about market risk. Part III requires
disclosure regarding the company's directors and executive officers,
executive compensation, security ownership and certain relationships
and related party transactions. Part IV requires disclosure of
exhibits, financial statement schedules and a list of current
reports filed on Form 8-K.
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[sbull] Quarterly reports on Form 10-Q (or Form 10-QSB in the case
of a small business issuer) no later than 45 calendar days after the
end of the first three quarters of its fiscal year; \19\ and
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\19\ Form 10-Q (and Form 10-QSB [17 CFR 249.308b]) currently
consists of two parts. Part I requires disclosure of specified
financial statements, management's discussion and analysis of
financial condition and results of operations and quantitative and
qualitative disclosure about market risk. Part II requires
disclosure regarding legal proceedings, changes in securities, sales
of unregistered securities, the use of proceeds from recent sales of
securities, defaults on senior securities, exhibits and a list of
current reports filed on Form 8-K.
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[sbull] Current reports on Form 8-K for a number of specified
events generally within five or 15 days after their occurrence.\20\

\20\ 17 CFR 249.308. These events currently include change in
control of the registrant, the acquisition or disposition of a
significant amount of assets, the bankruptcy or receivership of the
registrant, changes in the registrant's certifying accountant, the
resignation of a member of the registrant's board of directors and
any other event that the registrant deems of significance to
security holders. Item 7 of Form 8-K states that financial
statements and related pro forma financial information required to
be included on Form 8-K when a company acquires a business may be
filed with the initial report or by amendment not later than 60 days
after the date that the initial Form 8-K to report the acquisition
must be filed. See Item 7(a)(3) of Form 8-K. On June 17, 2002, we
proposed adding 11 new items that would require a company to file
Form 8-K, moving two items currently required to be included in
annual and quarterly reports to Form 8-K, amending several existing
Form 8-K disclosure items and shortening the filing deadline for
most items to two business days after the triggering event. See
Release No. 33-8106 (June 17, 2002) [67 FR 42914].
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In addition, a company may be required to file transition reports on
Form 10-K or 10-KSB or Form 10-Q or 10-QSB when it changes its fiscal
year.\21\
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\21\ See Exchange Act Rules 13a-10 and 15d-10.
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B. Proposing Release

In April 2002, we published for comment proposals to shorten the
filing deadlines of quarterly and annual reports for many companies as
a step in modernizing the periodic reporting system and improving the
usefulness of periodic reports to investors.\22\ The annual and
quarterly report deadlines were last changed 32 years ago.\23\ We
proposed accelerating the deadline for annual reports from 90 days to
60 days after the end of the company's fiscal year and accelerating the
deadline for quarterly reports from 45 days to 30 days after the end of
the company's first three fiscal quarters. These proposals would have
applied to companies that met the definition of an ``accelerated
filer'' as of the end of their first fiscal year ending after October
31, 2002. We proposed the definition of an accelerated filer to include
companies that had a public float \24\ of at least $75 million, that
had been reporting for at least 12 months and that previously had filed
at least one annual report.
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\22\ See Release No. 33-8089; 34-45741 (Apr. 12, 2002) [67 FR
19896] (the ``Proposing Release'').
\23\ See Release No. 34-9000 (Oct. 21, 1970) [35 FR 16919] and
Release No. 34-9004 (Oct. 28, 1970) [35 FR 17537].
\24\ Public float is the aggregate market value of a company's
outstanding voting and non-voting common equity (i.e., market
capitalization) minus the value of common equity held by affiliates
of the company. Public float also is one of the key determinants for
eligibility for short-form registration under the Securities Act
(Form S-3 [17 CFR 239.13] and Form F-3 [17 CFR 239.33]).
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We also proposed to require a company subject to these accelerated
filing deadlines to disclose in its annual report on Form 10-K where
investors can obtain timely access to company filings, including
whether the company provides access to its Forms 10-K, 10-Q and 8-K
reports on its Internet website, free of charge, as soon as reasonably
practicable after, and in any event on the same day as, these reports
are electronically filed with or furnished to the Commission.\25\ Under
the proposals, a company that did not provide website access in this
manner would have been required to disclose why it did not do so and
where else investors could access these filings electronically
immediately upon filing. The company also would be required to disclose
its website address, if it has one.
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\25\ Even if a company chooses not to make its reports available
on its website, investors still would be able to access information
about the company through our EDGAR system. A company's posting of
its reports on its website is not a substitute for filing documents
with the Commission. EDGAR is an acronym for the Electronic Data
Gathering, Analysis and Retrieval system.
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We received responses to our proposals from 305 commenters.\26\ 302
commented on the acceleration of periodic report deadlines. Generally,
these commenters fell into two groups. The first group (20 commenters)
represented primarily investors, institutional investors and other
users of company reports who supported the proposals and our objective
to provide investors with more timely access to company filings. The
second group (282 commenters) represented primarily companies, business
associations, law firms and accounting firms who opposed the extent of
acceleration and length of transition period proposed because, in their
view, preparing reports in the proposed timeframes would be too
burdensome and could result in less accurate filings. However, many
offered alternatives with longer transition periods or filing deadlines
or alternative measures to limit the number of accelerated filers. Most
of the 141 commenters expressing a view on the proposals concerning
website access supported them, although some suggested refinements.
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\26\ The public comments we received, and a summary of the
comments prepared by our staff (the ``Comment Summary''), can be
reviewed in our Public Reference Room at 450 Fifth Street, NW.,
Washington, DC 20549, in File No. S7-08-02. Public comments
submitted by electronic mail and the Comment Summary also are
available on our website, www.sec.gov.
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C. Final Rule Amendments

We have considered the commenters' views and have modified the
proposed amendments to reflect these comments. A summary of the final
rules follows:
1. Phase-In of Accelerated Deadlines
Commenters representing investors, investor groups and other users
of financial information favored receiving reports within a shortened
timeframe. Most of the commenters who objected to the proposals
believed that the

[[Page 58482]]

proposals were too aggressive in terms of the extent of acceleration
and the speed with which we expected companies to begin complying with
accelerated deadlines. These commenters offered alternatives to reduce
the potential costs and burden to registrants and a possible
inadvertent negative impact on disclosure quality. Also, while comments
were mixed, the majority of commenters addressing the issue believed it
would be more difficult to accelerate filing of the quarterly report
than the annual report.
As we stated in our Proposing Release, in establishing the
appropriate timeframes for filing periodic reports, we must balance the
market's need for information with the time companies need to prepare
that information without undue burden. Accordingly, in response to
comments, we are phasing-in accelerated deadlines over a three year
period, with no change in deadlines for the first year and a less
extensive ultimate acceleration of the quarterly report deadline. For
companies that meet our revised definition of accelerated filer as of
the end of their first fiscal year ending on or after December 15,
2002, the annual report deadline will remain 90 days for year one and
will then be reduced 15 days per year over two years to 60 days. The
quarterly report deadline for these filers will remain 45 days for year
one and will then be reduced five days per year over two years to 35
days. We also are making conforming amendments to transition reports
filed by accelerated filers. These changes are summarized in the
following table:

------------------------------------------------------------------------
Form 10- Form 10-
K Q
deadline deadline
(days (days
For fiscal years ending on or after after after
fiscal fiscal
year quarter
end) end)
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December 15, 2002................................... 90 45
December 15, 2003................................... 75 45
December 15, 2004................................... 60 40
December 15, 2005................................... 60 35
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2. Definition of Accelerated Filer
Comments were mixed on the proposed definition of accelerated
filer. Several commenters believed all public companies should be
subject to the same filing deadlines, regardless of a company's size or
experience in preparing filings. Other commenters agreed with the
notion of excluding smaller companies that may not have the necessary
resources and infrastructure to report on an accelerated basis.
Comments also were somewhat mixed on the proposed use of public float
as a method to differentiate between companies. Several commenters
thought the $75 million public float threshold was too low.
After evaluating the comments, we are adopting the proposals
substantially as proposed with some minor clarifications. Under the
final rules, accelerated deadlines will apply to a company after it
first meets the following conditions as of the end of it fiscal year:
[sbull] Its common equity public float was $75 million or more as
of the last business day of its most recently completed second fiscal
quarter;
[sbull] The company has been subject to the reporting requirements
of Section 13(a) or 15(d) of the Exchange Act for a period of at least
12 calendar months;
[sbull] The company has previously filed at least one annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act; and
[sbull] The company is not eligible to use Forms 10-KSB and 10-QSB.
While we agree that there would be benefits from accelerating
deadlines for all companies, we must balance the market's need for
information with the ability of companies to prepare that information
without undue burden. We are adopting the reporting history
requirements and the $75 million public float threshold substantially
as proposed, although we changed the determination date for the public
float requirement to give companies more time to prepare for
accelerated reporting. We believe that a public float test serves as a
reasonable measure of size and market interest. A one-year reporting
history requirement and a $75 million threshold excludes nearly half of
all publicly traded companies from the category of accelerated filers.
These requirements are based primarily on the current eligibility
requirements for short-form registration and ``shelf registration.''
\27\ Further, we believe the adoption of a three-year phase-in period
for accelerating deadlines and a less extensive acceleration of the
quarterly report deadline militates against the need to raise the
threshold.
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\27\ ``Shelf registration'' is the commonly used term for
delayed offerings under Securities Act Rule 415 [17 CFR 230.415].
Rule 415 permits offerings to be delayed until some point determined
by the registrant after effectiveness of the relevant registration
statement.
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3. Conforming Amendments for Other Commission Filings
In the Proposing Release, we requested comment on several possible
conforming revisions to other Commission rules as a result of the
proposals. Based on the responses we received, we are making several
conforming amendments. We are adopting amendments to Regulation S-X to
conform the timeliness requirements for the inclusion of financial
information in other Commission filings, such as Securities Act and
Exchange Act registration statements and proxy statements and
information statements under Section 14 of the Exchange Act.\28\ Under
the conforming amendments, financial information included in these
documents still will be required to be at least as current as financial
information filed under the Exchange Act. However, in response to the
concerns of commenters, separate financial statements of subsidiaries
not consolidated and 50% or less owned persons required by Rule 3-09 of
Regulation S-X will not be accelerated for inclusion in a company's
annual report on Form 10-K if the subsidiary or 50% or less owned
person is not an accelerated filer. Companies will be able to file
these financial statements by amendment within the existing time
periods.\29\ We also are adopting as proposed conforming amendments to
maintain an extra 30 days for companies to file schedules required by
Article 12 of Regulation S-X \30\ as an amendment to their annual
report on Form 10-K, if needed.
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\28\ 15 U.S.C. 77n.
\29\ See revisions to 17 CFR 210.3-09(b).
\30\ 17 CFR 210.12-01 et seq.
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As proposed, we are not shortening the period of time companies
have to file their definitive proxy or information statements to allow
the incorporation by reference of information required by Part III of
Form 10-K. We also are not making conforming revisions to the financial
statement filing requirements in Rule 3-05 of Regulation S-X \31\ and
Item 7 of Form 8-K for financial statements of businesses acquired.
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\31\ 17 CFR 210.3-05.
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4. Disclosure Concerning Web Site Access to Company Reports
The vast majority of commenters--representing investors, investor
groups, companies and professional associations--supported the
proposals that would require disclosure concerning website access to
company reports. Accordingly, we are adopting the disclosure
requirement substantially as proposed with minor modifications. Since
the Proposing Release, we have arranged for real-time access to
companies' electronically filed periodic reports through our Internet
website.\32\

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Elimination of the 24-hour delay in accessing EDGAR reports on our
website substantially facilitates provision by companies of free, real-
time website access to their reports by hyperlinking to our website. We
also have eliminated two of the proposed disclosure elements to
minimize the amount of disclosure required.
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\32\ See Press Release No. 2002-75 (May 30, 2002).
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As adopted, the amendments require accelerated filers to disclose
the following in their annual reports on Form 10-K beginning with
reports for fiscal years ending on or after December 15, 2002:
[sbull] The company's website address, if it has one;
[sbull] Whether the company makes available free of charge on or
through its website, if it has one, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all
amendments to those reports as soon as reasonably practicable after
such material is electronically filed with or furnished to the
Commission;
[sbull] If the company does not make its filings available in this
manner, the reasons it does not do so (including, where applicable,
that it does not have an Internet website); and
[sbull] If the company does not make its filings available in this
manner, whether the company voluntarily will provide electronic or
paper copies of its filings free of charge upon request.

II. Discussion of Amendments

A. Reporting Deadlines for Annual and Quarterly Reports

1. Proposed Rules
The proposed rules would have shortened the filing due date of
annual reports from 90 days to 60 days after the end of a company's
fiscal year and the filing due date of quarterly reports on Form 10-Q
from 45 days to 30 days after the end of a company's first three fiscal
quarters for companies that met our proposed definition of
``accelerated filer.'' \33\ We proposed similar conforming amendments
for transition reports filed on Forms 10-K and 10-Q by an accelerated
filer when it changes its fiscal year.
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\33\ As mentioned in the Proposing Release, the Commission
previously had requested comment as to whether it should shorten the
due dates for quarterly and annual reports for all issuers. See
Release No. 33-7606A (Nov. 13, 1998) [63 FR 67174]. Comments
received on that release are available through our Public Reference
Room under File No. S7-30-98.
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As discussed in the Proposing Release, we believe that periodic
reports contain valuable information for investors. While quarterly and
annual reports at present generally reflect historical information, a
lengthy delay before that information becomes available makes the
information less valuable to investors. While the specific disclosure
required in periodic reports has evolved over the past 30 years, and
the integrated disclosure system has placed added emphasis on Exchange
Act reporting, the basic structure and timeframes that were established
in 1970 remain in place today.
The more extensive information in periodic reports is evaluated by
investors and particularly analysts and institutional investors as a
baseline for the incremental disclosures made by a company. These
reports also contain more detailed information that is essential to
conduct comparative analyses, as this information is often not
contained in earnings releases or other incremental disclosures.
Moreover, the information in Exchange Act reports, due to its required
nature and the liability to which it is subject, provides a
verification function against other statements made by the company in
press releases and other public announcements. Investors and other
users of the reports can judge previous informal statements by the
company against the more extensive and mandated disclosure provided in
the reports that have been reviewed by independent public accountants
and other advisors.\34\ Accelerating the availability of this
information will enable this verification to occur at an earlier point
in time. Accelerating the availability of these reports also may
increase the relevance of the reports, as the timeliness of information
has considerable value to investors and the markets.
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\34\ In addition, the information in these reports must now be
certified by the principal executive officer and principal financial
officer of the company. See Sections 302 and 906 of the Sarbanes-
Oxley Act of 2002 [Pub. L. 107-204, sections 302 and 906, 116 Stat.
745 (2002)].
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In addition, many public companies issue press releases to announce
quarterly and annual results well before they file their reports with
us. These earnings announcements reflect the importance of financial
information and investors' demand for it at the earliest possible time.
Assuming that companies are collecting and evaluating information
before they issue these announcements, the availability of this
information also suggests that much of the process involved in
preparing the financial information contained in periodic reports is
substantially complete. However, these earnings announcements
themselves are generally less complete in their disclosure than
quarterly or annual reports, and they can emphasize information that is
less prominent in quarterly or annual reports.\35\ Investors often must
wait for the periodic reports to receive financial statements and the
accompanying notes prepared in accordance with generally accepted
accounting principles, management's discussion and analysis, or MD&A,
and other vitally important financial disclosures. These additional
disclosures increase transparency for investors.
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\35\ See Release No. 33-8039 (Dec. 4, 2001) [66 FR 63731]. In
addition, Section 401(b) of the Sarbanes-Oxley Act of 2002 [Pub. L.
107-204, section 401(b), 116 Stat. 745 (2002)] directs the
Commission to issue final rules providing that pro forma financial
information included in any periodic or other report, or in any
public disclosure or press or other release, shall be presented in a
manner that reconciles it with the financial condition and results
of operations of the issuer under generally accepted accounting
principles.
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In establishing the appropriate timeframes for filing periodic
reports, however, we must balance the market's need for information
with the time companies need to prepare that information without undue
burden. Significant technological advances over the last three decades
have both increased the market's demand for more timely corporate
disclosure and the ability of companies to capture, process and
disseminate this information. However, we acknowledge that, while the
deadlines for filing periodic reports have not changed in over 30
years, the disclosure requirements have changed and some companies,
particularly those with widespread operations, face additional
complexities in today's environment. Not all companies, particularly
small and unseasoned companies, may have the resources and
infrastructure in place to prepare their reports on a shorter timeframe
without undue burden or expense. Our amendments must speed the flow of
information to investors without sacrificing accuracy or completeness
or imposing undue burden and expense on registrants.
2. Comments on the Proposal
We received responses from 302 commenters on the proposals to
accelerate periodic report deadlines. Generally, these commenters fell
into two groups. The first group (20 commenters) represented primarily
investors, institutional investors and financial analysts who supported
the proposals and our objective to provide investors with more timely
access to company filings. The second group (282 commenters)
represented primarily companies, business associations, law firms and
accounting firms who

[[Page 58484]]

opposed the extent of acceleration and transition period proposed
because, in their view, preparing reports in the proposed timeframes
would be too burdensome and could result in less accurate filings. Most
of these commenters believed that any incremental benefit from the
speed and extent of acceleration proposed was insufficient to warrant
the added burdens on registrants and the risk of diminished disclosure
quality, although these commenters generally did not analyze the
benefits from the perspective of users of the reports.
Many commenters representing investors, users of financial
information and several companies believed that shortening deadlines
will improve the delivery and flow of reliable information to investors
and capital markets and assist in the efficient operation of the
markets.\36\ These commenters emphasized the importance of the
extensive information in periodic reports and investors' demand for it
at the earliest possible time.\37\ Several other companies, accounting
firms and professional associations agreed in concept that shortening
due dates would improve the flow of information, but believed the due
dates should reflect concerns about the quality of information to be
filed.\38\ A few companies, law firms and business organizations,
however, believed that existing deadlines and market practices are
sufficient to satisfy investors' needs.\39\ These commenters did not
think a significant benefit would result from shortening deadlines, but
also generally did not attempt to address the question of possible
benefits from the perspective of users of the reports.
---------------------------------------------------------------------------

\36\ See, for example, the Letters of the American Federal of
Labor and Congress of Industrial Organizations (``AFL-CIO'');
Association of Investment Management and Research (``AIMR''); AOL
Time Warner Inc.; Adrienne Randle Bond; Corporate Communications
Broadcast Network (``CCBN''); Council of Institutional Investors
(``CII''); Comcast Corporation; CSX Corporation; Delphi Corporation;
The Dow Chemical Company; EDGAR Online Inc.; Financial Executives
Institute (``FEI''); IMC Global, Inc.; Maverick Capital Ltd.;
McDonald's, Inc.; PepsiCo, Inc.; Pfizer Inc.; Pharmacia Corporation;
SBC Communications Inc.; Scott H. Schulke; and Teachers Insurance
and Annuity Association of America--College Retirement and Equities
Fund (``TIAA-CREF''). In addition, one commenter provided the
results of an unpublished study that argued that there is
statistically reliable evidence of an investor response to periodic
reports. See the Letter of Paul A. Griffin.
\37\ In addition, according to a web-based survey on The Motley
Fool's website, 67% of the 1,391 respondents thought that faster
information was important to them. See http://www.fool.com/Community/PollingAllFools/pollingallfoolsview.asp?questiondate=5%2F9%2F2002+12%3A45%3A29+PM.
\38\ See, for example, the Letters of the American Electric
Power; American Institute of Certified Public Accountants
(``AICPA''); BDO Seidman, LLP; The Coca-Cola Company; Computer
Sciences Corporation; Fidelity Management & Research Company;
Investment Company Institute; J.P. Morgan Chase & Co.; KPMG LLP;
PG&E Corporation; Sidley Austin Brown & Wood LLP (``Sidley''); and
Toys R Us, Inc.
\39\ See, for example, the Letters of the American Bar
Association (``ABA''); AFLAC Incorporated; the Association of the
Bar of the City of New York (``NYCBA''); BioReliance Corporation;
Compass Bankshares, Inc.; Commercial Federal Corporation; Emerson
Electric Co.; Greenberg Traurig, P.A.; HealthSouth Corporation;
Kellogg Company; Kimball International, Inc.; and SCANA Corporation.
---------------------------------------------------------------------------

While some companies commented that they could or already comply
with the proposal without undue burden,\40\ the group that objected to
the proposal raised several common concerns over the extent of
acceleration and transition period proposed. The most common concern
was that the proposed deadlines would negatively affect the quality and
accuracy of reports.\41\ According to one professional association,
two-thirds of its survey respondents expected a reduction in the
precision of reported information under the original proposals.\42\
Many commenters thought the proposals were contrary to other
initiatives that the Commission has undertaken to increase the quantity
and quality of company disclosure. Many believed that focusing on and
improving accuracy and quality should be the objective, not speed.
---------------------------------------------------------------------------

\40\ See, for example, the Letters of Delphi Corporation; The
Dow Chemical Company; Microsoft Corporation; Siebel Systems, Inc.;
TIAA-CREF; United Technologies Corporation; and V. I. Technologies,
Inc.
\41\ See, for example, the Letters of the ABA; American
Corporate Counsel Association (``ACCA''); Association of Financial
Professionals (``AFP''); American Insurance Association (``AIA'');
AICPA; American Society of Corporate Secretaries (``ASCS''); Ashland
Inc.; AT&T Corp.; BDO Seidman, LLP; the Business Roundtable; The
Chubb Corporation; Deloitte & Touche LLP; Dell Computer Corporation;
Ernst & Young LLP; Eli Lilly and Company; Financial Institutions
Accounting Committee (``FIAC''); Grant Thornton LLP; Joseph A.
Grundfest; H&R Block, Inc.; Halliburton Company; HealthSouth
Corporation; Kellogg Company; KPMG LLP; Liberty Media Corporation;
Merck & Co., Inc.; New York State Bar Association (``NYSBA'');
NYCBA; Papa John's International, Inc.; PepsiCo, Inc.;
PricewaterhouseCoopers LLP; Securities Industry Association
(``SIA''); Ronald S. Stowell; Sullivan & Cromwell; SCANA
Corporation; Shearman & Sterling; Sidley; Sotheby's Holdings, Inc.;
Washington Mutual, Inc.; The Williams Companies, Inc.; and Kathryn
J. Wilson.
\42\ See the Letter of the ASCS.
---------------------------------------------------------------------------

\43\ See, for example, the Letters of the ABA; American Counsel
of Life Insurers (``ACLI''); ACCA; AFP; AICPA; ASCS; AT&T Corp.; BDO
Seidman, LLP; The Bank of New York Company, Inc.; The Chubb
Corporation; The Coca-Cola Company; Comcast Corporation; Deloitte &
Touche LLP; Ernst & Young LLP; Eli Lilly and Company; FIAC; Grant
Thornton LLP; Greenberg Traurig, P.A.; Joseph A. Grundfest;
HealthSouth Corporation; KPMG LLP; Liberty Media Corporation; Simon
M. Lorne; Marathon Oil Corporation; Merck & Co., Inc.; McGuireWoods
LLP; NYCBA; NYSBA; Papa John's International, Inc.; PepsiCo, Inc.;
PG&E Corporation; Pharmacia Corporation; PricewaterhouseCoopers LLP;
Reed Smith LLP; Sullivan & Cromwell; SCANA Corporation; Shearman &
Sterling; SIA; Sidley; Sotheby's Holdings, Inc.; Washington Mutual,
Inc.; and The Williams Companies, Inc.
\44\ See Release No. 34-46079 (June 14, 2002) [67 FR 41877];
Release No. 34-46300 (Aug. 2, 2002) [67 FR 51508]; Release No. 33-
8124 (Aug. 29, 2002); and Sections 302, 404 and 906 of the Sarbanes-
Oxley Act of 2002 [Pub. L. No. 107-204, Sec. Sec. 302, 404 and 906,
116 Stat. 745 (2002)].
---------------------------------------------------------------------------

A third concern was that advances in technology over the past 30
years have been largely offset by increases in accounting and
disclosure requirements.\45\ Business operations have also become
increasingly global and complex, further complicating report
preparation. These commenters argued that technological advances that
have allowed companies to generate earnings results quickly in an
earnings release do not address the additional analysis necessary to
prepare periodic reports. Processes and systems would need to be
changed to report on an accelerated basis.
---------------------------------------------------------------------------

\45\ See, for example, the Letters of the ABA; ACLI; ACCA;
AICPA; ASCS; AT&T Corp.; BDO Seidman, LLP; The Bank of New York
Company, Inc.; the Business Roundtable; The Coca-Cola Company;
Comcast Corporation; Deloitte & Touche LLP; Ernst & Young LLP; Eli
Lilly and Company; FIAC; Grant Thornton LLP; Greenberg Traurig,
P.A.; Joseph A. Grundfest; H&R Block, Inc.; HealthSouth Corporation;
Institute of Management Accountants; KPMG LLP; Liberty Media
Corporation; Helen W. Melman; NYCBA; NYSBA; Papa John's
International, Inc.; PepsiCo, Inc.; PG&E Corporation;
PricewaterhouseCoopers LLP; Sullivan & Cromwell; SBC Communications
Inc.; SIA; Sidley; The Southern Company; Sun Trust Banks, Inc.;
Washington Mutual, Inc.; and The Williams Companies, Inc.
---------------------------------------------------------------------------

Commenters objecting to the original proposals also were concerned
that

[[Page 58485]]

companies would face an increased burden in preparing reports,
particularly with respect to increased costs and audit fees. While a
few commenters believed that the original proposals would not have a
significant adverse effect on the cost of preparing reports,\46\ most
who addressed the subject mentioned that the original proposals would
result in increased costs.\47\ Many commenters outlined their process
of preparing reports to demonstrate the difficulties of accelerating
the process.\48\ Several commenters provided detailed timelines. The
particular steps and timing varied depending on the individual company,
and not all companies appear to be at the same level of technological
sophistication and staffing for preparing reports. Two professional
associations noted that there are no current best practices for
preparing reports.\49\ As a result, the few cost estimates received
varied widely, and many commenters were unable to provide estimates.
One company believed it was not possible to put a dollar value on such
costs, as it depends on the quality and flexibility of each
registrant's present systems, processes and staff.\50\ According to one
professional association that surveyed its members, 52% of its survey
respondents reported that they expected costs to increase in order to
comply with the original proposals.\51\ Forty-five percent of
respondents indicated they would have to hire additional staff, and 27%
of respondents indicated they would have to buy or develop additional
systems. Other commenters were concerned that the original proposals
would result in increased audit fees, particularly for companies with a
calendar fiscal year-end, given a compression in the amount of time
available for auditors to complete their work for these companies.
---------------------------------------------------------------------------

\46\ See, for example, the Letters of the AFL-CIO; AIMR; Delphi
Corporation; The Dow Chemical Company; and TIAA-CREF.
\47\ See, for example, the Letters of the ABA; ACLI; AFP;
American Bankers Association; The Allstate Corporation; Deloitte &
Touche LLP; Dollar Tree Stores, Inc.; Ernst & Young LLP; Halliburton
Company; HealthSouth Corporation; KPMG LLP; National Association of
Real Estate Companies (``NAREC''); National Association of Real
Estate Investment Trusts (``NAREIT''); NYCBA; PricewaterhouseCoopers
LLP; Southern Union Company; Ronald S. Stowell; and UnionBanCal
Corporation.
\48\ See, for example, the Letters of the ACCA; ASCS;
BioReliance Corporation; Community Health Systems, Inc.;
Constellation Energy Group, Inc.; Dean Foods Company; HealthSouth
Corporation; Merrill Lynch & Co., Inc.; Nucor Corporation;
Technitrol, Inc.; Veritas Software Corporation; and Zygo
Corporation.
\49\ See the Letters of the ASCS and the Business Roundtable.
\50\ See the Letter of American Electric Power.
\51\ See the Letter of the ASCS.
---------------------------------------------------------------------------

Objecting commenters mentioned additional concerns over the
original proposals, such as an increased need to use estimates to
prepare reports \52\ or an increased risk of amendments or restatements
because of rushed preparation.\53\ Several commenters were especially
concerned about accelerating deadlines now given recent events with
Arthur Andersen LLP.\54\ While comments were mixed, many commenters
said that while most audit and review work is substantially complete
before the earnings release or the proposed deadlines, the process of
preparing reports, including the financial statements and footnotes, is
not.\55\ However, other commenters noted that the audit and review
process is far from complete by the time a company issues an earnings
release and little, if any, assurance can be ascribed to the publicly
disclosed results.\56\ While some commenters prepare their reports
concurrently with the earnings release, most described the process as a
series of sequential steps where the company first closes its financial
books, then prepares and releases its earnings release and then turns
its attention to the periodic reports. Some companies would need to
revise their internal processes to prepare their reports on a more
concurrent basis with the earnings release. Several companies expressed
concern that the proposals would be difficult for companies that
operate on a decentralized basis with many subsidiaries and operations
to consolidate, especially when the subsidiaries and operations are
located worldwide or in emerging markets.\57\
---------------------------------------------------------------------------

\52\ See, for example, the ABA; ACLI; AFLAC Incorporated;
BioReliance Corporation; The Bank of New York Company, Inc.;
ChevronTexaco Corporation; The Chubb Corporation; Crescent Real
Estate Equities Company; Dean Foods Company; Deloitte & Touche LLP;
Ernst & Young LLP; HealthSouth Corporation; J.C. Penney Company,
Inc.; Mercury General Corporation; NAREC; NAREIT;
PricewaterhouseCoopers LLP; and Washington Mutual, Inc.
\53\ See, for example, the Letters of the ABA; AFLAC
Incorporated; Cleary, Gottlieb, Steen & Hamilton; Halliburton
Company; J.C. Penney Company, Inc.; Jones & Keller, P.C.; Perkins
Coie LLP; PG&E Corporation; PricewaterhouseCoopers LLP; Sidley; and
UnionBanCal Corporation.
\54\ See, for example, the Letters of Brown-Forman Corporation;
Caremark Rx, Inc.; Deloitte & Touche LLP; Joseph A. Grundfest; KPMG
LLP; Liberty Media Corporation; NYCBA; PricewaterhouseCoopers LLP;
and XTO Energy, Inc.
\55\ See, for example, the Letters of the ACCA; ASCS; The Bank
of New York Company, Inc.; Cleary, Gottlieb, Steen & Hamilton;
Clifford Chance Rogers & Wells LLP; Crowe, Chizek and Company LLP;
Greenberg Traurig, P.A.; Halliburton Company; J.P. Morgan Chase &
Co.; Mellon Financial Corporation; PepsiCo, Inc.; Pfizer Inc.; SCANA
Corporation; Shearman & Sterling; Southern Union Company; and
Technitrol, Inc.
\56\ See, for example, the Letters of BDO Seidman, LLP; Ernst &
Young LLP; The Great Atlantic and Pacific Tea Company, Inc.;
HealthSouth Corporation; KPMG LLP; Merrill Lynch & Co., Inc.;
PricewaterhouseCoopers LLP; The Southern Company; and SunTrust
Banks, Inc. We are surprised and concerned by these assertions given
the importance of these announcements to investors and markets and
are considering their implications.
\57\ See, for example, the Letters of the ABA; AICPA; BDO
Seidman, LLP; the Business Roundtable; ChevronTexaco Corporation;
The Coca-Cola Company; Dean Foods Company; Deloitte & Touche LLP;
Eli Lilly and Company; Grant Thornton LLP; HealthSouth Corporation;
KPMG LLP; Marathon Oil Corporation; National Investor Relations
Institute (``NIRI''); Perkins Coie LLP; PricewaterhouseCoopers LLP;
Reed Smith LLP; Shearman & Sterling; Sidley; Southern Union Company;
and Western Wireless Corporation.
---------------------------------------------------------------------------

Slightly less than half of those objecting to the proposals (129
commenters) did not think any acceleration of deadlines was
warranted.\58\ However, slightly more than half of those objecting (153
commenters) objected because they believed the Commission was too
aggressive in its proposal.\59\ Many of these commenters generally
supported the Commission's objective to provide investors with more
timely access to company information and offered alternatives to reduce
the potential costs and burden to registrants and any negative impact
on disclosure quality. These alternatives fell roughly into three
categories:
---------------------------------------------------------------------------

\58\ See the Comment Summary.
\59\ Id.
---------------------------------------------------------------------------

[sbull] A more gradual phase-in or transition period than that
proposed (e.g., reducing deadlines by a set number of days per year
over several years or delaying the effective date of accelerated filing
deadlines).\60\
---------------------------------------------------------------------------

\60\ See, for example, the Letters of Abbott Laboratories; ACLI;
AICPA; AOL Time Warner Inc.; ASCS; the Business Roundtable; Cabot
Corporation; Cleary, Gottlieb, Steen & Hamilton; Deloitte & Touche
LLP; Ernst & Young LLP; Joseph A. Grundfest; Halliburton Company;
KPMG LLP; NYSBA; Pfizer Inc.; PricewaterhouseCoopers LLP; Sullivan &
Cromwell; SIA; Sidley; and The Williams Companies, Inc.
---------------------------------------------------------------------------

[sbull] Accelerating deadlines less extensively (e.g., 75 days for
the annual report and 35 days for the quarterly report) or accelerating
only the annual report deadline.\61\ In this regard, while comments
were mixed, the majority of commenters addressing the issue believed it
would be more difficult to

[[Page 58486]]

accelerate the quarterly report than the annual report.\62\
---------------------------------------------------------------------------

\61\ See, for example, the Letters of the ACCA; American Bankers
Association; The Coca-Cola Company; Eli Lilly and Company; Harrah's
Entertainment, Inc.; Lamar Advertising Company; Merck & Co., Inc.;
Merrill Lynch & Co., Inc.; Michael McDonald; NAREC; NAREIT; NYCBA;
Scholastic Inc.; Southern Union Company; Toys R Us, Inc.; TXU Corp.;
UST Inc.; and Washington Mutual, Inc.
\62\ Compare, for example, the Letters of AFLAC Incorporated;
Bank of America; Capital One Financial Corporation; CH Energy Group,
Inc.; Clancy Systems International, Inc.; Constellation Energy
Group, Inc.; Dollar Tree Stores, Inc.; FEI; Jefferson-Pilot
Corporation; Lamar Advertising Company; Phillips Petroleum Company;
The Southern Company; UnionBanCal Corporation and U.S. Bancorp with
the Letters of American Electric Power; AOL Time Warner Inc.;
Clifford Chance Rogers & Wells LLP; Long Aldridge & Norman LLP and
United States Steel Corporation.
---------------------------------------------------------------------------

[sbull] Linking the deadline for filing reports to a company's
public announcement of earnings (e.g., the earlier of the existing
deadlines or some period of time after a company's issuance of an
earnings release).\63\
---------------------------------------------------------------------------

\63\ See, for example, the Letters of the ABA; ACLI; AICPA; BDO
Seidman, LLP; Comcast Corporation; Ernst & Young LLP; Grant Thornton
LLP; Julia A. Harper; Hibernia Corporation; KPMG LLP; The Pepsi
Bottling Group; PepsiCo, Inc.; PG&E Corporation;
PricewaterhouseCoopers LLP; Stewart Information Services
Corporation; UnumProvident Corporation; and Wild Oats Markets, Inc.
---------------------------------------------------------------------------

In addition to the comments received on the Proposing Release,
earlier this year we hosted an investor summit in Washington, DC.\64\
The summit offered individual investors nationwide an opportunity to
ask questions and offer comments about our regulatory agenda. Most
participants at the investor summit mentioned their support for our
proposals to accelerate the delivery of periodic reports to
investors.\65\
---------------------------------------------------------------------------

\64\ See SEC Press Release No. 2002-59 (May 1, 2002). The summit
was held on May 8, 2002. Archived broadcasts of the investor summit
are available to the public on our Internet website at www.sec.gov.
\65\ See, for example, Joseph D. Borg, Bill Mann and Damon
Silvers, Remarks at the Investor Summit in Washington, DC (May 8,
2002) (archived broadcast available at www.sec.gov).
---------------------------------------------------------------------------

As mentioned in the Proposing Release, we also hosted roundtable
discussions in New York, Washington, DC, and Chicago earlier this year
at which investor relations professionals, corporate executives,
academics and experienced legal counsel discussed financial disclosure
and auditor oversight.\66\ Several participants at these roundtables
indicated that reporting within the proposed shortened deadlines was
feasible.\67\ Some participants, however, referred to the comment
letters on our 1998 request for comment on accelerating deadlines,\68\
and were concerned about the ability of companies, and smaller
companies in particular, to report in a shorter timeframe.\69\ They
thought that accelerating deadlines could cause the quality of reports
to diminish.\70\ One participant was concerned that shortened deadlines
may present more problems for quarterly reports than for annual
reports.\71\
---------------------------------------------------------------------------

\66\ See SEC Press Release Nos. 2002-28 (Feb. 22, 2002) and
2002-46 (Mar. 27, 2002). The New York roundtable was held on March
4, 2002. The Washington DC roundtable was held on March 6, 2002. The
Chicago roundtable was held on April 4, 2002. Archived broadcasts of
the roundtables are available to the public on our Internet website
at www.sec.gov.
\67\ See, for example, Richard Carbone and Raymond Groves,
Remarks at the Financial Disclosure and Auditor Oversight Roundtable
in Washington, DC (Mar. 6, 2002) (archived broadcast available at
www.sec.gov).
\68\ See, for example, John White, Remarks at the Financial
Disclosure and Auditor Oversight Roundtable in New York, NY (Mar. 4,
2002) (archived broadcast available at www.sec.gov); and James
Cheek, Remarks at the Financial Disclosure and Auditor Oversight
Roundtable in Washington, DC (Mar. 6, 2002) (archived broadcast
available at www.sec.gov).
\69\ See, for example, Edward Nusbaum, Remarks at the Financial
Disclosure and Auditor Oversight Roundtable in Chicago, IL (Apr. 4,
2002) (archived broadcast available at www.sec.gov).
\70\ See note 68 above.
\71\ See, for example, Phil Livingston, Remarks at the Financial
Disclosure and Auditor Oversight Roundtable in Washington, DC (Mar.
6, 2002) (archived broadcast available at www.sec.gov).
---------------------------------------------------------------------------

3. Final Rules
After careful consideration of the comments received, we are
adopting a phased-in approach of accelerated deadlines, with no change
in deadlines for the first year and a less extensive ultimate
acceleration of the deadline for quarterly reports. Specifically, we
are phasing-in accelerated deadlines for accelerated filers according
to the following schedule:

We also are accelerating the due dates for transition reports by
accelerated filers on Form 10-K and 10-Q on the same schedule. These
conforming changes will ensure that the deadlines for transition
reports remain similar to the deadlines for periodic reports.\72\ We
also are making technical corrections to the codification of financial
reporting policies to reflect our amendments.
---------------------------------------------------------------------------

\72\ See, for example, Release No. 33-6823 (Mar. 13, 1989) [54
FR 10306] (Revising transition report rules to conform their filing
requirements to those for periodic reports).
---------------------------------------------------------------------------

According to the amendments, if a company with a calendar year
fiscal year-end determines it is an accelerated filer as of December
31, 2002 (its first fiscal year ending on or after December 15, 2002),
its annual report on Form 10-K for that fiscal year will continue to
have a 90 day filing deadline and will be due by March 31, 2003.\73\
Each of the Form 10-Q reports for the first three quarters of its 2003
fiscal year will continue to have a 45-day deadline. For example, the
Form 10-Q for the company's first fiscal quarter ending March 31, 2003
will continue to be due by May 15, 2003. The Form 10-K for the fiscal
year ending December 31, 2003 will have a 75-day deadline and will be
due by March 15, 2004. Each of the Form 10-Q reports for the first
three quarters in the 2004 fiscal year will have a 40-day deadline. For
example, the Form 10-Q for the company's first fiscal quarter ending
March 31, 2004 will be due by May 10, 2004. The Form 10-K for the
fiscal year ending December 31, 2004 will have a 60-day deadline and
will be due by March 1, 2005. Each of the Form 10-Q reports for the
first three quarters in the 2005 fiscal year will have a 35-day
deadline. For example, the Form 10-Q for the company's first fiscal
quarter ending March 31, 2005 will be due by May 5, 2005. All
subsequent reports on Form 10-K and 10-Q by the accelerated filer will
be subject to a 60 and 35-day deadline, respectively.
---------------------------------------------------------------------------

\73\ A one-time extension of time to file a particular periodic
report is available under certain circumstances under Exchange Act
Rule 12b-25 [17 CFR 240.12b-25].
---------------------------------------------------------------------------

In establishing this schedule for accelerated deadlines, we agree
with the suggestions of many commenters that appropriate focus should
be directed toward report quality.\74\ We also agree with investors and
other users of financial information that timeliness of information is
important. Increased quality and timeliness, with an appropriate
balance between the two, assures that investors receive the full and
reliable data they deserve at the speed in which they desire it. A
phased-in approach of accelerated deadlines allows a greater transition
period for companies to adjust their procedures and to develop
efficiencies to ensure that the quality and accuracy of reported
information will not be sacrificed. Under a phased-in approach,
companies will have additional time to plan for and adjust their
reporting schedules and processes to ensure that the necessary reviews
will not be compromised. Given the recent enactment of the Sarbanes-
Oxley Act of 2002, a phased-in approach also allows companies to adjust
to significant new changes and requirements in the reporting system. At
the same time, a phased-in approach

[[Page 58487]]

allows investors to begin to experience the benefits of an accelerated
flow of information. A phased-in approach also will provide the
Commission with an opportunity to understand how each incremental
change affects the disclosure process.
---------------------------------------------------------------------------

\74\ For other proposals where we are specifically addressing
the quality and content of information disclosed, see notes 20 and
44 above.
---------------------------------------------------------------------------

A phased-in approach helps to alleviate the immediate impact of any
costs and burdens that may be imposed on certain registrants. While
several commenters indicated that they could report on an accelerated
timeframe today, several major business associations that surveyed
their members reported that adjustment to accelerated deadlines would
be easier with a longer phase-in period.\75\ A longer transition may
even help reduce costs as companies will have additional time to
develop best practices, long-term processes and efficiencies to prepare
reports, as opposed to having to take rushed and possibly inefficient
measures to meet a more sudden acceleration.\76\ Also, a longer
transition period helps to smooth out any possible impact on the
availability of third party advisors used by companies to prepare their
reports.
---------------------------------------------------------------------------

\75\ See, for example, the Letters of the ASCS; the Business
Roundtable; and FEI. These and other commenters also mentioned, and
we are aware of other anecdotal reports that, many companies already
are revising their systems and procedures to prepare for accelerated
reporting.
\76\ See, for example, the Letters of the ASCS and FEI.
---------------------------------------------------------------------------

A less extensive acceleration of the quarterly report deadline also
will alleviate some of the burdens mentioned by commenters. There will
be more time than proposed to gather the necessary data and complete
the necessary reviews by company officials, the board of directors and
outside advisors. One professional association commented that 80% of
its survey respondents reported they could more easily meet a 35-day
deadline than a 30-day deadline.\77\ Further, we believe that by
imposing a 40-day deadline before finally reducing it to 35 days, we
are striking an adequate compromise between the benefits of reducing
deadlines with the potential inconvenience, difficulty and cost that
may be incurred by some companies.
---------------------------------------------------------------------------

\77\ See the Letter of the ASCS. See also Letter of the Business
Roundtable.
---------------------------------------------------------------------------

We considered, but rejected, the alternative of tying the due date
of reports to a company's announcement of earnings. Not all companies
issue earnings releases or issue them on an accelerated basis. As a
result, linking deadlines to earnings releases may not result in more
accelerated reporting of information. We also were concerned that
linking report deadlines to earnings announcements could delay earnings
announcements, as companies would know that the announcement would
trigger the deadline to file reports. While market demand for earnings
information could negate this risk, an approach linking deadlines to
earnings announcements could have the effect of penalizing companies
for early releases of information while rewarding companies that delay
their earnings with extended time to file their reports.
Even with a phase-in period, accelerating filing deadlines may
create the risk that more companies will file their reports late or
need a filing extension. Moreover, if a company is late filing its
reports, it will lose availability for short-form registration for at
least one year from the date of the late filing. Being late also could
render Securities Act Rule 144 temporarily unavailable for security
holders' resales of restricted and control securities, and make new
filings on Form S-8 temporarily unavailable for resales of employee
benefit plan securities.\78\ We considered the suggestions of some
commenters to extend the filing extension periods in Exchange Act Rule
12b-25 as an additional method to alleviate any transition difficulties
to shortened deadlines.\79\ However, we think a lengthy phase-in period
adequately addresses these concerns. A less dramatic acceleration of
deadlines over a set schedule each year will provide companies with
advance notice of the changes they will be expected to make and will
smooth out some of the possible difficulties raised by commenters. Rule
12b-25 in its existing form still will provide companies that face
extenuating circumstances the ability to gain a filing extension of
five calendar days for quarterly reports and fifteen calendar days for
annual reports.
---------------------------------------------------------------------------

\78\ Securities Act Rule 144 [17 CFR 230.144] requires that for
such a resale to be valid, the issuer of the securities must have
made all filings required under the Exchange Act during the
preceding 12 months. Form S-8 [17 CFR 239.16b] requires that an
issuer be current in its reporting for the last 12 calendar months
(or such shorter period that the issuer was required to file such
reports and materials). If a company was late in filing its reports,
the company would lose Rule 144 eligibility and eligibility to file
a Form S-8 during the time that the company was not current in its
reporting.
\79\ See, for example, the Letters of the ASCS; Cleary,
Gottlieb, Steen & Hamilton; CSX Corporation; Deloitte & Touche LLP;
Ernst & Young LLP; NAREIT; NYSBA; Pharmacia Corporation;
PricewaterhouseCoopers LLP; and Triarc Companies, Inc.
---------------------------------------------------------------------------

While our proposals did not directly address the contents of
earnings releases, many commenters supported additional efforts by the
Commission in this area. Several recommended that earnings or other
standardized earnings information be filed with the Commission, such as
on Form 8-K.\80\ Others thought the Commission should consider issuing
or promoting minimum requirements or guidelines for the contents of
earnings releases, such as a GAAP reconciliation.\81\ While we will
continue to explore ways to improve earnings releases, and the
Sarbanes-Oxley Act of 2002 requires us to take steps in this area, we
believe these are separate initiatives from the need to accelerate
periodic report deadlines.\82\ We recognize that the information in
periodic reports is more extensive than that contained in earnings
releases, and that it would be difficult to eliminate any gap between
the earnings release and the filing of the report. As mentioned above,
however, we believe periodic reports contain valuable information for
investors, and comments received from the users of this information
uniformly indicated their desire to receive the reports at the earliest
time that is consistent with receiving quality information.\83\
---------------------------------------------------------------------------

\80\ See, for example, the Letters of the ABA; Deloitte & Touche
LLP; FEI; Joseph A. Grundfest; Investment Company Institute; Intel
Corporation; Merrill Lynch & Co., Inc.; Nucor Corporation; SCANA
Corporation; SIA; The Southern Company; TIAA- CREF; and Trover
Solutions, Inc.
\81\ See, for example, the Letters of Ernst & Young LLP; FEI,
Fidelity Management & Research Company; Investment Company
Institute; KPMG LLP; NAREC; NAREIT; NIRI; Papa John's International,
Inc.; Shearman & Sterling; SIA; and Valmont Industries, Inc.
\82\ See, for example, Sections 401(b) and 409 of the Sarbanes-
Oxley Act of 2002 [Pub. L. No. 107-204, Sec. Sec. 401(b) and 409,
116 Stat. 745 (2002)].
\83\ See, for example, the Letter of Fidelity Management &
Research Company.
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B. Definition of ``Accelerated Filer''

1. Proposed Rules
We proposed to accelerate the due dates for annual and quarterly
reports only for companies with a common equity public float of $75
million or more, that have been reporting for at least 12 calendar
months and that have filed at least one annual report. The public float
and reporting history requirements are designed to include the
companies that are least likely to find such a change overly burdensome
and where investor interest in accelerated filing is likely to be
highest. Other companies would continue to file under existing
deadlines, including small business issuers that file on Forms 10-KSB
and 10-QSB, foreign governments, foreign private issuers that elect to
use Form 20-F and companies that do not have a common equity public
float. Under the proposed rules,

[[Page 58488]]

a company would determine its public float for purposes of determining
whether it would become an accelerated filer as of a date no more than
60 and no less than 30 days before the end of its fiscal year. In
addition, as proposed, a company would become an accelerated filer at
any time during the year if it met the public float test on a previous
determination date and subsequently met the reporting requirements
during the year.
2. Comments on the Proposal
Comments were mixed on the proposed definition of accelerated
filer. Several commenters believed that all public companies should be
required to adhere to the same filing deadlines, regardless of a
company's size or experience in preparing filings.\84\ These commenters
thought it would be confusing to investors and companies to have
differing filing deadlines. They also believed that investors in
companies with a public float of less than $75 million should expect
the same timely access to prompt disclosure as investors in larger
companies. They argued that such prompt disclosure may be even more
important for smaller companies. Several commenters also thought that
while large firms may have more resources, they tend to have more
complex and geographically widespread operations, numerous consolidated
entities and segments and complicated financial transactions.\85\
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\84\ See, for example, the Letters of the ABA; FEI; NYCBA;
Caremark Rx, Inc.; Comcast Corporation; The Dow Chemical Company;
Monsanto Company; and Troutman Sanders LLP.
\85\ See, for example, the Letters of the ABA; American Electric
Power; Cleary, Gottlieb, Steen & Hamilton; Grant Thornton, LLP;
HealthSouth Corporation; and Union Planters Corporation.
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Other commenters agreed with the notion of excluding smaller
companies.\86\ Smaller companies may have operations that are just as
complicated as large companies. More importantly, accelerated reporting
may be particularly burdensome for smaller companies because they may
not have the necessary resources or infrastructure to report on an
accelerated basis. Many of these issuers have small staffs and limited
technological resources, so the imposition of accelerated deadlines may
have a disproportionate impact on these companies. In addition,
auditors may be more likely to postpone their reviews of smaller
companies' financial statements until they have completed their work
for larger clients. There also may not be sufficient market interest in
these companies to justify the costs and burdens needed to accelerate a
smaller company's reporting processes.\87\
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\86\ See, for example, the Letters of the AFL-CIO; Corning
Incorporated; Crowe, Chizek and Company LLP; KPMG LLP; NAREC;
NAREIT; NYSBA; and The Williams Companies, Inc.
\87\ See, for example, the Letters of Community Bankshares, Inc;
First Capital Bank Holding Corporation; and GrandSouth
Bancorporation.
---------------------------------------------------------------------------

Comments also were somewhat mixed on the use of public float as a
method to differentiate between companies.\88\ Several commenters
questioned the use of public float as a measure indicative of a
company's ability to file sooner. According to these commenters,
smaller companies with limited operations and personnel could easily
develop a significant public float. These commenters offered several
alternative measures, including revenues, assets or some measure of
trading volume. Other commenters thought the proposed $75 million
public float threshold was too low.\89\ These commenters recommended a
number of alternative thresholds, ranging from $150 million to $10
billion. Several other commenters thought the proposed public float
measurement date occurred too late in the fiscal year to give companies
sufficient time to modify their systems and prepare for accelerated
reporting.\90\
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\88\ Compare, for example, the Letters of the AFP; KPMG LLP; and
Western Wireless Corporation with the Letters of the ABA; AICPA;
American Bankers Association; Arris Group, Inc.; BDO Seidman, LLP;
Ernst & Young LLP; Foley, Hoag & Eliot LLP; Grant Thornton LLP;
Joseph A. Grundfest; NYCBA; NYSBA; PricewaterhouseCoopers LLP;
Shearman & Sterling; Southern Union Company; and United States Steel
Corporation.
\89\ See, for example, the Letters of the AICPA; American
Bankers Association; Arris Group, Inc.; Baldwin & Lyons, Inc.; Ernst
& Young LLP; HealthSouth Corporation; KPMG LLP; NAREC; NYSBA;
Perkins Coie LLP; Triarc Companies, Inc.; and Troutman Sanders LLP.
\90\ See, for example, the Letters of the ABA; AICPA; Ernst &
Young LLP; KMPG LLP; and Troutman Sanders LLP.
---------------------------------------------------------------------------

In the Proposing Release, we also requested comment on whether the
deadline for annual reports of foreign private issuers on Form 20-F
should be shortened. Comments were mixed on this request. Some
commenters did not think there was a reason to not also shorten
deadlines for foreign filers.\91\ Others thought that the issues
involving foreign issuers are sufficiently different as to warrant a
separate study and rule proposal.\92\ A few others thought the
deadlines for foreign issuers should not be accelerated at all.\93\
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\91\ See, for example, the Letters of the AIMR; Brown-Forman
Corporation; Chevron Phillips Chemical Company LLP; Comcast
Corporation; Deloitte & Touche LLP; The Dow Chemical Company; Markel
Corporation; Maverick Capital Ltd.; and SBC Communications Inc.
\92\ See, for example, the Letters of the AICPA; Ernst & Young
LLP; Institute of Management Accountants; KMPG LLP; and
PricewaterhouseCoopers LLP.
\93\ See, for example, the Letters of Cleary, Gottlieb, Steen &
Hamilton and NYCBA.
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3. Final Rules
After evaluating the comments on this aspect of the proposal, we
are adopting the amendments substantially as proposed with some minor
clarifications. Under the final rules, accelerated deadlines will apply
to a company after it first meets the following conditions as of the
end of its fiscal year:
[sbull] Its common equity public float was $75 million or more as
of the last business day of its most recently completed second fiscal
quarter;
[sbull] The company has been subject to the reporting requirements
of Section 13(a) or 15(d) of the Exchange Act for a period of at least
12 calendar months;
[sbull] The company has previously filed at least one annual report
pursuant to Section 13(a) or 15(d) of the Exchange Act; and
[sbull] The company is not eligible to use Forms 10-KSB and 10-QSB.
The public float and reporting history aspects of this definition
are being adopted substantially as proposed. These requirements are
based primarily on the current eligibility requirements for
registration of primary offerings for cash on Form S-3.\94\ These
companies can take advantage of short-form registration, including the
resultant benefits of incorporation by reference and quick access to
the capital markets through ``shelf registration.'' Shortening the
periodic reporting deadline for these companies, coupled with our
conforming revisions to the financial statement timeliness requirements
discussed below, promises that investors will receive information about
these companies sooner. This enhances the timeliness of information
received for primary purchasers in these offerings in addition to
secondary market purchasers. These changes also ensure that investors
receive consistent financial information regardless of the particular
registration form a company uses. In identifying companies that will be
subject to this new requirement, we also thought it would be
appropriate to use a pre-existing threshold to reduce regulatory
complexity.
---------------------------------------------------------------------------

\94\ See General Instructions I.A.3 and I.B.1 of Form S-3.
---------------------------------------------------------------------------

While we agree that investors in smaller companies value the
timeliness of corporate disclosures, we must balance the market's need
for information with the ability of companies to prepare that
information without undue burden. The possible detrimental effects of
accelerating the reporting process for companies least able to bear the
burden of these changes may outweigh the potential advantages

[[Page 58489]]

of acceleration if the quality of information suffers. We do not think
that having two sets of reporting deadlines will be confusing. Some
registrants, such as foreign private issuers, are already subject to
different deadlines. We believe it is more important that companies of
the same relative size, including the most actively followed companies,
are subject to shortened deadlines. We agree that larger companies may
have more complex operations, but they also are more likely than
smaller companies to have the infrastructure and resources to report on
an accelerated timeframe.
We believe that a public float test serves as a reasonable measure
of company size and market interest. While several commenters urged
raising the proposed threshold, we believe a longer phase-in period for
accelerating deadlines and a less extensive acceleration of the
quarterly report deadline militates against the need to raise the
threshold. The definition of accelerated filer we are adopting today
with a $75 million public float threshold excludes nearly half of all
publicly traded companies, as well as all companies eligible for our
small business issuer reporting system, all foreign private issuers
that file on Form 20-F and all companies that do not have a common
equity public float.\95\
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\95\ We arrived at this estimate by dividing the number of
companies in Standard & Poors Research Insight Compustat Database
with a market capitalization below $75 million as of November, 2001
(4,622) by the total number of companies in the Compustat Database
with a reported market capitalization for that period (9,325). It is
our understanding that the data in the Compustat Database is derived
principally from larger companies, so our estimate may understate
the actual percentage of companies that would be excluded by the
proposals. Further, this figure does not include many additional
companies that would not be affected by the amendments, including
foreign private issuers that file on Form 20-F and issuers that do
not have a common equity public float.
---------------------------------------------------------------------------

A company that does not fall within the ``accelerated filer''
definition as of its first fiscal year ending on or after December 15,
2002 will have to re-evaluate its status at the end of each fiscal
year. To address concerns raised by commenters, a company will
determine its public float by looking back at the last business day of
its most recently completed second fiscal quarter. This allows
companies to know further in advance whether they will become an
accelerated filer at the end of their fiscal year and allow them to
begin making the appropriate preparations.
As explained in the new definition of ``accelerated filer,'' the
determination of whether a non-accelerated filer becomes an accelerated
filer as of the end of its fiscal year governs the annual report to be
filed for that fiscal year, the quarterly reports to be filed for the
subsequent fiscal year and annual and quarterly reports to be filed
thereafter. Under the final rules, a company would not need to
determine whether it would become an accelerated filer other than at
the end of its fiscal year. We believe this provides increased notice
to a company for planning purposes. It also lessens any potential
confusion to investors by a sudden change in deadlines.
For example, if a calendar year-end company meets the public float
requirement, but has not filed its first annual report as of December
31, 2002, it does not become an accelerated filer and remains subject
to existing deadlines for its 2002 annual report and its 2003 quarterly
reports. However, if on December 31, 2003, the company meets the public
float test as of the last business day of its second fiscal quarter
ending June 30, 2003 and meets the other requirements of the
accelerated filer definition, the company becomes an accelerated filer
subject to the accelerated deadlines for its 2003 annual report, 2004
quarterly reports and all periodic reports thereafter.
As proposed, once a company becomes an accelerated filer, it
remains an accelerated filer subject to shortened deadlines unless and
until it subsequently becomes eligible to use Forms 10-KSB and 10-QSB
for its annual and quarterly reports.\96\ In that case, the issuer
ceases to be an accelerated filer unless and until it again meets the
accelerated filer criteria. A few commenters thought that the use of
different standards for entering and exiting accelerated filer status
would be confusing and potentially unfair compared to companies that
never had their public float exceed $75 million, especially for
companies that cross the threshold for a certain period of time and
then fall back below the threshold but do not otherwise meet the
criteria to become a small business issuer.\97\ However, it is our view
that, once a company meets the accelerated filer threshold, it is
reasonable to minimize a company's fluctuation in and out of
accelerated filer status while still allowing the company to exit if it
becomes so small for so long that it becomes eligible to file its
reports as a small business issuer. Accordingly, we are adopting the
provisions to exit accelerated filer status as proposed.
---------------------------------------------------------------------------

\96\ See Item 10(a)(2) of Regulation S-B [17 CFR 228.10(a)(2)]
for the conditions for entering and exiting the small business
reporting system. A reporting company that is not a small business
issuer must meet the definition of a small business issuer at the
end of two consecutive fiscal years before it will be considered a
small business issuer for purposes of Form 10-KSB and Form 10-QSB.
\97\ See, for example, the Letters of the ABA and NAREIT.
---------------------------------------------------------------------------

Currently, companies are required to disclose on the cover page of
their annual report on Form 10-K their public float as of a specified
date within 60 days before filing. To assist investors and the
Commission in evaluating whether a company is subject to accelerated
deadlines, we are revising this requirement. We are requiring every
company, regardless of whether it is an accelerated filer, to disclose
its public float as computed on the last business day of the company's
most recently completed second fiscal quarter. We recognize that this
will reduce the currency of this disclosure, but we believe such a
change will simplify the burdens companies face by requiring them to
calculate only one public float amount. Also, to clarify further a
company's filing status, we are requiring each company to check a box
on the cover of its quarterly and annual reports to indicate whether it
is an accelerated filer.
We are not adopting changes today to the deadline for annual
reports by foreign private issuers on Form 20-F. As we mentioned in the
Proposing Release, we are continuing to consider this issue and
Exchange Act filing requirements generally for foreign issuers. We
recognize that with the adoption of today's amendments, the discrepancy
between the filing deadlines for larger seasoned U.S. issuers and those
for foreign private issuers will increase. We will consider the
comments received in our continuing review of the issue.

C. Conforming Amendments

In the Proposing Release, we requested comment on several possible
conforming revisions to other Commission rules as a result of the
proposals. Our decisions on these requests are discussed in this
section.
1. Timeliness Requirements in Other Commission Filings
We mentioned in the Proposing Release that we were considering
making conforming revisions to accelerate the timeliness requirements
in Regulation S-X for the inclusion of financial statements by
accelerated filers in other Commission filings, such as Securities Act
and Exchange Act registration statements and proxy and information
statements under Section 14 of the Exchange Act. We requested comment
on whether these changes should be made. Most of the commenters that
responded to this request suggested we should make

[[Page 58490]]

conforming changes if we change the periodic report deadlines.\98\ We
agree.
---------------------------------------------------------------------------

\98\ See, for example, the Letters of American Electric Power;
Comcast Corporation; The Dow Chemical Company; Ernst & Young LLP;
Eli Lilly and Company; and HealthSouth Corporation.
---------------------------------------------------------------------------

When the Commission made extensive revisions to its rules, forms
and regulations in 1980 to further the integrated disclosure system, it
adopted amendments regarding the inclusion of financial information in
registration statements and proxy statements that parallel the
requirements for financial data in Exchange Act periodic reports.\99\
Parallel requirements facilitate the integrated reporting system by
simplifying existing rules. They also improve overall disclosure as
investors are assured consistent requirements as to the timeliness of
information regardless of the document received. If conforming
amendments are not made to keep these requirements parallel, a filing
could conceivably be filed under the Securities Act with financial
information less current than that filed under the Exchange Act.
Accordingly, to facilitate uniform requirements, we are adopting
amendments to Regulation S-X to conform the timeliness requirements.
Under the conforming amendments we are adopting today, financial
statements included in a registration statement or proxy statement
still will be required to be at least as current as any financial
statements filed under the Exchange Act.
---------------------------------------------------------------------------

\99\ See Release No. 33-6234 (Sept. 2, 1980) [45 FR 63682].
---------------------------------------------------------------------------

We recognize that in making these conforming changes, for some
short period of time, accelerated filers may be prevented from going to
market.\100\ However, it is our view that, when a company is an
accelerated filer and is attempting to raise capital in the marketplace
after audited financial information would be required to be filed under
the Exchange Act, it is reasonable to delay registration until such
financial statements become available. We believe this change is in the
best interest of the investing public and will not create any
additional burden on the large majority of accelerated filers because
the required financial information already will be required to have
been filed. Also, as in the past, we will consider waivers to the rules
where unusual circumstances dictate the need for them.\101\
---------------------------------------------------------------------------

\100\ For example, after the phase-in period is complete, an
accelerated filer would need to include updated financial statements
in its registration statements up to 30 days earlier than under the
current rules.
\101\ See, for example, Rule 3-13 of Regulation S-X [17 CFR
210.3-13].
---------------------------------------------------------------------------

a. Filings Within 90 Days of Year-End
Currently, a reporting issuer is not required to include audited
financial statements for its most recent fiscal year until the 90th day
after the end of the fiscal year if it satisfies three conditions:
[sbull] The company has filed all required Exchange Act reports;
[sbull] The company reasonably, and in good faith, expects income,
after taxes but before extraordinary items and a cumulative effect of a
change in accounting principle, for its most recent fiscal year; and
[sbull] For at least one of the two immediately preceding fiscal
years, the company has reported income, after taxes but before
extraordinary items and cumulative effect of a change in accounting
principle.

Unless all three conditions are met, registration statements filed or
declared effective or proxy statements mailed after the 45th day
following the fiscal year end must include audited financial statements
for the most recent fiscal year end.\102\
---------------------------------------------------------------------------

\102\ If the audited financial statements for the most recently
completed fiscal year are available or become available before
effectiveness or mailing, they must be included in the filing.
---------------------------------------------------------------------------

We are shortening the 90-day deadline to conform to the phase-in
periods for accelerated filers to keep this requirement parallel to the
requirement to file an annual report under the Exchange Act. In year
one of the phase-in period, the deadline will remain at 90 days. In
year two of the phase-in period, the deadline will be reduced to 75
days. For year three and subsequent years, the deadline will be reduced
to 60 days.
One commenter suggested we eliminate the distinctions among
registrants that meet the conditions in Rule 3-01(c) of Regulation S-
X.\103\ We are not changing the 45-day deadline for companies that do
not meet the three required conditions. This deadline was not
previously linked to an Exchange Act reporting requirement, and we
continue to think that this shorter deadline is sufficient. This
deadline will continue to require audited financial information more
current than that required by the Exchange Act reporting requirements
for companies that have not reported, and do not expect to report,
income.
---------------------------------------------------------------------------

\103\ See the Letter of Ernst & Young LLP.
---------------------------------------------------------------------------

b. Filings After 134 Days of Year-End
The existing rules require interim financial information in
registration statements filed by registrants after 134 days subsequent
to the end of the registrant's fiscal year--the period after audited
financial statements for the most recently completed fiscal year are
already required to be filed by most registrants on Form 10-K or 10-KSB
and on or after the date most registrants are required to have filed
interim financial statements for the first quarter on Form 10-Q or 10-
QSB. Under the conforming amendments, in year one of the phase-in
period, the period will remain at 134 days for accelerated filers. In
year two of the phase-in period, the period will be reduced from 134 to
129 days for accelerated filers. When a registration statement is filed
or is to be declared effective during this period, updated financial
statements will now be required as of an interim date within 130 days
of the date of filing. For year three and subsequent years, the period
will be reduced to 124 days for accelerated filers. Registration
statements filed or to be declared effective during this period will be
required to include updated financial statements as of an interim date
within 125 days of the date of filing. Here again, the amended rules
parallel the requirements for filing interim information under the
Exchange Act.
c. Age at Effective Date of Filing
Under the existing rules, where financial statements in a filing
are as of a date 135 days or more before the date the filing is
expected to become effective, or proposed mailing date in the case of a
proxy statement, the financial statements must be updated with a
balance sheet as of an interim date within 135 days and with statements
of income and cash flows on a comparative basis for the interim period
between the end of the most recent fiscal year and the date of the
interim balance sheet provided.\104\ Two exceptions exist under the
current rule. First, where the registrant meets the conditions in Rule
3-01 of Regulation S-X and the anticipated effective date or proposed
mailing date in the case of a proxy statement falls after 45 days but
within 90 days of the end of the fiscal year, the filing need not be
updated with financial statements more current than as of the end of
the third fiscal quarter of the most recently completed fiscal year
provided audited financial statements for such fiscal year are not
available. Second, where the registrant does not meet the prescribed
conditions referred to above and the anticipated effective date or
proposed mailing date falls after 45 days but within 90 days of the end
of the fiscal year, the filing must include audited financial
statements for the most recent fiscal year. Both exceptions are
consistent with the rules

[[Page 58491]]

governing financial statements as of the date of filing.
---------------------------------------------------------------------------

\104\ See Rule 3-12 of Regulation S-X.
---------------------------------------------------------------------------

The conforming amendments revise the updating rule to parallel the
requirements for filing financial information under the Exchange Act.
In year one of the phase-in period, the general updating period will
remain at 135 days for accelerated filers. In year two of the phase-in
period, the general updating period will be reduced from 135 days to
130 days for accelerated filers. For year three and subsequent years,
the period will be reduced to 125 days. For each of the exceptions, the
90 day period will remain at 90 days for year one and then be reduced
to 75 days in year two and 60 days in year three and subsequent years
for accelerated filers. We will maintain the two existing exceptions in
the rule.\105\
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\105\ As with the existing rules, the revised updating rule also
includes a general provision that if a filing is made near the end
of a fiscal year and the audited financial statements for that
fiscal year are not included in the original filing, the filing must
be updated with those audited financial statements if they become
available before the anticipated effective date, or proposed mailing
date in the case of a proxy statement.
---------------------------------------------------------------------------

d. Unconsolidated Subsidiaries and 50% or Less Owned Persons
Several commenters did not think that the due date in Rule 3-09 of
Regulation S-X regarding the inclusion of financial statements of
significant equity investees, joint ventures and subsidiaries not
consolidated should be accelerated to conform to that of the investor
registrant.\106\ Accelerating the filing of these financial statements
could require a company that does not meet the definition of an
accelerated filer to file its financial statements before it would
otherwise be required to do so solely because of a minority ownership
stake by the investor registrant. In addition, the investor registrant
may have difficulty in obtaining these financial statements from these
non-wholly owned entities in the appropriate timeframe. This may lead a
registrant to either sell its investment, not for business reasons, but
in order to remain timely and current in its filing requirements, or
cause the investor registrant to be not timely, which could have a
number of adverse effects, including the loss of short-form
registration.
---------------------------------------------------------------------------

\106\ See, for example, the Letters of the AICPA; Corning
Incorporated; Ernst & Young LLP; and KPMG LLP.
---------------------------------------------------------------------------

As part of our conforming amendments, we are amending Rule 3-09 of
Regulation S-X to address these concerns. Separate financial statements
of subsidiaries not consolidated and 50% or less owned persons required
by Rule 3-09 of Regulation S-X will not be accelerated for inclusion in
a company's annual report on Form 10-K if the subsidiary or 50% or less
owned person is not an accelerated filer. In that instance, the
financial statements of the subsidiary or 50% or less owned person can
be filed by amendment within the existing time periods. In addition, we
are making conforming amendments to still provide companies with
additional time to file the required financial statements if the fiscal
years of the investor registrant and the subsidiary or 50% or less
owned person differ.
2. Time Allowed to Incorporate Form 10-K Information From Definitive
Proxy or Information Statements
In the Proposing Release, we did not propose to make a conforming
change to the 120-day period companies have to file their definitive
proxy or information statements involving the election of directors to
allow the incorporation by reference of the information required by
Part III of Form 10-K.\107\ We requested comment on whether this period
should be shortened. While two commenters supported accelerating the
filing of definitive proxy or information statements to ensure that
investors have timely information,\108\ the majority of commenters that
responded to our request objected to a conforming change.\109\ The
objecting commenters thought that a shortened deadline would be overly
burdensome. We see no significant reason to shorten the deadline at
this time.
---------------------------------------------------------------------------

\107\ See General Instruction I.G.(3) of Form 10-K.
\108\ See the Letters of the AIMR and Maverick Capital Ltd.
\109\ See, for example, the Letters of American Electric Power;
AFLAC Incorporated; ASCS; The Coca-Cola Company; Comcast
Corporation; The Dow Chemical Company; Ernst &Young LLP; Intel
Corporation; LeBoeuf, Lamb, Green & MacRae; McGuireWoods LLP; NYSBA;
PepsiCo, Inc.; PricewaterhouseCoopers LLP; The Southern Company; and
Technitrol, Inc.
---------------------------------------------------------------------------

Some commenters were concerned that a reduction of the filing
deadline for Form 10-K without a corresponding change in the deadline
for incorporating the Part III information by reference from the proxy
statement would interfere with the ability of some companies to file
new short-form registration statements for securities offerings during
the period between the Form 10-K filing date and the filing of the
proxy statement.\110\ This is because these issuers would be required
to include the Part III information in the registration statement,
either directly or through incorporation by reference from another
document, before the proxy statement is filed. As the ability to
incorporate the Part III information from the proxy statement is
voluntary and is designed for the benefit of registrants, we do not
believe this concern warrants either a change to the deadline to
incorporate Part III information from the proxy statement or the Form
10-K deadline. Companies will retain the flexibility to choose the
alternative that best suits their individual circumstances.
---------------------------------------------------------------------------

\110\ See, for example, the Letters of J.P. Morgan Chase & Co.
and NYCBA.
---------------------------------------------------------------------------

3. Form 10-K Schedules Required by Article 12 of Regulation S-X
We did propose to make a conforming change to the date by which all
schedules required by Article 12 of Regulation S-X may be filed as an
amendment to the annual report. We proposed to change this date from
120 calendar days to 90 calendar days for accelerated filers to
maintain a 30-day period after the due date of the report to file the
amendment. We requested comment on this change.
The majority of commenters responding to this request supported
this change.\111\ Several commenters supported eliminating any delay
and requiring these schedules to be filed with the Form 10-K.\112\
However, we understand that in some instances additional time may be
necessary to prepare these schedules. As a result, we are adopting
conforming amendments to maintain a 30-day period after the due date of
the report to file the schedules.
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\111\ See, for example, the Letters of American Electric Power;
ASCS; The Dow Chemical Company; Ernst &Young LLP; and United States
Steel Corporation. But see the Letter of Triarc Companies, Inc.
\112\ See, for example, the Letters of the AIMR; Maverick
Capital Ltd.; and PricewaterhouseCoopers LLP.
---------------------------------------------------------------------------

4. Financial Statement Filing Requirements in Rule 3-05 of Regulation
S-X and Item 7 of Form 8-K
In the Proposing Release, we requested comment on whether we should
make conforming revisions to the financial statement filing
requirements in Item 7 of Form 8-K and Rule 3-05 \113\ of Regulation S-
X for financial statements of businesses acquired. The commenters who
responded to this request uniformly objected to such a change.\114\
Many of these commenters believed that the ability to obtain audited
financial statements of a significant acquired business generally is
unrelated to any

[[Page 58492]]

circumstances of the acquirer that cause it to be an accelerated filer
for purposes of its own financial statements. We see no significant
reason to shorten the deadline at this time, and therefore we are not
adopting conforming amendments to these provisions.
---------------------------------------------------------------------------

\113\ 17 CFR 210.3-05.
\114\ See, for example, the Letters of the AICPA; ASCS; Cleary,
Gottlieb, Steen & Hamilton; Deloitte & Touche LLP; Ernst &Young LLP;
KPMG LLP; NYCBA; and PricewaterhouseCoopers LLP.
---------------------------------------------------------------------------

D. Website Access to Information

1. Proposed Rules
We proposed to require accelerated filers to provide additional
disclosure in their annual reports of where investors can obtain access
to company filings. This would have included disclosure regarding the
availability of information from the Commission, the company's website
address and whether the company makes available free of charge on its
website, if it has one, its annual, quarterly and current reports, and
all amendments to those reports, as soon as reasonably practicable
after, and in any event on the same day as, such material is
electronically filed with or furnished to the Commission. If a company
chose not to make its filings available on its website in this manner,
the proposals would have required it to disclose why it does not do so
and where else the public can access these filings immediately upon
filing and whether there is a fee for such access. Companies also would
have to disclose whether they voluntarily will provide electronic or
paper copies of its filings upon request.
Widespread access to timely corporate information promotes the
efficient functioning of the secondary markets by enabling investors to
make informed investment and voting decisions. Further, ready access to
Exchange Act information is critical to short-form registration of
securities offerings by seasoned issuers under the Securities Act.\115\
This form of registration allows certain information about the company
conducting the offering to be incorporated by reference from the
company's Exchange Act reports without, in many instances, separate
delivery of those reports. One rationale for this method of
registration is that the information in the company's Exchange Act
reports already has been adequately disseminated and evaluated by the
marketplace.
---------------------------------------------------------------------------

\115\ Short-form registration is available in varying degrees
for domestic issuers on Forms S-2 [17 CFR 239.12], S-3, S-4 [17 CFR
239.25] and S-8.
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The development of the Internet has revolutionized information
production, availability, and dissemination.\116\ The increased
availability of information has helped to promote transparency,
liquidity and efficiency in our capital markets. One of the key
benefits of the Internet is that companies can make information
available to many investors and the financial markets quickly and in a
cost-effective manner. Online access to Internet information also helps
to democratize the capital markets by enabling many small investors to
access corporate information.\117\
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\116\ See, for example, Report to the Congress: The Impact of
Recent Technological Advances on the Securities Markets, (Sept.
1997). That report, like all Commission reports issued after 1996,
is available on our Internet website (http://www.sec.gov).
\117\ See, for example, Ianthe Jeanne Dugan, ``Small Investors
United by Web Find New Power,'' The Washington Post, May 30, 1999,
at A01.
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We have taken a number of steps to encourage the dissemination of
information electronically via the Internet. For 18 years, we have been
continually improving and modernizing electronic access to companies'
Exchange Act reports through our EDGAR system, including by providing
Internet access to these reports.\118\ We now provide electronic access
to the public on a real-time basis through our Internet website.\119\
---------------------------------------------------------------------------

\118\ Numerous third-party vendors also make information filed
with the Commission electronically available to investors, but many
charge fees for this service.
\119\ See note 32 above.
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Without regard to EDGAR, an efficient and economical method for
companies to make information available about themselves to many
investors is through their Internet websites. In addition to other
existing sources of company information, such as our website, a
company's website is often an obvious place for investors to find
information about a company. A company also may use different formats
and other approaches to making information available in ways it
believes are useful to investors. Most companies, realizing the
benefits of this technology for information dissemination, already
provide access to their Commission filings through their websites. A
study by our Office of Economic Analysis revealed that approximately
83% of companies with a public float of at least $75 million provide
some form of access to their Commission filings through their websites,
either via a hyperlink with a third-party service providing real-time
access to the filings (45%), by posting the filings directly on their
websites (29%) or via a hyperlink to our EDGAR database (15%).
Modernizing the disclosure system under the federal securities laws
involves recognizing the importance of the Internet in fostering prompt
and more widespread dissemination of information.\120\ We believe
company disclosure should be more readily available to investors on a
timely basis in a variety of locations to facilitate investor access to
that information. We believe it is important for companies to make
investors aware of the different sources that provide access to company
information. We applaud those that already provide access to their
Commission filings through their websites, and encourage every
reporting company to do so.
---------------------------------------------------------------------------

\120\ Congress has already recognized the importance of
utilizing the Internet to disseminate information. For example,
Section 403(a) of the Sarbanes-Oxley Act of 2002 [Pub. L. 107-204,
Section 403(a), 116 Stat. 745 (2002)] added Section 16(a)(4) of the
Exchange Act [15 U.S.C. 78p(a)(4)] requiring companies to provide
Section 16(a) filings on their corporate websites. Other countries
also have begun to recognize the importance of the Internet to
disseminate information. For example, the listing standards for the
S.T.A.R. Market segment of the Italian Exchange (Borsa Italiana)
require listed companies to post their periodic reports on their
websites. See Article 2.2.3, paragraph 3.e) of Regolamento Dei
Mercati Organizzati E Gestiti Da Borsa Italiana S.P.A. [Rules of the
Markets Organized and Managed by the Italian Exchange] (July 15,
2002).
---------------------------------------------------------------------------

2. Comments on the Proposal
We received responses from 141 commenters on the proposals for
disclosure concerning access to company filings. The vast majority of
commenters representing investors, investor groups, companies and
professional associations were supportive of the proposals. Sixty
commenters supported the requirement as proposed and concurred with our
objective to provide investors with information on where they can
access company reports.\121\ These commenters believed the proposal
would aid in encouraging companies to make information available in a
variety of locations and hence make corporate information more widely
accessible and disseminated. One professional association mentioned
that almost 90% of companies in its survey expected to accomplish the
objectives of the proposal with ease.\122\ The commenter also referred
to other studies demonstrating that corporate websites are a
significant source of information to investors and the media.
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\121\ See, for example, the Letters of the AFP; AIA; AIMR; The
Allstate Corporation; AOL Time Warner Inc.; Armstrong World
Industries, Inc.; BDO Seidman, LLP; the Business Roundtable; CCBN;
CII; Jason Cook; Deloitte & Touche LLP; Delphi Corporation; Dollar
Tree Stores, Inc.; The Dow Chemical Company; EDGAR Online; Eli Lilly
and Company; Grant Thornton LLP; Investment Company Institute;
Jefferson-Pilot Corporation; NIRI; Pharmacia Corporation; Principal
Financial Group, Inc.; SunTrust Banks, Inc.; TIAA-CREF; UnionBanCal
Corporation; UnumProvident Corporation; and XTO Energy Inc.
\122\ See the Letter of the NIRI.
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Forty commenters concurred with our objective but offered
modifications to

[[Page 58493]]

the proposal, such as recommending that we allow additional time for
companies to post the reports on their websites and suggesting that a
permanent statement regarding availability of the company's filings on
a web page referring to EDGAR or a standing hyperlink to EDGAR should
suffice.\123\ Twenty other commenters offered similar suggestions to
modify the proposal.\124\ Some of the commenters requested interpretive
clarifications for complying with the proposals.\125\
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\123\ See, for example, the Letters of the ACCA; American
Electric Power; AFLAC Incorporated; Amerada Hess Corporation; the
American Bankers Association; Capital One Financial Corporation; The
Chubb Corporation; CIGNA Corporation; Cleary, Gottlieb, Steen &
Hamilton; Dell Computer Corporation; Ernst &Young LLP; FEI;
Halliburton Company; Merrill Lynch & Co., Inc.; NAREC; PepsiCo,
Inc.; PG&E Corporation; and UniSource Energy Corporation.
\124\ See, for example, the Letters of the ABA; J.P. Morgan
Chase & Co.; McDonald's, Inc.; Mellon Financial Corporation; NAREIT;
PricewaterhouseCoopers LLP; and Sullivan & Cromwell.
\125\ See, for example, the Letters of the ABA; Capital One
Financial Corporation; and Reed Smith LLP.
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Twenty-one commenters questioned the utility of the proposal,
especially considering the existence of the Commission's EDGAR website
and the Commission's recent announcement that its website now provides
real-time access to filings.\126\ Some of these commenters thought the
proposal unnecessarily duplicated the Commission's EDGAR system.\127\
One commenter did not agree that a variety of electronic sources
provides any more widespread access to information than a single
source.\128\ Ten companies suggested that the desired improvement the
Commission seeks in instant accessibility of information could be best
accomplished by modernizing the EDGAR system, including by making
filings immediately available to the public on its website, which we
have now done.\129\
---------------------------------------------------------------------------

\126\ See, for example, the Letters of American Financial Group,
Inc.; Allegheny Energy, Inc.; Aztar Corporation; Caremark Rx, Inc.;
Chevron Phillips Chemical Company LLP; Compass Bankshares, Inc.;
Community Bankshares, Inc.; Edison Electric Institute; First Capital
Bank Holding Corporation; GrandSouth Bancorporation; International
Bancshares Corporation; J.C. Penney Company, Inc.; M&T Bank
Corporation; Marathon Oil Corporation; MDU Resources, Inc.; Pinnacle
West Capital Corporation; and Sinclair Broadcast Group, Inc.
\127\ See, for example, the Letters of Allegheny Energy, Inc.;
Compass Bankshares, Inc.; Commercial Federal Corporation; Edison
Electric Institute; and Pinnacle West Capital Corporation.
\128\ See the Letter of Compass Bankshares, Inc.
\129\ See, for example, the Letters of American Financial Group,
Inc.; Caremark Rx, Inc.; Community Bankshares, Inc.; First Capital
Bank Holding Corporation; GrandSouth Bancorporation; International
Bancshares Corporation; J.C. Penney Company, Inc.; M&T Bank
Corporation; Marathon Oil Corporation; and MDU Resources, Inc.
---------------------------------------------------------------------------

3. Final Rules
After evaluating the comments received, we are adopting the
proposals with minor revisions. These amendments require accelerated
filers to disclose in their annual reports on Form 10-K the following:
\130\
---------------------------------------------------------------------------

\130\ See revisions to Item 101(e) of Regulation S-K.
---------------------------------------------------------------------------

[sbull] The company's website address, if it has one;
[sbull] Whether the company makes available free of charge on or
through its website, if it has one, its annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all
amendments to those reports as soon as reasonably practicable after
such material is electronically filed with or furnished to the
Commission;
[sbull] If the company does not make its filings available in this
manner, the reasons it does not do so (including, where applicable,
that it does not have an Internet website); \131\ and
---------------------------------------------------------------------------

\131\ This requirement relates to the company's experience
during the period covered by the report, or since the effective date
of the amendments if a company has not completed a full fiscal year
before its next annual report is due.
---------------------------------------------------------------------------

[sbull] If the company does not make its filings available in this
manner, whether the company voluntarily will provide electronic or
paper copies of its filings free of charge upon request.

Accelerated filers must begin complying with the new disclosure
requirement starting with their annual reports on Form 10-K to be filed
for fiscal years ending on or after December 15, 2002.
In response to comment, we have eliminated the proposed requirement
that registrants disclose that filings are available on our website and
in our public reference room as unnecessary. We have also eliminated
the proposed disclosure relating to where else the public can access
company filings immediately upon filing if the company does not provide
real-time website access as real-time access to filings is now
available through our Web site.
We understand that companies provide website access to their
Exchange Act reports in a variety of ways, including by establishing a
hyperlink to its Exchange Act reports via a third-party service in lieu
of maintaining the reports themselves.\132\ For purposes of the
disclosure element for website access to reports, hyperlinking to a
third-party service is acceptable so long as the reports are made
available in the appropriate time frame and access to the reports is
free of charge to the user. To clarify that hyperlinking to a third
party website is acceptable, we have slightly modified the proposed
language to specify that a company can provide access on or through its
website. A company should hyperlink directly to its reports (or to a
list of its reports) instead of just to the home page or general search
page of the third-party service.\133\ We note that many companies
already provide this level of specificity in their hyperlinks as a
matter of best practice.
---------------------------------------------------------------------------

\132\ In Release No. 33-7856 (Apr. 28, 2000) [65 FR 25843] (the
``2000 Release''), we provided interpretive guidance on the possible
effects of hyperlinking to a third party website. See the 2000
Release, at n.48 and the accompanying text.
\133\ Companies could present the viewer with an intermediate
screen stating that the visitor is leaving the company's website.
Also, a disclaimer of responsibility for the accuracy of the third
party service will not make the website posting ineffective for
purposes of the disclosure requirement.
---------------------------------------------------------------------------

As we now provide real-time access to Exchange Act reports through
our website, hyperlinking directly to a company's reports (or to a list
of its reports) on our EDGAR website will allow a company to state that
it provides website access to its reports as soon as reasonably
practicable after those reports are filed. This will help to decrease
further any incremental burdens or costs caused by the new requirement.
Despite the availability of these reports through our website, we
concluded that disclosure regarding company website access is still
desirable as one of our objectives is to encourage the availability of
information in a variety of locations and foster best practices for
making that information broadly accessible. Hyperlinking through EDGAR
will now allow a company to state in all cases that it provides website
access as soon as reasonably practicable.\134\
---------------------------------------------------------------------------

\134\ Several companies already hyperlink to our EDGAR website
to provide website access to their reports. As a result of adding
real-time EDGAR filing data to our website, new searches located on
new webpages are now available on our website that provide access to
this real-time data. For companies that currently hyperlink to our
website, they will need to revise their hyperlink scripts if they
have not already done so to refer to the new search pages providing
real-time data. The older search pages will be eliminated in the
near future.
---------------------------------------------------------------------------

In reference to comments concerned about technical and other
obstacles that might lead to violating the ``same day'' requirement, we
have eliminated that requirement. However, we interpret the ``as soon
as reasonably practicable'' standard to mean that the report would be
available, barring unforeseen circumstances, on the same day as filing.
We could revisit this requirement if posting on the same day does not
generally occur.

[[Page 58494]]

Whether a company provides access to its Exchange Act reports
either directly or through a third-party service, we recognize that
some companies display the reports in electronic formats (for example,
PDF) other than the official electronic format used to transmit the
filing to our EDGAR system. In fact, we encourage companies to do so if
alternative formats enhance readability and accessibility of the
reports, so long as all of the information in the reports remains
retrievable. However, the use of a particular medium to access the
reports should not be so burdensome that the intended recipients cannot
effectively access the information provided.\135\
---------------------------------------------------------------------------

\135\ See, for example, Release No. 33-7233 (Oct. 6, 1995) [60
FR 53458], at n. 24 and the accompanying text.
---------------------------------------------------------------------------

The website access contemplated by the amendments includes access
to all exhibits and supplemental schedules electronically filed with
the reports or amendments. Information incorporated by reference is not
required to be separately posted, although we encourage companies to do
so if it will aid investor access to the information.
While the amendments do not cover how long a company's report must
be made available on or through its website, we encourage companies to
provide ongoing website access to their reports. At a minimum, we
suggest companies provide website access to their previous reports for
at least a 12 month period. It would be desirable for companies to
provide access to their previous reports on an appropriately archived
portion of their website over an even longer timeframe. Finally, we
encourage companies to provide website access to all of their filings
with the Commission, including their filings under the proxy rules and
their Securities Act filings.
Regarding the requirement that a company disclose its website
address in its annual report on Form 10-K, some commenters were
concerned as to whether including the website address in the filing
constitutes incorporation by reference of any website information into
the filing.\136\ If a company is complying with this disclosure item in
its annual report on Form 10-K, the inclusion of the company's website
address will not, by itself, include or incorporate by reference the
information on the site into the company's Commission filing, unless
the company otherwise acts to incorporate the information by
reference.\137\
---------------------------------------------------------------------------

\136\ See, for example, the Letters of the ABA; ASCS; Caremark
Rx, Inc.; NYCBA; NYSBA; PricewaterhouseCoopers LLP; and Sullivan &
Cromwell.
\137\ In the 2000 Release, we provided interpretive guidance on
the effect of including a website address in other situations. See
the 2000 Release, note 132 above, at n.41 and the accompanying text.
We are not changing that guidance for those other situations.
---------------------------------------------------------------------------

We understand that a company may have multiple Web sites that it
uses for various purposes, such as investor relations, product
information and business-to-business activities. We interpret the
requirement to disclose the company's website address to mean the
website the company normally uses for its investor relations functions.
The revisions we adopt today create new disclosure obligations that
are designed to create duties only under Sections 13(a) and 15(d) of
the Exchange Act. The new disclosure is not an antifraud rule, and it
is not designed to create new duties under the antifraud provisions of
the federal securities laws or in private rights of action or to alter
any existing liability provisions. The new disclosure also does not
separately create or otherwise affect a company's duty to update its
prior statements.
As proposed, we are initially limiting the amendments to
accelerated filers. Commenters were nearly unanimous in thinking that
we should extend the amendments to all filers, including smaller
issuers and foreign issuers.\138\ According to these commenters, the
utility of information about report access is likely to be just as
great or even greater for these issuers compared to the minimal
incremental cost that may be associated with the proposals. We will
continue to study this issue and consider extending the requirement to
all reporting companies after evaluating our initial experience with
the requirement by accelerated filers.
---------------------------------------------------------------------------

\138\ See, for example, the Letters of the ABA; ASCS; Comcast
Corporation; Deloitte & Touche LLP; The Dow Chemical Company;
Institute of Management Accountants; PricewaterhouseCoopers LLP; and
TIAA-CREF.
---------------------------------------------------------------------------

III. Paperwork Reduction Act

The amendments contain ``collection of information'' requirements
within the meaning of the Paperwork Reduction Act of 1995
(``PRA'').\139\ We published a notice requesting comment on the
collection of information requirements in the Proposing Release, and we
submitted these requirements to the Office of Management and Budget
(``OMB'') for review.\140\ Subsequently, OMB approved the proposed
information collection requirements.
---------------------------------------------------------------------------

\139\ 44 U.S.C. 3501 et seq.
\140\ Publication and submission were in accordance with 44
U.S.C. 3507(d) and 5 CFR 1320.11.
---------------------------------------------------------------------------

The titles for the collection of information are ``Form 10-K'' and
``Form 10-Q.'' An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless it
displays a currently valid OMB control number.
Form 10-K (OMB Control No. 3235-0063) prescribes information that a
registrant must disclose annually to the market about its business.
Preparing and filing an annual report on Form 10-K is a collection of
information.
Form 10-Q (OMB Control No. 3235-0070) prescribes information that a
registrant must disclose quarterly to the market about its business.
Preparing and filing a quarterly report on Form 10-Q is a collection of
information.
We currently estimate that Form 10-K results in a total annual
compliance burden of 12,105,360 hours and an annual cost of
$1,210,536,000. The burden was calculated by multiplying the estimated
number of respondents filing Form 10-K annually (9,384) by the
estimated average number of hours each entity spends completing the
form (1,720 hours). We estimate that 75% of the burden is carried by
the respondent internally (9,384 x 1,720 x 0.75 = 12,105,360), and we
estimate that 25% of the burden is carried by outside advisors retained
by the respondent at an average cost of $300 per hour (9,384 x 1,720 x
0.25 x $300 = $1,210,536,000).\141\ The portion of the burden carried
by outside advisors is reflected as a cost.
---------------------------------------------------------------------------

\141\ Our allocation of the burden for Form 10-K and Form 10-Q
is a departure from the Proposing Release and our past PRA
submissions for Exchange Act periodic reports, for which we
estimated that the company carried 25% of the burden internally and
75% of the burden was carried by outside professionals retained by
the company. See also Release No. 33-3098 (May 10, 2002) [67 FR
35620]. We believe that this new allocation more accurately reflects
current practice for annual and quarterly reports.
---------------------------------------------------------------------------

We currently estimate that Form 10-Q results in a total annual
compliance burden of 2,728,092 hours and an annual cost of
$272,809,200. The burden was calculated by multiplying the estimated
number of reports on Form 10-Q filed annually (26,746) by the estimated
average number of hours each entity spends completing the form (136
hours). We estimate that 75% of the burden is prepared by the
respondent (26,746 x 136 x 0.75 = 2,728,092). We estimate that 25% of
the burden is prepared by outside advisors retained by the respondent
at an average cost of $300 per hour (26,746 x 136 x 0.25 x $300 =
$272,809,200). This

[[Page 58495]]

portion of the burden is reflected as a cost.

A. Summary of Amendments

The amendments will accelerate the filing deadlines of quarterly
reports on Form 10-Q and annual reports on Form 10-K by companies
subject to specified public float and reporting history requirements.
The amendments also require those companies to disclose in their annual
reports on Form 10-K where investors can obtain access to company
filings, including whether the company provides access to its Exchange
Act reports free of charge on its Internet website as soon as
reasonably practicable after those reports are electronically filed
with or furnished to the Commission. If a company does not provide
website access in this manner, it must also disclose the reasons it
does not do so. We also require companies to disclose their website
address if they have one. We believe that the revisions will promote
direct, uniform and more widespread dissemination of timely information
to investors and the markets and further the purposes of short-form
registration under the Securities Act.

B. Summary of Comment Letters and Revisions to Proposals

We requested comment on the PRA analysis contained in the Proposing
Release. We received responses from two companies addressing the
Commission's overall estimates for preparing reports.\142\ Both
commenters questioned our original estimate of the allocation of the
burden between the company (25% of the burden) and outside
professionals retained by the company (75% of the burden). Both
believed the estimate for the amount of work prepared in-house should
be much higher.\143\ Subsequent to the Proposing Release, we have
changed our estimates of the allocation of the burden between the
company and outside advisors to 75% for in-house work and 25% for
outside advisors.\144\ We recognize that not all companies may utilize
in-house resources to the extent mentioned by the commenters, but we
believe the new allocation more accurately reflects current practice
for annual and quarterly reports.
---------------------------------------------------------------------------

\142\ See the Letters of PPL Corporation and Southern Union
Company.
\143\ One commenter believed the estimate should be 90% for in-
house work and 10% for outside professionals. See the Letter of PPL
Corporation. The other commenter mentioned it prepares over 95% of
its reports by in-house personnel. See the Letter of Southern Union
Company.
\144\ See note 141 above.
---------------------------------------------------------------------------

One of the commenters believed the Commission's estimate of the
average number of hours each entity spends completing Form 10-Q (136
hours) is too low.\145\ The commenter also believed that the
Commission's estimate of the average number of hours each entity spends
completing the Form 10-K (1,720 hours) was more accurate. We have not
concluded that our estimates should be changed as a result of this
comment, although we will continue to monitor registrant response to
our burden hour estimates.
---------------------------------------------------------------------------

\145\ The commenter provided an estimate of 400 hours. See the
Letter of PPL Corporation.
---------------------------------------------------------------------------

In addition to the concerns raised by commenters, we have made
several modifications to the proposals, although the modifications do
not affect our estimate of the incremental burden of the amendments.
The amendments will change the calculation date for determining the
disclosure of a company's common equity public float that appears on
the cover page of its Form 10-K. In addition, companies will be
required to check a box on their Form 10-K and 10-Q indicating whether
they are an accelerated filer. We believe these changes are minimal and
do not affect the total amount of burden hours for preparing the forms.
In addition, we have made several changes to the proposal for
disclosure concerning access to company reports in response to comments
on the substance of the proposal and to avoid unnecessarily lengthening
reports. These changes include revising or eliminating some of the
proposed disclosure elements. We do not believe these changes will
significantly change our previous estimates of the burden on
registrants from this new disclosure item.

C. Revisions to Reporting and Cost Burden Estimates

We estimate that approximately 59% of Form 10-K and Form 10-Q
respondents, or 5,494 respondents, will satisfy our proposed definition
of accelerated filer, and thus will be subject to accelerated deadlines
and the requirement to make the enhanced disclosure in their Form 10-K
regarding website access to their Exchange Act reports.\146\
---------------------------------------------------------------------------

\146\ We arrived at this estimate by multiplying the approximate
number of respondents that file on Form 10-K that do not only have a
class of securities registered under Section 15(d) of the Exchange
Act (and hence are less likely to have listed equity and therefore a
public float) (7,384) by 74.4%, which represents the percentage of
companies in Standard & Poors Research Insight Compustat Database
with a market capitalization above $75 million out of the total
number of companies in the Compustat Database with a market
capitalization above $25 million (the upper limit for small business
filers on Form 10-KSB). It is our understanding that the data in the
Compustat Database is derived principally from larger companies, so
our estimate may overstate the actual percentage of companies that
would be affected by the proposals.
---------------------------------------------------------------------------

For our amendments regarding filing deadlines, the amount of
information required to be included in Exchange Act reports will remain
the same. Accordingly, solely for purposes of the Paperwork Reduction
Act, our estimate is that the amount of time necessary to prepare the
reports, and hence, the total amount of burden hours, will not change.
As proposed, we estimate that the preparation of the required
disclosure regarding information access in a respondent's Form 10-K
will add 0.50 burden hours to each annual report on Form 10-K. Thus, we
estimate this aspect of the amendments will add an additional 2,747
burden hours to the current Form 10-K (0.50 hours x 5,494 respondents).
We estimate that 75% of the burden is carried by the respondent (0.50 x
5,494 x 0.75 = 2,060).\147\ We estimate that 25% of the burden is
prepared by outside advisors retained by the respondent at an average
cost of $300 per hour (0.50 x 5,494 x 0.25 x $300 = $206,025). This
portion of the burden is reflected as a cost.
---------------------------------------------------------------------------

\147\ As discussed in note 141 above, this allocation of the
burden is a departure from the Proposing Release, for which we
estimated that the respondent carried 25% of the burden internally
and 75% of the burden was carried by outside advisors retained by
the respondent. We believe that this new allocation more accurately
reflects current practice for annual and quarterly reports.
---------------------------------------------------------------------------

As a result, we estimate the total annual compliance burden for
Form 10-K after our revisions to be 12,107,420 hours and an annual cost
of $1,210,742,025, an increase of 2,060 hours and $206,025 in cost.
Compliance with the disclosure requirement will be mandatory. There
will be no mandatory retention period for the information disclosed,
and responses to the disclosure requirements will not be kept
confidential. We do not believe that the imposition of this disclosure
requirement will alter significantly the number of respondents that
file on Form 10-K.

IV. Cost-Benefit Analysis

The amendments are part of our initiative to modernize and improve
the regulatory system for periodic disclosure under the Exchange Act.
We are sensitive to the costs and benefits that result from our rules.
In this section, we examine the benefits and costs of our amendments.

[[Page 58496]]

The rule and form changes will enhance the timeliness and
availability of disclosure to investors in two ways:
[sbull] Shorten the due dates of quarterly and annual reports (and
transition reports) for domestic reporting companies that meet certain
public float and reporting history requirements; \148\ and
---------------------------------------------------------------------------

\148\ We also are making conforming amendments to the timeliness
requirements for the inclusion of financial information in proxy
statements, information statements and Securities Act and Exchange
Act registration statements.
---------------------------------------------------------------------------

[sbull] Require companies to disclose in their annual reports on
Form 10-K where investors can obtain access to company filings,
including whether companies provide access to their Exchange Act
reports on their Internet websites.

A. Acceleration of Quarterly and Annual Report Due Dates

1. Benefits
The due dates for quarterly and annual reports by domestic issuers
have not changed in over 30 years, despite enormous advances in
information technology and productivity. We believe that periodic
reports contain valuable information for investors. Shortening the due
dates for quarterly, annual and transition reports will provide many
benefits. Most importantly, it will accelerate the delivery of
information to investors and the capital markets, enabling them to make
more informed investment and valuation decisions more quickly.\149\
This helps the capital markets function more efficiently, which implies
more efficient valuation and pricing. While quarterly and annual
reports at present generally reflect historical information, a lengthy
delay before that information becomes available makes the information
less valuable to investors.
---------------------------------------------------------------------------

\149\ Some academic evidence shows that annual reports on Form
10-K filed through the EDGAR system provide incremental information
to the market even after the firm has made an earnings announcement.
See, for example, Daqing Qi, Woody Wu, and In-Mu Haw, 2000, ``The
Incremental Information Content of SEC 10-K Reports Filed Under the
EDGAR System,'' Journal of Accounting, Auditing, and Finance 15
(Winter) : 25-45. See also the Letter of Paul A. Griffin.
---------------------------------------------------------------------------

The more extensive information in periodic reports is evaluated by
investors and particularly analysts and institutional investors as a
baseline for the incremental disclosures made by a company. These
reports also contain more detailed information that is essential to
conduct comparative analyses, as this information is often not
contained in earnings releases or other incremental disclosures.
Moreover, the information in Exchange Act reports, due to its required
nature and the liability to which it is subject, provides a
verification function against other statements made by the company in
press releases and other public announcements. Investors and other
users of the reports can judge previous informal statements by the
company against the more extensive and mandated disclosure provided in
the reports that have been reviewed by independent public accountants
and other advisors. Accelerating the availability of this information
will enable this verification to occur at an earlier point in time.
Accelerating the availability of these reports also may increase the
relevance of these reports, as the timeliness of information has
considerable value to investors and the markets. Moreover, seasoned
issuers incorporate information from their Exchange Act reports in
their Securities Act registration statements. Hence, investors buying
in these public offerings, particularly in on-going shelf offerings,
also may benefit from more timely disclosure.
Many companies now routinely release quarterly and annual results
well before they file their formal reports with us. These earnings
announcements reflect the importance of financial information and
investors' demand for it at the earliest possible time. Assuming that
companies are collecting and evaluating information before they issue
these announcements, the availability of this information also suggests
that much of the process involved in preparing the financial
information contained in periodic reports is substantially complete.
However, these earnings announcements are generally less complete in
their disclosure than quarterly or annual reports, and they can
emphasize information that is less prominent in quarterly or annual
reports. Investors often must wait for the periodic reports to receive
financial statements and the accompanying notes prepared in accordance
with generally accepted accounting principles, MD&A and other vitally
important financial disclosures. These additional disclosures increase
transparency for investors.
We also are making conforming amendments to accelerate the
timeliness requirements in Regulation S-X for the inclusion of
financial statements by accelerated filers in other Commission filings,
such as Securities Act and Exchange Act registration statements and
proxy and information statements under Section 14 of the Exchange Act.
When the Commission made extensive revisions to its rules, forms and
regulations in 1980 to further the integrated disclosure system, it
adopted amendments regarding the inclusion of financial information in
registration statements and proxy statements that parallel the
requirements for financial data in Exchange Act periodic reports.
Parallel requirements facilitate the integrated reporting system by
simplifying existing rules. They also improve overall disclosure as
investors are assured consistent requirements as to the timeliness of
information regardless of the document received. If conforming
amendments are not made to keep these requirements parallel, a filing
could conceivably be made under the Securities Act with financial
information less current than that filed under the Exchange Act.
Accordingly, to facilitate uniform requirements, we are adopting
amendments to Regulation S-X to conform the timeliness requirements.
Under the conforming amendments we are adopting today, financial
statements included in a registration statement or proxy statement
still will be required to be at least as current as any financial
statements filed under the Exchange Act.
Many commenters representing investors, users of financial
information and several companies concurred with our assessment of the
benefits of the proposals. These commenters believed that shortening
deadlines will improve the delivery and flow of reliable information to
investors and capital markets and assist in the efficient operation of
the markets. These commenters emphasized the importance of the
extensive information in periodic reports and investors' demand for it
at the earliest possible time. Several other companies, accounting
firms and professional associations agreed in concept that shortening
due dates would improve the flow of information, but believed the due
dates should reflect concerns about the quality of information to be
filed.
A small minority of companies, law firms and business
organizations, however, believed that existing deadlines and market
practices are sufficient to satisfy investors' needs and believed we
over-emphasized the importance of periodic reports. These commenters
did not think a significant benefit would result from shortening
deadlines, but also generally did not attempt to address the question
of possible benefits from the perspective of users of the reports.
While we recognize that investors and the markets rely on information
from a variety of sources in formulating their investment decisions, we
agree with the near unanimous view of commenters representing the users
of

[[Page 58497]]

reports that the financial and other information in periodic reports is
important to them, and that accelerating the delivery of the reports
will provide benefits to investors and the markets.
2. Costs
The amendments will increase costs to some affected reporting
companies, although companies may, and some already do, report within
the new deadlines voluntarily. Specifically, the amendments may
increase the costs of preparing reports because although companies
already must prepare the reports, some may have to delay other projects
or use additional resources, including in-house personnel, outside
legal counsel and outside auditors to prepare the information in a
shorter timeframe. Some companies may need to make additional capital
investments, such as in additional information systems, to prepare
their reports in a shorter timeframe.
While a few commenters believed that the original proposals would
not have a significant adverse effect on the cost of preparing reports,
most who addressed the subject mentioned that the original proposals
would result in some increased costs. Many outlined their process of
preparing reports to demonstrate the difficulties of accelerating the
process. The particular steps and timing varied depending on the
individual company, and not all companies appear to be at the same
level of technological sophistication and staffing for preparing
reports. Two professional associations noted that there are no current
best practices for preparing reports.\150\ As a result, the few cost
estimates received varied widely, and many commenters were unable to
provide estimates. One company believed it was not possible to put a
dollar value on such costs, as it depends on the quality and
flexibility of each registrant's present systems, processes and
staff.\151\ According to one professional association that surveyed its
members, 52% of its survey respondents reported that they expected
costs to increase in order to comply with the original proposals.\152\
Forty-five percent of respondents indicated they would have to hire
additional staff, and 27% of respondents indicated they would have to
buy or develop additional systems. Other commenters were concerned that
accelerating deadlines would result in increased audit fees,
particularly for companies with a calendar fiscal year-end, given a
compression in the amount of time available for auditors to complete
their work for these companies.
---------------------------------------------------------------------------

\150\ See the Letters of the ASCS and the Business Roundtable.
\151\ See the Letter of American Electric Power.
\152\ See the Letter of the ASCS.
---------------------------------------------------------------------------

The amendments may have indirect effects as well. While some
companies commented that they could or already comply with the proposal
without undue burden, the group that objected to the proposal raised
several common concerns over the extent of acceleration and transition
period proposed. The most common concern was that the proposed
deadlines would negatively affect the quality and accuracy of reports.
According to one professional association, two-thirds of its survey
respondents expected a reduction in the precision of reported
information under the original proposals.\153\ We are not changing the
liability standards for reports, nor are we decreasing the amount of
information required. Investors and the capital markets may suffer if
quality or accuracy diminished, causing the markets to function less
efficiently and investment decisions to be impaired.
---------------------------------------------------------------------------

\153\ Id.
---------------------------------------------------------------------------

Another common concern was that the proposed deadlines would impair
the ability of management, external auditors, boards of directors and
especially audit committees to scrutinize and review filings properly
and give appropriate consideration to the form, substance and priority
of disclosures, especially MD&A disclosures and financial statement
footnotes. These commenters feared that disclosures could be reduced or
become more boilerplate if companies have less time to prepare and
review them. The commenters believed that accelerating deadlines in the
manner proposed would also undermine the governance and review
mechanisms that have been put in place to ensure quality. Several other
commenters mentioned additional concerns over the proposals, such as an
increased need to use estimates or an increased risk of amendments or
restatements because of rushed preparation. Several commenters were
especially concerned about accelerating deadlines now given recent
events with Arthur Andersen LLP.
We have limited direct data on which to base cost estimates of the
amendments. However, we reviewed cost estimates provided by respondents
to a survey conducted by the American Society of Corporate Secretaries.
These estimates were based on the original proposal. We attempted to
determine if the survey results were related to issuer characteristics.
The cost estimates did not appear to be related to market
capitalization, revenues, industry or number of reporting segments of
the underlying company. Based on 46 companies with over $75 million in
public float that provided estimates, 17% reported that they did not
expect any additional costs from the proposals. 43.4% expected initial
costs to prepare for the proposals. These estimates ranged from $12,500
to $5,000,000, with a median value of $125,000. 50% expected on-going
annual costs to comply with the proposals. These estimates ranged from
$27,500 to $250,000, with a median value of $90,000. 11% of respondents
expected both initial and on-going costs to comply with the proposals.
Assuming these estimates are representative of all affected companies,
we estimate that initial costs of the original proposal for all
affected companies would range from $29,862,500 to $11,945,000,000,
with a median value of $298,625,000.\154\ Aggregate on-going, annual
costs of the original proposal for all affected companies would range
from $75,524,500 to $686,750,000, with a median value of $247,230,000.
---------------------------------------------------------------------------

\154\ This estimate is based on our estimate of the probable
number of affected reporting companies determined for purposes of
the Paperwork Reduction Act (5,494).
---------------------------------------------------------------------------

These estimates may overstate the actual costs from the amendments
we are adopting today, however, as we are making several accommodations
to address commenters' concerns and to ease compliance, including:
[sbull] A gradual phase-in of the new deadlines over three years,
with no change in deadlines for the first year;
[sbull] A less extensive ultimate acceleration of quarterly reports
than proposed;
[sbull] Revisions to the definition of accelerated filer to give
companies more advance notice and time to prepare for accelerated
deadlines; and
[sbull] Conforming amendments that allow certain financial
statements of subsidiaries to be filed by later amendment if the
subsidiary is not an accelerated filer.
A phased-in approach helps to alleviate the immediate impact of any
costs and burdens that may be imposed on certain registrants. While
several commenters indicated that they could report on an accelerated
timeframe today, several major business associations that surveyed
their members reported that adjustment to accelerated deadlines would
be easier with a phase-in period.\155\ A longer transition may even
help reduce costs as companies will have additional time to

[[Page 58498]]

develop best practices, long-term processes and efficiencies to prepare
reports, as opposed to having to take rushed and possibly inefficient
measures to meet a more sudden acceleration. Also, a longer transition
period helps to smooth out any possible impact on the availability of
third party advisors used by companies to prepare their reports.
---------------------------------------------------------------------------

\155\ See, for example, the Letters of the ASCS; the Business
Roundtable; and FEI.
---------------------------------------------------------------------------

A less extensive acceleration of the quarterly report deadline also
will alleviate some of the burdens mentioned by commenters. There will
be more time than proposed to gather the necessary data and complete
the necessary reviews by company officials, the board of directors and
outside advisors. One professional association commented that 80% of
its survey respondents reported they could more easily meet a 35-day
deadline than a 30-day deadline.\156\ Further, we believe that by
imposing a 40-day deadline before finally reducing it to 35 days, we
are striking an adequate compromise between the benefits of reducing
deadlines with the potential inconvenience, difficulty and cost that
may be incurred by some companies.
---------------------------------------------------------------------------

\156\ See the Letter of the ASCS. See also Letter of the
Business Roundtable.
---------------------------------------------------------------------------

Regarding our conforming changes to the timeliness requirements in
other Commission filings, we recognize that for some short period of
time, accelerated filers may be prevented from going to market.
However, it is our view that, when a company is an accelerated filer
and is attempting to raise capital in the marketplace after audited
financial information would be required to be filed under the Exchange
Act, it is reasonable to delay registration until such financial
statements become available. We believe this change is in the best
interest of the investing public and will not create any additional
burden on the large majority of accelerated filers because the required
financial information already will be required to have been filed.
Also, as in the past, we will consider waivers to the rules where
unusual circumstances dictate the need for them.
We considered several regulatory alternatives in formulating the
final amendments. We considered, but rejected, the alternative of tying
the due date of reports to a company's announcement of earnings. Not
all companies issue earnings releases or issue them on an accelerated
basis. As a result, linking deadlines to earnings releases may not
result in more accelerated reporting of information. We also were
concerned that linking report deadlines to earnings announcements could
delay earnings announcements, as companies would know that the
announcement would trigger the deadline to file reports. While market
demand for earnings information could negate this risk, an approach
linking deadlines to earnings announcements could have the effect of
penalizing companies for early releases of information while rewarding
companies that delay their earnings with extended time to file their
reports.
Even with a phase-in period, accelerating filing deadlines may
create the risk that more companies will file their reports late or
need a filing extension. Moreover, if a company is late filing its
reports, it will lose availability for short-form registration for at
least one year from the date of the late filing. Being late also could
render Securities Act Rule 144 temporarily unavailable for security
holders' resales of restricted and control securities, and make new
filings on Form S-8 temporarily unavailable for resales of employee
benefit plan securities. We considered the suggestions of some
commenters to extend the filing extension periods in Exchange Act Rule
12b-25 as an additional method to alleviate any transition difficulties
to shortened deadlines. However, we think a lengthy phase-in period
adequately addresses these concerns. A less dramatic acceleration of
deadlines over a set schedule each year will provide companies with
advance notice of the changes they will be expected to make and will
smooth out some of the possible difficulties raised by commenters. Rule
12b-25 in its existing form still will provide companies that face
extenuating circumstances the ability to gain a filing extension.
While our proposals did not directly address the contents of
earnings releases, many commenters supported additional efforts by the
Commission in this area. Several recommended that earnings or other
standardized earnings information be filed with the Commission, such as
on Form 8-K. Others thought the Commission should consider issuing or
promoting minimum requirements or guidelines for the contents of
earnings releases, such as a GAAP reconciliation. While we will
continue to explore ways to improve earnings releases, and the
Sarbanes-Oxley Act of 2002 requires us to take steps in this area, we
believe these are separate initiatives from the need to accelerate
periodic report deadlines. As mentioned above, we believe periodic
reports contain valuable information for investors, and comments
received from the users of this information uniformly indicated their
desire to receive the reports at the earliest time that is consistent
with receiving quality information.
We also considered shorter and longer phase-in periods and
deadlines. While several commenters indicated they could report on an
accelerated timeframe today, several major business associations that
surveyed their members reported that adjustment to accelerated
deadlines would be easier with a phase-in period. Also, while comments
were mixed, the majority of commenters addressing the issue believed it
would be more difficult to accelerate the quarterly report than the
annual report. Accordingly, the quarterly deadline will only be reduced
to a 35-day deadline at the end of the phase-in period, which is five
days longer than originally proposed. We think any concerns over
possible confusion over changing deadlines during the phase-in period
will be temporary and justified by the benefits of giving companies
additional time to adjust their reporting schedules.
We considered shortening filing deadlines for all companies.
Comments were mixed over excluding smaller issuers. Although we believe
investors in less large or unseasoned companies may want and benefit
from more timely disclosures just as much as investors in larger,
listed companies, we are concerned that this may impose undue burden
and expense on these companies. Smaller companies are likely to be more
sensitive to any increased costs in preparing their reports. These
entities may not have the infrastructure and resources available or
necessary to prepare their reports on a shorter timeframe. Accordingly,
we are only shortening the filing deadlines for companies with a
minimum public float or reporting history as proposed. Of course,
smaller companies may file their reports earlier voluntarily.
Comments also were mixed on the proposed $75 million public float
threshold. We considered several different thresholds for shortening
deadlines, including thresholds based on revenue, measures of trading
volume and listing status. However, based on our past experience, we
believe the public float test currently used in Form S-3 is consistent
with our purposes. We believe that a public float test serves as a
reasonable measure of company size and market interest. While several
commenters urged raising the threshold, we believe a longer phase-in
period and a less extensive acceleration of the quarterly report
deadline militates against the need to raise the threshold. The
definition of accelerated filer we are adopting today excludes nearly
half of

[[Page 58499]]

all publicly traded companies, as well as all companies eligible for
our small business issuer reporting system, all foreign private issuers
that file on Form 20-F and all companies that do not have a common
equity public float. Selecting a $75 million public float threshold
also is consistent with our conforming amendments to the timeliness
requirements for other Commission filings. By using the same threshold
as in Form S-3, investors are assured of receiving the most up-to-date
information regardless of the particular registration form a company
chooses.

B. Web Site Access to Information

1. Benefits
Widespread access to timely company information promotes the
efficient functioning of the capital markets. Also, ready access to
Exchange Act information is critical to short-form registration of
securities offerings. Many aspects of our disclosure system were
adopted well before the revolutions in information technology brought
about by the Internet. In modernizing and improving our disclosure
system, we recognize the benefits of the Internet in promoting more
widespread dissemination of information. An efficient and cost
effective method for companies to make information available about
themselves is through their Internet website. In addition to other
existing sources of company information, such as our website, a
company's web site is one obvious place for many investors to find
information about a company. A company also may use different formats
and other approaches to making information available in ways it
believes are useful to investors. We believe company disclosure should
be more readily available to investors on a timely basis in a variety
of locations to facilitate investor access to that information. We
believe it is important for investors to know of additional sources
where they can access company information.
Providing this disclosure and encouraging companies to post their
Exchange Act reports on their websites will provide many benefits, and
the vast majority of commenters concurred and were supportive of the
proposals. The amendments protect investors by alerting them to sources
where they can obtain direct and easy access to the information they
should have to make informed investment and valuation decisions. The
amendments will help promote consistent, direct, timely and more
widespread access of information to investors and the markets, and
further the proper functioning of the integrated disclosure and short-
form registration system. An efficiently functioning registration
system facilitates capital formation. Not all reporting companies now
make their Exchange Act filings available through their websites, and
not all the ones that do make information available provide access in
real-time. The amendments encourage uniform best practices to aid in an
investor's search for timely information, thereby potentially reducing
the costs to gather such information.
2. Costs
The amendments may increase the costs to some affected companies,
although we seek to minimize those costs. Companies will be required to
include minimal additional disclosure in their annual report on Form
10-K. We estimate this will result in a total cost of $463,525 for all
affected companies.\157\ The disclosure requirement only will apply to
companies that meet specified public float and reporting history
requirements, which will help to minimize the impact on companies
potentially less able to bear additional costs. The amendments also
will not require a company to provide website access, although we
encourage all companies to do so.
---------------------------------------------------------------------------

\157\ The estimate is based on the burden hour estimates
calculated under the Paperwork Reduction Act. For purposes of the
Paperwork Reduction Act, we estimate that the additional disclosure
will result in 2,060 internal burden hours and $206,025 in external
costs. Assuming a cost of $125/hour for in-house professional staff,
the total cost for the internal burden hours would be $257,500.
Hence the aggregate cost estimate is $463,525 ($257,500 + $206,025).
---------------------------------------------------------------------------

Commenters were nearly unanimous in their belief that the proposal
would result in no or minimal additional costs and would not be unduly
burdensome to implement, particularly since it is limited only to
accelerated filers.\158\ One professional association mentioned that
the majority of its survey respondents expected that the proposal would
incur no additional costs.\159\ Another professional association
mentioned that almost 90% of companies in its survey expected to
accomplish the objectives of the proposal with ease.\160\
---------------------------------------------------------------------------

\158\ See, for example, the Letters of the ASCS; Dow Chemical
Company; Hibernia Corporation; PricewaterhouseCoopers LLP; and TIAA-
CREF.
\159\ See the Letter of the ASCS.
\160\ See the Letter of the NIRI.
---------------------------------------------------------------------------

Also, as we now provide real-time access to Exchange Act reports
through our website, hyperlinking directly to our EDGAR website will
allow a company to state that it provides website access in the
required timeframe. This will help to decrease further any incremental
burdens or costs caused by the amendments. Some commenters thought the
proposal was duplicative of EDGAR, particularly considering that we now
provide real-time Internet access to reports. Despite the availability
of reports through our website, we concluded that disclosure regarding
company website access is still desirable as one of our objectives is
to encourage the availability of information in a variety of locations
and foster best practices for making that information broadly
accessible. In response to comments concerned about the technical and
other obstacles that might lead to violating the proposed ``same day''
requirement, we have eliminated that requirement.
We considered several additional regulatory alternatives. Many
companies already voluntarily provide at least some access to their
filings on their websites, but not all provide access to all of their
filings or in real-time. We considered requiring website access to
company reports as an additional eligibility requirement for short-form
registration. However, we were concerned that the potential loss of
form eligibility from non-compliance with the requirement would be
overly burdensome on companies. We are considering the suggestions by
many commenters to extend the disclosure requirement to non-accelerated
filers.

V. Consideration of Burden on Competition, and Promotion of Efficiency,
Competition and Capital Formation

Section 23(a)(2) of the Exchange Act \161\ requires us, when
adopting rules under the Exchange Act, to consider the impact that any
new rule would have on competition. In addition, Section 23(a)(2)
prohibits us from adopting any rule that would impose a burden on
competition not necessary or appropriate in furtherance of the purposes
of the Exchange Act. We have considered the amendments in light of the
standards in Section 23(a)(2).
---------------------------------------------------------------------------

\161\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

The amendments are intended to improve the timeliness and
accessibility of Exchange Act reports to investors and the financial
markets. We anticipate these amendments will enhance the proper
functioning of the capital markets. This increases the competitiveness
of companies participating in the U.S. capital markets. The amendments
will affect certain companies and not others, so the impacts of the
proposal may not be equally distributed. Also, if not all competitors
in a given industry are subject to accelerated deadlines,

[[Page 58500]]

information about some competitors may be disclosed ahead of other
competitors (for example, the filing of material contracts).\162\ This
could potentially give some competitors an informational advantage. If
the amendments to shorten filing deadlines increased the number of
companies who filed their reports late, this could reduce the number of
companies eligible for short-form and delayed shelf registration. For
our amendments relating to website access, companies that will be
subject to accelerated deadlines may incur increased costs from
providing additional disclosure that will not be incurred by companies
not subject to these deadlines. However, we believe these costs are not
significant.
---------------------------------------------------------------------------

\162\ The Commission does have rules in place that allow for the
non-disclosure of certain limited information filed with the
Commission. See, for example, Exchange Act Rule 24b-2 [17 CFR
240.24b-2].
---------------------------------------------------------------------------

We requested comment on any anti-competitive effects of the
proposals. A few commenters suggested that the proposals to accelerate
filing deadlines might have some effects on competition. For example,
one law firm thought that differing reporting deadlines for accelerated
and non-accelerated filers could adversely affect competition.\163\
Non-accelerated filers would enjoy a competitive advantage against
accelerated filers who are forced to incur the incremental costs
imposed by accelerated deadlines. While we recognize that the impacts
of the amendments will not be equally distributed, we also must balance
the market's need for information with the ability of companies to
report on an accelerated timeframe without undue burden. Not all
companies, particularly small and unseasoned companies, may have the
resources and infrastructure in place to prepare their reports on a
shorter timeframe without undue burden or expense. While any dividing
line we ultimately choose could have a possible disproportionate affect
at the margin, we believe separating small and large companies balances
the needs of investors against the constraints facing smaller issuers.
In doing so, the amendments could actually encourage competition
because they are designed to avoid imposing onerous burdens and
expenses on those companies that are least able to bear them. We will
continue to study whether acceleration of deadlines for a broader class
of issuers is appropriate.
---------------------------------------------------------------------------

\163\ See, for example, the Letter of Troutman Sanders LLP.
---------------------------------------------------------------------------

Several other commenters believed we should not exclude foreign
private issuers from our definition of accelerated filer.\164\ These
commenters believe foreign filers should be subject to the same rules
to create a level playing field for all companies that access the U.S.
capital markets. Other commenters thought that the issues involving
foreign issuers are sufficiently different as to warrant separate study
and rule proposals.\165\ We agree with the latter group. We do
recognize that with the amendments we adopt today, the discrepancy
between the filing deadlines for larger seasoned U.S. issuers and those
for foreign private issuers will increase. Foreign issuers are subject
to similar obligations as to the information to be reported. There are
some categories of information, for example executive compensation,
where requirements for foreign issuers are less onerous. Foreign
issuers that do not prepare their financial statements in accordance
with U.S. GAAP, however, must go through the additional step of
preparing a reconciliation of their financial statements to U.S. GAAP.
These companies also may have additional home country reporting
requirements. We are continuing to consider this issue and Exchange Act
filing requirements generally for foreign issuers. However, given that
a current filing lag already exists, we do not believe the relative
increase in the lag created by the amendments is significant enough to
warrant a delay in their adoption. To the extent any anti-competitive
effect may arise from the increase in this lag, we believe any such
burden would be necessary and appropriate for the protection of
investors.
---------------------------------------------------------------------------

\164\ See, for example, the Letters of Chevron Phillips Chemical
Company LLP; Eastman Kodak Company; and Maverick Capital Ltd.
\165\ See, for example, the Letters of the AICPA; Ernst & Young
LLP; Institute of Management Accountants; KPMG LLP; and
PricewaterhouseCoopers LLP.
---------------------------------------------------------------------------

Section 2(b) of the Securities Act \166\ and Section 3(f) of the
Exchange Act \167\ requires us, when engaging in rulemaking where we
are required to consider or determine whether an action is necessary or
appropriate in the public interest, to consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation. We have considered the amendments
in light of the standards in these provisions.
---------------------------------------------------------------------------

\166\ 17 U.S.C. 77b(b).
\167\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

The amendments will enhance our reporting requirements in light of
technological advances. The purpose of the amendments is to promote
greater timeliness and accessibility of this information so that
investors can more easily make informed investment and voting
decisions. Informed investor decisions generally promote market
efficiency and capital formation. As noted above, however, the
proposals could have certain indirect negative effects, such as
discouraging or precluding some companies near the threshold from using
short-form registration, which could adversely impact their ability to
raise capital.
We also are adopting conforming amendments to the timeliness
requirements for the inclusion of financial statements in proxy
statements, information statements and Securities Act and Exchange Act
registration statements. We recognize that in making these conforming
changes, for some short period of time, accelerated filers may be
prevented from going to market. However, it is our view that, when a
company is an accelerated filer and is attempting to raise capital in
the marketplace after audited financial information would be required
to be filed under the Exchange Act, it is reasonable to delay
registration until such financial statements become available. We
believe this change is in the best interest of the investing public and
will not create any additional burden on the large majority of
accelerated filers because the required financial information already
will be required to have been filed. Also, as in the past, we will
consider waivers to the rules where unusual circumstances dictate the
need for them.
We requested comment on how the proposals would affect efficiency,
competition and capital formation. Many commenters representing
investors, investor organizations as well as some companies believed
that shortening deadlines will improve the delivery and flow of
reliable information to investors and capital markets and assist in the
efficient operation of the markets. A larger group of commenters
representing primarily companies, business associations, law firms and
accounting firms objected to the extent of acceleration and transition
period proposed because, in their view, preparing reports in the
proposed time frame could result in less accurate filings, which could
stifle efficiency. Some commenters also were concerned that the
proposed deadlines may increase the number of late filings. In addition
to adverse market reaction, filing late could cause companies to lose
eligibility to use short-form registration statements for at least one
year, which could raise the cost of capital.

[[Page 58501]]

In response to these concerns, we are phasing-in deadlines over a
three-year period and adopting a less extensive acceleration of the
quarterly report deadline. A phased-in approach of accelerated
deadlines allows a greater transition period for companies to adjust
their procedures and develop efficiencies to ensure that the quality
and accuracy of reported information will not be sacrificed. With a
less extensive acceleration of the quarterly report deadline, there
will be more time than proposed to gather the necessary data and
complete the necessary reviews by company officials, the board of
directors and outside advisors. Also, Exchange Rule 12b-25 in its
existing form still will provide companies that face extenuating
circumstances the ability to gain a filing extension.

VI. Final Regulatory Flexibility Analysis

This Final Regulatory Flexibility Analysis, or FRFA, has been
prepared in accordance with the Regulatory Flexibility Act.\168\ This
FRFA relates to amendments to the rules and forms under the Securities
Act and the Exchange Act to:
---------------------------------------------------------------------------

\168\ 5 U.S.C. 603.
---------------------------------------------------------------------------

[sbull] Shorten the due dates of quarterly and annual reports (and
transition reports) for domestic reporting companies that meet certain
public float and reporting history requirements;\169\ and
---------------------------------------------------------------------------

\169\ We also are making conforming amendments to the timeliness
requirements for the inclusion of financial information in proxy
statements, information statements and Securities Act and Exchange
Act registration statements.
---------------------------------------------------------------------------

A. Need for the Amendments

The amendments have two primary objectives. First, we are
accelerating the disclosure of information to investors and the capital
markets by shortening the due dates of quarterly and annual periodic
reports and transition reports for domestic reporting companies that
meet certain minimum public float and reporting history requirements.
These due dates have not changed in over 30 years, despite advances in
information technology and productivity and increases in the pace of
and need for communications in the capital markets. Accelerating the
delivery of information to the capital markets will help enhance the
efficient functioning of those markets. The more extensive information
in periodic reports is evaluated by investors and particularly analysts
and institutional investors as a baseline for the incremental
disclosures made by a company, and these reports also contain more
detailed information that is essential to conduct comparative financial
analyses. Many companies routinely release quarterly and annual
financial results before they file their formal reports with us.
However, these earnings announcements are generally less complete in
their disclosure than periodic reports, and they can emphasize
information that is less prominent than in the reports. Shortening the
deadlines will shorten this information gap, thereby increasing the
relevance of those reports. Investors buying in public offerings of
issuers that incorporate their Exchange Act reports in their Securities
Act registration statements also will benefit from more timely
disclosure.
Second, we wish to encourage more direct and widespread
accessibility and dissemination of timely information to investors and
the capital markets in a variety of locations. Accordingly, we are
requiring companies subject to the accelerated filing deadlines to
disclose in their annual reports on Form 10-K where investors can
obtain access to company filings, including whether the company
provides access to its Exchange Act reports free of charge on its
Internet website as soon as reasonably practicable after those reports
are electronically filed with or furnished to the Commission. These
amendments will help promote consistent, direct, timely and more
widespread access of information to investors and the markets and
further the proper functioning of the integrated disclosure and short-
form registration system. Not all public companies currently make their
filings available on their websites, and not all provide access to all
of their reports or in real-time. The amendments will thus promote
greater access for investors.

B. Significant Issues Raised by Public Comment

The Initial Regulatory Flexibility Analysis, or IRFA, appeared in
the Proposing Release.\170\ We requested comment on any aspect of the
IRFA, including the number of small entities that would be affected by
the proposals, the nature of the impact, how to quantify the number of
small entities that would be affected and how to quantify the impact of
the proposals. We received no comment letters responding to that
request.
---------------------------------------------------------------------------

\170\ See the Proposing Release at Section VI.
---------------------------------------------------------------------------

C. Small Entities Subject to the Amendments

The amendments will affect certain small entities that are required
to file quarterly and annual periodic reports and transition reports
under the Exchange Act, but only if those small entities meet the
definition of an ``accelerated filer'' that we are adopting today. For
purposes of the Regulatory Flexibility Act, Exchange Act Rule 0-
10(a)\171\ defines the term ``small business'' to be an issuer, other
than an investment company, that, on the last day of its most recent
fiscal year, has total assets of $5 million or less. The Securities Act
defines a ``small business'' issuer, other than investment companies,
to be an issuer that, on the last day of its most recent fiscal year,
has total assets of $5 million or less and is engaged in or proposes to
engage in an offering of securities of $5 million or less.\172\
---------------------------------------------------------------------------

\171\ 17 CFR 240.0-10(a).
\172\ 17 CFR 230.157.
---------------------------------------------------------------------------

We estimate that there are approximately 2,500 companies, other
than investment companies, subject to the reporting requirements of
Sections 13 or 15(d) of the Exchange Act that have assets of $5 million
or less. The amendments to shorten the deadlines for annual and
quarterly periodic and transition reports and the amendments regarding
access to Exchange Act reports will apply to these small entities if
they have a public float of $75 million or more, have been subject to
the Exchange Act's reporting requirements for at least one year, have
filed at least one annual report and are not eligible for our small
business issuer reporting system. We have no way to determine exactly
how many small entities meet these requirements, although it is likely
that only a very small number of these entities will meet the public
float requirement. In addition, small entities are not affected if they
are eligible to use our small business issuer reporting system.
According to the Standard & Poors Research Insight Compustat
Database, of the 711 reporting companies listed with assets of $5
million or less, 10, or 1.4%, had a market capitalization greater than
$75 million.\173\ Assuming that this sample is representative of all
small entities, the public float requirement

[[Page 58502]]

will have the effect of almost completely excluding all small entities.
---------------------------------------------------------------------------

\173\ It is our understanding that the data in the Compustat
Database is derived principally from larger companies, so our
estimate could understate the actual percentage of companies that
would be affected by the proposals.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance
Requirements

For reporting companies that meet the public float and reporting
history requirements, we are phasing-in shortened due dates for annual
reports on Form 10-K and quarterly reports on Form 10-Q over three
years. The Form 10-K deadline will be reduced over three years from the
current deadline of 90 days after the end of the company's fiscal year
to 60 days after the end of the company's fiscal year. The Form 10-Q
deadline will be reduced over three years from the current deadline of
45 days after the end of the company's first three fiscal quarters to
35 days after the end of the first three fiscal quarters. We are making
similar changes to transition reports these companies must file when
they change their fiscal year and the timeliness requirements for
financial information that must be included in other Commission filings
such as proxy statements, information statements and Securities Act and
Exchange Act registration statements. We are not changing the filing
deadlines for other companies, including small business issuers
eligible to rely on our small business reporting system, at this time.
While the amount of information required to be included in Exchange
Act reports, and hence the amount of time necessary to prepare them,
will remain the same, affected companies may be required to use
additional resources, including in-house personnel, in preparing their
reports on a shorter timeframe. Small entities that meet the public
float and reporting history requirements may incur additional costs in
seeking the help of outside experts, particularly outside legal counsel
and auditors, or in making any necessary technological investments to
speed their reporting process.
Companies that are late in filing their reports will lose
eligibility for short-form registration for at least one year, and
Securities Act Rule 144 and new filings on Form S-8 will be temporarily
unavailable during the period of noncompliance.\174\ On the margin,
affected small entities that are unable, or cannot afford, to prepare
their reports on a shorter timeframe may be discouraged from remaining
public companies or accessing the public markets. This may adversely
affect their ability to raise capital.
---------------------------------------------------------------------------

\174\ One-time extensions of due dates are available under
certain circumstances under Exchange Act Rule 12b-25. Also,
companies that are not timely will not meet the timeliness
requirements for their proxy statements, information statements and
Securities Act and Exchange Act registration statements.
---------------------------------------------------------------------------

We also are requiring accelerated filers to disclose in their
annual reports on Form 10-K where investors can obtain access to
company filings, including whether the company provides access to its
Exchange Act reports free of charge on its Internet website as soon as
reasonably practicable after those reports are electronically filed
with or furnished to the Commission. If a company does not provide such
access, it must also disclose why it does not do so. In formulating
these amendments, we have sought to minimize its costs, particularly on
small entities. The requirement will apply only to companies that met
the public float and reporting history requirements. Companies will not
be required to establish an Internet website for purposes of this
requirement if they did not otherwise have one. Also, a company can
elect not to provide website access to their reports as long as it
disclosed that it has elected not to do so and the reasons it has
elected not to do so. Accordingly, these elements of the amendments,
coupled with the fact that almost all small entities will be
effectively excluded from the proposal, lead us to believe that the
requirement will not have a disproportionate effect on small entities.

E. Agency Action to Minimize Effect on Small Entities

As required by the Regulatory Flexibility Act, we have considered
alternatives that would accomplish our stated objectives, while
minimizing any significant adverse impact on small entities. In
connection with the amendments, we considered several alternatives,
including:
[sbull] Establishing different compliance or reporting requirements
or timetables that take into account the resources available to small
entities;
[sbull] Clarifying, consolidating or simplifying compliance and
reporting requirements under the rules for small entities;
[sbull] Using performance rather than design standards; and
[sbull] Exempting small entities from all or part of the
requirements.
Our amendments to shorten the filing deadlines will apply only to
entities that meet minimum public float and reporting history
requirements, which should serve to exclude almost all small entities.
As a result, different timetables will apply for almost all small
entities. We strive to strike a balance between timely delivery of
information to investors and giving companies enough time to prepare
their reports. We considered the alternative of only shortening the
filing deadlines for companies whose securities are listed on the NYSE
or AMEX or quoted on Nasdaq National Market System or Small Cap Market.
However, we believe investors in companies that are not as large or
listed but nevertheless meet the public float or reporting history
requirements may want and benefit from more timely disclosures just as
much as investors in larger, listed companies. Accordingly, we rejected
exempting small entities in their entirety from the coverage of the
amendments.
In addition, we are not aware of how to further clarify,
consolidate or simply these proposals for small entities. In this
regard, we already are limiting the shortened deadlines to entities
that meet minimum public float and reporting history requirements. We
do not consider using performance rather than design standards to be
consistent with our statutory mandate of investor protection in the
present context. Because specified information in Exchange Act reports
must be reported in a timely manner to be useful, design standards are
necessary to achieve the objectives of the amendments. Accelerating the
delivery of mandated information is one of the goals of the amendments.
Our amendments regarding disclosure of website access to company
reports are designed to enhance the accessibility and dissemination of
information to investors. These amendments also will apply only to
entities that meet minimum public float and reporting history
requirements, which should serve to exclude almost all small entities.
We believe our amendments strike a balance between providing investor
access to information and giving companies alternatives in providing
this access. Different compliance or reporting requirements for
affected small entities or exemptions for all affected small entities
are not considered warranted at this time because it is just as
important that information be adequately disseminated and easily
available for affected small entities as it is for large entities, if
not more so. We have made a number of changes to the proposal that we
believe decrease further the impact on all issuers, including small
entities. First, we have narrowed the scope of disclosure required.
Second, we now provide real-time access to EDGAR filings through our
website for free, which allows companies an easy and low cost method to
provide real-time access if they choose to do so. The

[[Page 58503]]

expected low costs of complying with the proposal, as well as the
effect of the public float requirement in lessening the impact on small
entities, also contributed to our decision not to exclude small
entities in their entirety.
Companies can choose whether to provide website access and
therefore the disclosure that will be necessary in their annual report
on Form 10-K. This allows companies, including small entities, the
flexibility to choose the alternative that best suits their individual
circumstances. We believe this freedom should apply to all entities,
large and small. We are not aware of ways to further clarify,
consolidate or simply these proposals for small entities.

VII. Update to Codification of Financial Reporting Policies

The Commission amends the ``Codification of Financial Reporting
Policies'' announced in Financial Reporting Release No. 1 (April 15,
1982) as follows:
1. By amending Section 102.05.(2) to read as follows:

(2) Conforming the Filing Requirements of Transition Reports to the
Current Requirements for Forms 10-Q and 10-K

To conform to the current filing periods for reports on Forms 10-K
and 10-Q, the filing period for transition reports on Form 10-K is 90,
75 or 60 days for accelerated filers, as applicable depending on the
issuer's fiscal year specified in Rules 13a-10 and 15d-10, and 90 days
for other issuers after the close of the transition period or the date
of the determination to change the fiscal year, whichever is later, and
for transition reports on Form 10-Q, the filing period is 45, 40 or 35
days for accelerated filers, as applicable depending on the issuer's
fiscal year specified in Rules 13a-10 and 15d-10, or 45 days for other
issuers after the later of these two events.
2. By amending Section 102.05. to add the following preliminary
note to the ``Appendix'' to Section 102.05.:
Preliminary Note: The following examples are applicable if the
issuer is not an accelerated filer. If the issuer is an accelerated
filer, substitute 75 or 60 days, as applicable depending on the
issuer's fiscal year specified in Rules 13a-10 and 15d-10, for 90 days
in the examples for transition reports on Form 10-K, and substitute 40
or 35 days, as applicable depending on the issuer's fiscal year
specified in Rules 13a-10 and 15d-10, for 45 days in the examples for
transition reports on Form 10-Q.
3. By amending Section 302.01.a. to:
a. Replace the phrase ``after 45 days but within 90 days of the end
of the registrant's fiscal year'' with the phrase ``after 45 days but
within 90, 75 or 60 days of the end of the registrant's fiscal year for
accelerated filers, as applicable depending on the registrant's fiscal
year (or after 45 days but within 90 days of the end of the
registrant's fiscal year for other registrants)'' in the second
paragraph of Section 302.01.a.; and
b. Replace the phrase ``after 45 days but within 90 days of the end
of its fiscal year (i.e., February 16 to March 31 for calendar year
companies)'' with the phrase ``after 45 days but within 90, 75 or 60
days of the end of its fiscal year if the registrant is an accelerated
filer, as applicable depending on the company's fiscal year (i.e.,
February 16 to March 31, 15 or 1 for calendar year companies) (or after
45 days but within 90 days of the end of its fiscal year for other
registrants (i.e., February 16 to March 31 for calendar year
companies))'' in the first sentence of the fourth paragraph of Section
302.01.a.
4. By amending Section 302.01.b. to:
a. Replace the phrase ``134 days subsequent to the end of a
registrant's fiscal year'' with the phrase ``134, 129 or 124 days
subsequent to the end of a registrant's fiscal year if the registrant
is an accelerated filer, as applicable depending on the registrant's
fiscal year (or 134 days subsequent to the end of a registrant's fiscal
year for other registrants)'' in the first sentence of Section
302.01.b.;
b. Replace the phrase ``135 days of the date of the filing'' with
the phrase ``135, 130 or 125 days of the date of the filing if the
registrant is an accelerated filer, as applicable depending on the
registrant's fiscal year (or 135 days of the date of the filing for
other registrants)'' in the second sentence of Section 302.01.b.; and
c. Removing the words ``135 day'' in the footnote to the fourth
sentence of Section 302.01.b.
5. By amending Section 302.01.c. to:
a. Replace the phrase ``135 days or more'' with the phrase ``135,
130 or 125 days or more, if the registrant is an accelerated filer, as
applicable depending on the registrant's fiscal year (or 135 days or
more for other registrants)'' in the first paragraph of Section
302.01.c.;
b. Replace the phrase ``as of an interim date within 135 days''
with the phrase ``as of an interim date within 135, 130 or 125 days, if
the registrant is an accelerated filer, as applicable depending on the
registrant's fiscal year (or 135 days for other registrants)'' in the
first paragraph of Section 302.01.c.; and
c. Replace the phrase ``after 45 days but within 90 days of the end
of the fiscal year'' with the phrase ``after 45 days but within 90, 75
or 60 days of the end of the fiscal year if the registrant is an
accelerated filer, as applicable depending on the registrant's fiscal
year (or after 45 days but within 90 days of the end of the fiscal year
for other registrants)'' in the second and third sentences of the
second paragraph of Section 302.01.c.
The Codification is a separate publication of the Commission. It
will not be published in the Federal Register or Code of Federal
Regulations.

VIII. Statutory Authority and Text of Rule Amendments

The amendments contained in this document are being adopted under
the authority set forth in Sections 3(b) and 19(a) of the Securities
Act and Sections 12, 13, 15(d) and 23(a) of the Exchange Act.

Text of Rule Amendments

List of Subjects in 17 CFR Parts 210, 229, 240 and 249

Reporting and recordkeeping requirements, Securities.

In accordance with the foregoing, Title 17, Chapter II of the Code
of Federal Regulations is amended as follows.

PART 210--FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL
STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF
1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT
COMPANY ACT OF 1940, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY
POLICY AND CONSERVATION ACT OF 1975

1. The authority citation for part 210 continues to read as
follows:

Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3,
77aa(25), 77aa(26), 78c, 78j-1, 78l, 78m, 78n, 78o(d), 78q, 78u-5,
78w(a), 78ll, 78mm, 79e(b), 79j(a), 79n, 79t(a), 80a-8, 80a-20, 80a-
29, 80a-30, 80a-37(a), 80b-3, 80b-11 unless otherwise noted.

2. Section 210.3-01 is amended by:
a. Removing the phrase ``90 days of the end of the registrant's
fiscal year'' and adding, in its place, the phrase ``the number of days
of the end of the registrant's fiscal year specified in paragraph (i)
of this section'' in the introductory text of paragraph (c) and
paragraph (d); and b. Revising paragraph (e) and adding paragraph (i)
to read as follows:

Sec. 210.3-01 Consolidated balance sheets.

* * * * *

[[Page 58504]]

(e) For filings made after the number of days specified in
paragraph (i) of this section, the filing shall also include a balance
sheet as of an interim date within the following number of days of the
date of filing:
(1) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(i) 135 days for fiscal years ending on or after December 15, 2002
and before December 15, 2004;
(ii) 130 days for fiscal years ending on or after December 15, 2004
and before December 15, 2005; and
(iii) 125 days for fiscal years ending on or after December 15,
2005; and
(2) 135 days for all other registrants.
* * * * *
(i)(1) For purposes of paragraph (c) and (d) of this section, the
number of days shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(A) 90 days for fiscal years ending on or after December 15, 2002
and before December 15, 2003;
(B) 75 days for fiscal years ending on or after December 15, 2003
and before December 15, 2004; and
(C) 60 days for fiscal years ending on or after December 15, 2004;
and
(ii) 90 days for all other registrants.
(2) For purposes of paragraph (e) of this section, the number of
days shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(A) 134 days subsequent to the end of the registrant's most recent
fiscal year for fiscal years ending on or after December 15, 2002 and
before December 15, 2004;
(B) 129 days subsequent to the end of the registrant's most recent
fiscal year for fiscal years ending on or after December 15, 2004 and
before December 15, 2005; and
(C) 124 days subsequent to the end of the registrant's most recent
fiscal year for fiscal years ending on or after December 15, 2005; and
(ii) 134 days subsequent to the end of the registrant's most recent
fiscal year for all other registrants.

3. Section 210.3-09 is amended by:
a. Removing the authority citation following Sec. 210.3-09;
b. Removing the phrase ``Sec. 210.1-02(v)'' and adding, in its
place, the phrase ``Sec. 210.1-02(w)'' in the first sentence of
paragraph (a); and
c. Revising the last sentence of paragraph (b) and adding
paragraphs (b)(1), (b)(2), (b)(3) and (b)(4) to read as follows:

Sec. 210.3-09 Separate financial statements of subsidiaries not
consolidated and 50 percent or less owned persons.

* * * * *
(b) * * * For purposes of a filing on Form 10-K (Sec. 249.310 of
this chapter):
(1) If the registrant is an accelerated filer (as defined in Sec.
240.12b-2 of this chapter) but the 50 percent or less owned person is
not an accelerated filer, the required financial statements may be
filed as an amendment to the report within 90 days, or within six
months if the 50 percent or less owned person is a foreign business,
after the end of the registrant's fiscal year.
(2) If the fiscal year of any 50 percent or less owned person ends
within the registrant's number of filing days before the date of the
filing, or if the fiscal year ends after the date of the filing, the
required financial statements may be filed as an amendment to the
report within the subsidiary's number of filing days, or within six
months if the 50 percent or less owned person is a foreign business,
after the end of such subsidiary's or person's fiscal year.
(3) The term registrant's number of filing days means:
(i) If the registrant is an accelerated filer:
(A) 90 days for fiscal years ending on or after December 15, 2002
and before December 15, 2003;
(B) 75 days for fiscal years ending on or after December 15, 2003
and before December 15, 2004; and
(C) 60 days for fiscal years ending on or after December 15, 2004;
and
(ii) If the registrant is not an accelerated filer, 90 days.
(4) The term subsidiary's number of filing days means:
(i) If the 50 percent or less owned person is an accelerated filer:
(A) 90 days for fiscal years ending on or after December 15, 2002
and before December 15, 2003;
(B) 75 days for fiscal years ending on or after December 15, 2003
and before December 15, 2004; and
(C) 60 days for fiscal years ending on or after December 15, 2004;
and
(ii) If the 50 percent or less owned person is not an accelerated
filer, 90 days.
* * * * *

4. Section 210.3-12 is amended by:
a. Removing the phrase ``135 days'' and adding, in its place, the
phrase ``the number of days specified in paragraph (g) of this
section'' in both instances where it appears in the first sentence of
paragraph (a);
b. Removing the phrase ``90 days subsequent to the end of the
fiscal year'' and adding, in its place, the phrase ``the number of days
subsequent to the end of the fiscal year specified in paragraph (g) of
this section'' in the first sentence of paragraph (b); and
c. Adding paragraph (g) to read as follows:

Sec. 210.3-12 Age of financial statements at effective date of
registration statement or at mailing date of proxy statement.

* * * * *
(g)(1)For purposes of paragraph (a) of this section, the number of
days shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(A) 135 days for fiscal years ending on or after December 15, 2002
and before December 15, 2004;
(B) 130 days for fiscal years ending on or after December 15, 2004
and before December 15, 2005; and
(C) 125 days for fiscal years ending on or after December 15, 2005;
and
(ii) 135 days for all other registrants.
(2) For purposes of paragraph (b) of this section, the number of
days shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(A) 90 days for fiscal years ending on or after December 15, 2002
and before December 15, 2003;
(B) 75 days for fiscal years ending on or after December 15, 2003
and before December 15, 2004; and
(C) 60 days for fiscal years ending on or after December 15, 2004;
and
(ii) 90 days for all other registrants.

PART 229--STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND
CONSERVATION ACT OF 1975--REGULATION S-K

5. The authority citation for part 229 continues to read, in part,
as follows:

Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2,
77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj,
77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78u-5, 78w,
78ll(d), 78mm, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 80a-
37, 80a-38(a) and 80b-11, unless otherwise noted.
* * * * *

6. Section 229.101 is amended by revising paragraph (e) to read as
follows:

Sec. 229.101 (Item 101) Description of business.

* * * * *
(e) Available information. Disclose the information in paragraphs
(e)(1), (e)(2) and (e)(3) of this section in any registration statement
you file under the Securities Act (15 U.S.C. 77a et seq.), and disclose
the information in paragraphs (e)(3) and (e)(4) of this section if you
are an accelerated filer (as defined in Sec. 240.12b-2 of this
chapter)

[[Page 58505]]

filing an annual report on Form 10-K (Sec. 249.310 of this chapter):
(1) Whether you file reports with the Securities and Exchange
Commission. If you are a reporting company, identify the reports and
other information you file with the SEC.
(2) That the public may read and copy any materials you file with
the SEC at the SEC's Public Reference Room at 450 Fifth Street, NW.,
Washington, DC 20549. State that the public may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-
SEC-0330. If you are an electronic filer, state that the SEC maintains
an Internet site that contains reports, proxy and information
statements, and other information regarding issuers that file
electronically with the SEC and state the address of that site (http://www.sec.gov).
(3) You are encouraged to give your Internet address, if available,
except that if you are an accelerated filer filing your annual report
on Form 10-K, you must disclose your Internet address, if you have one.
(4)(i) Whether you make available free of charge on or through your
Internet website, if you have one, your annual report on Form 10-K,
quarterly reports on Form 10-Q (Sec. 249.308a of this chapter),
current reports on Form 8-K (Sec. 249.308 of this chapter), and
amendments to those reports filed or furnished pursuant to Section
13(a) or 15(d) of the Exchange Act (15 U.S.C. 78m(a) or 78o(d)) as soon
as reasonably practicable after you electronically file such material
with, or furnish it to, the SEC;
(ii) If you do not make your filings available in this manner, the
reasons you do not do so (including, where applicable, that you do not
have an Internet website); and
(iii) If you do not make your filings available in this manner,
whether you voluntarily will provide electronic or paper copies of your
filings free of charge upon request.
* * * * *

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934

7. The authority citation for part 240 continues to read, in part,
as follows:

Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3,
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i,
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5,
78w, 78x, 78ll, 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37, 80b-
3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *

8. Section 240.12b-2 is amended by adding the definition of
``Accelerated filer'' before the definition of ``Affiliate'' to read as
follows:

Sec. 240.12b-2 Definitions.

* * * * *
Accelerated filer. (1) The term ``accelerated filer'' means an
issuer after it first meets the following conditions as of the end of
its fiscal year:
(i) The aggregate market value of the voting and non-voting common
equity held by non-affiliates of the issuer is $75 million or more;
(ii) The issuer has been subject to the requirements of Section
13(a) or 15(d) of the Act (15 U.S.C. 78m or 78o(d)) for a period of at
least twelve calendar months;
(iii) The issuer has filed at least one annual report pursuant to
Section 13(a) or 15(d) of the Act; and
(iv) The issuer is not eligible to use Forms 10-KSB and 10-QSB
(Sec. 249.310b and Sec. 249.308b) for its annual and quarterly
reports.

Note to paragraph (1): The aggregate market value of the
issuer's outstanding voting and non-voting common equity shall be
computed by use of the price at which the common equity was last
sold, or the average of the bid and asked prices of such common
equity, in the principal market for such common equity, as of the
last business day of the issuer's most recently completed second
fiscal quarter.

(2) Entering and Exiting Accelerated Filer Status. (i) The
determination for whether a non-accelerated filer becomes an
accelerated filer as of the end of the issuer's fiscal year governs the
annual report to be filed for that fiscal year, the quarterly and
annual reports to be filed for the subsequent fiscal year and all
annual and quarterly reports to be filed thereafter while the issuer
remains an accelerated filer.
(ii) Once an issuer becomes an accelerated filer, it will remain an
accelerated filer unless the issuer becomes eligible to use Forms 10-
KSB and 10-QSB for its annual and quarterly reports. In that case, the
issuer will not become an accelerated filer again unless it
subsequently meets the conditions in paragraph (1) of this definition.
* * * * *

9. Section 240.13a-10 is amended by:
a. Removing the phrase ``90 days'' and adding, in its place, the
phrase ``the number of days specified in paragraph (j) of this
section'' in the first sentence of paragraph (b) and the second
sentence of paragraph (f);
b. Removing the phrase ``45 days'' and adding, in its place, the
phrase ``the number of days specified in paragraph (j) of this
section'' in the first sentence of paragraph (c), the second sentence
of paragraph (e)(2), and the third sentence of paragraph (f); and
c. Adding paragraph (j) before the Note to read as follows:

Sec. 240.13a-10 Transition reports.

* * * * *
(j)(1) For transition reports to be filed on the form appropriate
for annual reports of the issuer, the number of days shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2):
(A) 90 days for fiscal years ending on or after December 15, 2002
and before December 15, 2003;
(B) 75 days for fiscal years ending on or after December 15, 2003
and before December 15, 2004; and
(C) 60 days for fiscal years ending on or after December 15, 2004;
and
(ii) 90 days for all other issuers; and
(2) For transition reports to be filed on Form 10-Q or Form 10-QSB
(Sec. 249.308a or Sec. 249.308b of this chapter), the number of days
shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2):
(A) 45 days for fiscal years ending on or after December 15, 2002
and before December 15, 2004;
(B) 40 days for fiscal years ending on or after December 15, 2004
and before December 15, 2005; and
(C) 35 days for fiscal years ending on or after December 15, 2005;
and
(ii) 45 days for all other issuers.
* * * * *

10. Section 240.15d-10 is amended by:
a. Removing the phrase ``90 days'' and adding, in its place, the
phrase ``the number of days specified in paragraph (j) of this
section'' in the first sentence of paragraph (b) and the second
sentence of paragraph (f);
b. Removing the phrase ``45 days'' and adding, in its place, the
phrase ``the number of days specified in paragraph (j) of this
section'' in the first sentence of paragraph (c), the second sentence
of paragraph (e)(2), and the third sentence of paragraph (f); and
c. Adding paragraph (j) before the Note to read as follows:

Sec. 240.15d-10 Transition reports.

[[Page 58506]]

(B) 75 days for fiscal years ending on or after December 15, 2003
and before December 15, 2004; and
(C) 60 days for fiscal years ending on or after December 15, 2004;
and
(ii) 90 days for all other issuers; and
(2) For transition reports to be filed on Form 10-Q or Form 10-QSB
(Sec. 249.308a or Sec. 249.308b of this chapter), the number of days
shall be:
(i) For accelerated filers (as defined in Sec. 240.12b-2):
(A) 45 days for fiscal years ending on or after December 15, 2002
and before December 15, 2004;
(B) 40 days for fiscal years ending on or after December 15, 2004
and before December 15, 2005; and
(C) 35 days for fiscal years ending on or after December 15, 2005;
and
(ii) 45 days for all other issuers.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

11. The authority citation for part 249 continues to read, in part,
as follows:

Authority: 15 U.S.C. 78a, et seq., unless otherwise noted.
* * * * *
12. Section 249.308a is revised to read as follows:

Sec. 249.308a Form 10-Q, for quarterly and transition reports under
sections 13 or 15(d) of the Securities Exchange Act of 1934.

(a) Form 10-Q shall be used for quarterly reports under Section 13
or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)), required to be filed pursuant to Sec. 240.13a-13 or Sec.
240.15d-13 of this chapter. A quarterly report on this form pursuant to
Sec. 240.13a-13 or Sec. 240.15d-13 of this chapter shall be filed
within the following period after the end of the first three fiscal
quarters of each fiscal year, but no quarterly report need be filed for
the fourth quarter of any fiscal year:
(1) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(i) 45 days after the end of the fiscal quarter for fiscal years
ending on or after December 15, 2002 and before December 15, 2004;
(ii) 40 days after the end of the fiscal quarter for fiscal years
ending on or after December 15, 2004 and before December 15, 2005; and
(iii) 35 days after the end of the fiscal quarter for fiscal years
ending on or after December 15, 2005; and
(2) 45 days after the end of the fiscal quarter for all other
registrants.
(b) Form 10-Q also shall be used for transition and quarterly
reports filed pursuant to Sec. 240.13a-10 or Sec. 240.15d-10 of this
chapter. Such transition or quarterly reports shall be filed in
accordance with the requirements set forth in Sec. 240.13a-10 or Sec.
240.15d-10 of this chapter applicable when the registrant changes its
fiscal year end.

13. Form 10-Q (referenced in Sec. 249.308a) is amended by revising
General Instruction A.1. and by adding a paragraph before the title
``Applicable Only to Issuers Involved in Bankruptcy Proceedings During
the Preceding Five Years:'' on the cover page to read as follows:

Note: The text of Form 10-Q does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 10-Q

General Instructions

A. Rule as to Use of Form 10-Q.

1. Form 10-Q shall be used for quarterly reports under Section 13
or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)), filed pursuant to Rule 13a-13 (17 CFR 240.13a-13) or Rule 15d-
13 (17 CFR 240.15d-13). A quarterly report on this form pursuant to
Rule 13a-13 or Rule 15d-13 shall be filed within the following period
after the end of each of the first three fiscal quarters of each fiscal
year, but no report need be filed for the fourth quarter of any fiscal
year:
a. For accelerated filers (as defined in 17 CFR 240.12b-2):
(i) 45 days after the end of the fiscal quarter for fiscal years
ending on or after December 15, 2002 and before December 15, 2004;
(ii) 40 days after the end of the fiscal quarter for fiscal years
ending on or after December 15, 2004 and before December 15, 2005; and
(iii) 35 days after the end of the fiscal quarter for fiscal years
ending on or after December 15, 2005; and
b. 45 days after the end of the fiscal quarter for all other
issuers.
* * * * *

FORM 10-Q

* * * * *
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act). Yes ---- No ----

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
* * * * *

14. Section 249.310 is revised to read as follows:

Sec. 249.310 Form 10-K, for annual and transition reports pursuant to
sections 13 or 15(d) of the Securities Exchange Act of 1934.

(a) This form shall be used for annual reports pursuant to Sections
13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) for which no other form is prescribed. This form also shall be
used for transition reports filed pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934.
(b) Annual reports on this form shall be filed within the following
period:
(1) For accelerated filers (as defined in Sec. 240.12b-2 of this
chapter):
(i) 90 days after the end of the fiscal year covered by the report
for fiscal years ending on or after December 15, 2002 and before
December 15, 2003;
(ii) 75 days after the end of the fiscal year covered by the report
for fiscal years ending on or after December 15, 2003 and before
December 15, 2004; and
(iii) 60 days after the end of the fiscal year covered by the
report for fiscal years ending on or after December 15, 2004; and
(2) 90 days after the end of the fiscal year covered by the report
for all other registrants.
(c) Transition reports on this form shall be filed in accordance
with the requirements set forth in Sec. 240.13a-10 or Sec. 240.15d-10
of this chapter applicable when the registrant changes its fiscal year
end.
(d) Notwithstanding paragraphs (b) and (c) of this section, all
schedules required by Article 12 of Regulation S-X (Sec. Sec. 210.12-
01-210.12-29 of this chapter) may, at the option of the registrant, be
filed as an amendment to the report not later than 30 days after the
applicable due date of the report.

15. Form 10-K (referenced in Sec. 249.310) is amended by revising
General Instruction A. and the paragraph before the ``Note'' on the
cover page to read as follows:

Note: The text of Form 10-K does not, and this amendment will
not, appear in the Code of Federal Regulations.

Form 10-K

* * * * *

General Instructions

A. Rule as to Use of Form 10-K.

(1) This Form shall be used for annual reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or
78o(d)) (the ``Act'') for which no other form is prescribed. This Form
also shall be used for transition reports filed pursuant to Section 13
or 15(d) of the Act.

[[Page 58507]]

(2) Annual reports on this Form shall be filed within the following
period:
(a) For accelerated filers (as defined in 17 CFR 240.12b-2):
(i) 90 days after the end of the fiscal year covered by the report
for fiscal years ending on or after December 15, 2002 and before
December 15, 2003;
(ii) 75 days after the end of the fiscal year covered by the report
for fiscal years ending on or after December 15, 2003 and before
December 15, 2004; and
(iii) 60 days after the end of the fiscal year covered by the
report for fiscal years ending on or after December 15, 2004; and
(b) 90 days after the end of the fiscal year covered by the report
for all other registrants.
(3) Transition reports on this Form shall be filed in accordance
with the requirements set forth in Rule 13a-10 (17 CFR 240.13a-10) or
Rule 15d-10 (17 CFR 240.15d-10) applicable when the registrant changes
its fiscal year end.
(4) Notwithstanding paragraphs (2) and (3) of this General
Instruction A., all schedules required by Article 12 of Regulation S-X
(17 CFR 210.12-01-210.12-29) may, at the option of the registrant, be
filed as an amendment to the report not later than 30 days after the
applicable due date of the report.
* * * * *

FORM 10-K

* * * * *
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act). Yes ---- No ----
State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, or the average bid and asked
price of such common equity, as of the last business day of the
registrant's most recently completed second fiscal quarter.
* * * * *

Dated: September 5, 2002.

By the Commission.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-23072 Filed 9-13-02; 8:45 am]
BILLING CODE 8010-01-P