[Federal Register Volume 64, Number 84 (Monday, May 3, 1999)]
[Notices]
[Pages 23710-23722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-10984]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41324; File No. SR-NYSE-99-13]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the New York Stock Exchange, Inc. 
Relating to Amendments to the Listed Company Manual Regarding Original 
and Continued Listing Criteria and Procedures

April 22, 1999.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on March 31, 1999, the New York Stock Exchange, Inc. (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. On April 21, 1999, the Exchange submitted Amendment No. 1 to 
the proposed rule change. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    The proposed rule change consists of amendments to the Listed 
Company Manual (``Manual'') \3\ with regards to the original and 
continued listing criteria and procedures of the Exchange. The text of 
the proposed rule change follows. New text is italicized. Deleted text 
is bracketed.
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    \3\ The Exchange notes that it has a pending filing to make 
certain amendments to its listing standards (SR-NYSE-98-21). The 
instant filing is marked against the Manual in its current form, not 
the Manual as proposed to be amended in the already pending filing.
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NYSE Listed Company Manual

* * * * *

Section 1

The Listing Process
101.00  Introduction
* * * * *
    The Exchange has broad discretion regarding the listing of a 
company. The Exchange is committed to list only those companies that 
are suited for auction market trading and that have attained the status 
of being eligible for trading on the Exchange. Thus, the Exchange may 
deny listing or apply additional or more stringent criteria based on 
any event, condition, or circumstance that makes the listing of the 
company inadvisable or unwarranted in the opinion of the Exchange. Such 
determination can be made even if the company meets the standards set 
forth below.
102.01  Minimum Numerical Standards
--Domestic Standards [Companies]
--Equity Listings

    102.01A. A company must meet one of the following size/volume 
criteria:
* * * * *
    102.01B. A company must demonstrate an [A]aggregate market value of 
publicly-held shares [(C) , subject to adjustment depending on market 
conditions, as described below]......[$40,000,000] of $60,000,000 for 
companies that list either at the time of their initial public 
offerings (``IPOs'') (C) or as a result of spin-offs, and $100,000,000 
for other companies (D).

[(While greater emphasis is placed on market value, an additional 
measure of size is $40,000,000 in net tangible assets.)]
* * * * *
    (C) For companies that list at the time of their IPOs, the Exchange 
will rely on a written commitment from the underwriter to represent the 
anticipated value of the company's offering in order to determine a 
company's compliance with this listing standard. Similarly, for spin-
offs, the Exchange will rely on a representation from the parent 
company's investment banker (or other financial advisor) in order to 
estimate the market value based upon the as disclosed distribution 
ratio. For purpose of this paragraph, an IPO is an offering by an 
issuer which, immediately prior to its original listing, does not have 
a class of common stock registered under the Securities Exchange Act of 
1934. An IPO includes a carve-out, which is defined for purposes of 
this paragraph as the initial offering of an equity security to the 
public by a publicly traded company for an underlying interest in its 
existing business (which may be a subsidiary, division, or business 
unit).
    [C] (D) Shares held by directors, officers, or their immediate 
families and other concentrated holdings of 10 percent or more are 
excluded in calculating the number of publicly-held shares. If a 
company either has a significant concentration of stock, or changing 
market forces have adversely impacted the public market value of a 
company which otherwise would qualify for listing on the Exchange, such 
that its public market value is no more than 10 percent below 
$60,000,000 or $100,000,000, as applicable, the Exchange will generally 
consider $60,000,000 or $100,000,000, as applicable, in stockholders' 
equity as an alternate measure of size and therefore as an alternate 
basis on which to list the company.
* * * * *
[Calculation of Aggregate market Value Adjustment--On January 15 and 
July 15 of each year the NYSE Composite Index, at the close of business 
for that date, or on the next succeeding business day if the Exchange 
is closed, is divided by the base value of 55.06 (the NYSE Composite 
Index for July 15, 1971). The $40,000,000 standard multiplied by the 
adjustment factor as so calculated (after rounding up to the nearest 
thousandth). The resulting product is rounded to the nearest $100,000.
    The adjustment is made only when the NYSE Composite Index is lower 
than that of the base value, and is limited to a maximum reduction of 
50 percent of the standard which will be in effect for the succeeding 
six months following the calculation.
    Since the NYSE Composite Index has remained above 55.06 in recent 
years, no adjustment has been necessary]
* * * * *
----------------------------------------------------------------------
[Demonstrated earning power--income before federal income taxes and 
under competitive conditions:

Latest fiscal year......................................      $2,500,000
Each of the preceding two fiscal years..................      $2,000,000
 


[[Page 23711]]

OR
Demonstrated earning power--income before federal income taxes and 
under competitive conditions:

Aggregate for last 3 fiscal years.......................      $6,500,000
together with
A minimum in most recent fiscal year....................     $4,500,000
(All three years must be profitable.)
 

OR

For companies with not less than
$500,000,000 market capitalization and
$200,000,000 revenues in the most recent fiscal year:
Demonstrated earning power--adjusted net income*:
Aggregate for last 3 fiscal years--$25,000,000
(Each year must report a positive amount.)]

    102.01C. A company must meet one of the following financial 
standards:
    (I) (1) Pre tax earnings from continuing operations and after 
minority interest and equity in the earnings or losses of investees as 
adjusted (E) for items specified in (2)(a) through (i) below (F) must 
total at least:

$2,500,000 in the latest fiscal year together with $2,000,000 in each 
of the preceding two years; or
$6,500,000 in the aggregate for the last three fiscal years together 
with a minimum of $4,500,000 in the most recent fiscal year, and 
positive amounts for each of the preceding two years.

    (2) Adjustments that must be included in the calculation of the 
amounts required in paragraph (1) are as follows:

(a) Application of Use of Proceeds.

    If a company is in registration with the SEC and is in the process 
of an equity offering, adjustments should be made to reflect the net 
proceeds of that offering, and the specified intended application(s) of 
such proceeds to:
    (i) Pay off existing debt. The adjustment will include elimination 
of the actual historical interest on debt being retired with offering 
proceeds for all relevant periods. If the event giving rise to the 
adjustment occurred during a time-period such that pro forma amounts 
are not set forth in the SEC registration statement (typically, the pro 
forma effect of repayment of debt will be provided in the current 
registration statement only with respect to the last fiscal year plus 
any interim period in accordance with SEC rules), the company must 
prepare the relevant adjusted financial data to reflect the adjustment 
to its historical financial data, and its outside audit firm must 
provide a report of having applied agreed-upon procedures with respect 
to such adjustments. Such report must be prepared in accordance with 
the standards established by the American Institute of Certified Public 
Accountants.
    (ii) Fund an acquisition.
    (1) The adjustments will include those applicable with respect to 
acquisition(s) to be funded with the proceeds. Adjustments will be made 
that are disclosed as such in accordance with Rule 3-05 ``Financial 
Statements of Businesses Acquired or to be Acquired and Article 11 of 
Regulation S-X. Adjustments will be made for all the relevant periods 
for those acquisitions for which historical financial information of 
the acquiree is required to be disclosed in the SEC registration 
statement; and
    (2) Adjustments applicable to any period for which pro forma 
numbers are not set forth in the registration statement shall be 
accompanied by the relevant adjusted financial data to combine the 
historical results of the acquiree (or relevant portion thereof) and 
acquiror, as disclosed in the company's SEC filing. Under SEC rules, 
the number of periods disclosed depends upon the significance level of 
the acquiree to the acquiror. The adjustments will include those 
necessary to reflect (a) the allocation of the purchase price, 
including adjusting assets and liabilities of the acquiree to fair 
value recognizing any intangibles (and associated amortization and 
depreciation), and (b) the effects of additional financing to complete 
the acquisition. The company must prepare the relevant adjusted 
financial data to reflect the adjustment to its historical financial 
data, and its outside audit firm must provide a report of having 
applied agreed-upon procedures with respect to such adjustments. Such 
report must be prepared in accordance with the standards established by 
the American Institute of Certified Public Accountants.

(b) Acquisitions and Dispositions

    In instances other than acquisitions (and related dispositions of 
part of the acquiree) funded with the use of proceeds, adjustments will 
be made for those acquisitions and dispositions that are disclosed as 
such in a company's financial statements in accordance with Rule 3-05 
``Financial Statements of Businesses Acquired or to be Acquired'' and 
Article 11 of Regulation S-X. If the disclosure does not specify pre-
tax earnings from continuing operations, minority interest, and equity 
in the earnings or losses of investees, then such data must be prepared 
by the company's outside audit firm for the Exchange's consideration. 
In this regard, the audit firm would have to issue an independent 
accountant's report on applying agreed-upon procedures in accordance 
with the standards established by the American Institute of Certified 
Public Accountants.

(c) Exclusion of Merger or Acquisition Related Costs Recorded under 
Pooling of Interests

(d) Exclusion of Charges or Income Specifically Disclosed in the 
Applicant's SEC Filing for the Following:

    (i) In connection with exiting an activity for the following:
    (1) Costs of severance and termination benefits
    (2) Costs and associated revenues and expenses associated with the 
elimination and reduction of product lines
    (3) Costs to consolidate or re-locate plant and office facilities
    (4) Loss or gain on disposal of long-lived assets
    (ii) Environmental clean-up costs
    (iii) Litigation settlements

(e) Exclusion of Impairment Charges on Long-lived Assets (goodwill, 
property, plant, and equipment, and other long-lived assets)

(f) Exclusion of Gains or Losses Associated with Sales of a 
Subsidiary's or Investee's Stock

(g) Exclusion of In-Process Purchased Research and Development Charges

(h) Regulation S-X Article 11 Adjustments

    Adjustments will include those contained in a company's pro forma 
financial statements provided in a current filing with the SEC pursuant 
to SEC rules and regulations governing Article 11 ``Pro forma 
information of Regulation S-X Part 210--Form and Content of and 
Requirements for Financial Statements.''

(i) Exclusion of the Cumulative Effect of Adoption of New Accounting 
Standard (APB Opinion No.20)

OR

    (II) A Company with not less than $500,000,000 market 
capitalization and $200,000,000 in revenues during the most recent 12 
month period must demonstrate from the operating activity section of 
its cash flow statement that its cash flow, which represents net income 
adjusted to (a) reconcile such amounts to cash provided by operating 
activities, and (b) exclude changes in operating assets and 
liabilities, is at least

[[Page 23712]]

$25,000,000 in the aggregate for the last three fiscal years, and each 
year is reported as a positive amount as adjusted (E)(F) pursuant to 
Para. 102.01C (I)(2)(a) and (b) as applicable. With respect to 
reconciling amounts pursuant to this Paragraph, all such amounts are 
limited to the amount included in the company's income statement.
    (E) Only adjustments arising from events specifically so indicated 
in the company's SEC filing(s) as to both categorization and amount can 
and must be made. Any such adjustment applies only in the year in which 
the event occurred except with regard to the use of proceeds or 
acquisitions and dispositions. Any company for which the Exchange 
relies on adjustments in granting clearance must include all relevant 
adjusted financial data in its listing application as specified in 
Para. 702.04, and disclose the use of adjustments by including a 
statement in a press release (i) that additional information is 
available upon which the NYSE relied to list the company and is 
included in the listing application and (ii) that such information is 
available to the public upon request.
    (F) The above-referenced adjustments are measured and recognized in 
accordance with any relevant accounting literature, such as that 
published by the Financial Accounting Standards Board (``FASB''), the 
Accounting Principles Board (``APB''), the Emerging Issues Task Force 
(``EITF''), the American Institute of Certified Public Accountants 
(``AICPA''), and the SEC. Any literature is intended to guide issuers 
and investors regarding the affected adjustment listed. If successor 
interpretations (or guidelines) are published with respect to any 
particular adjustment, the most recent relevant interpretations (or 
guidelines) should be consulted.
    102.01D. Policy on restated financial statements due to a change 
from an unacceptable to acceptable accounting principle or a correction 
of errors
    If at any time following the Exchange's initial determination that 
a company meets the Exchange's original listing criteria, the company 
restates its financial statements due to a change from an unacceptable 
to an acceptable accounting principle or a correction of errors, and 
the restatement encompasses financial statements included in its SEC 
filings at the time of application for listing on the Exchange, the 
Exchange will re-evaluate the company's listing status. In this regard, 
the Exchange will determine whether, at the time of the original 
clearance, the company would have qualified under the Exchange's 
original listing standards utilizing the restated financial data. If 
not, unless the company meets original listing standards at the time of 
the restatement, the company will be notified that it does not meet the 
original listing standards and, if its securities have been listed, 
such securities will be suspended from trading and the company will 
immediately be subject to the delisting procedures in Para. 804.

[*Net income, adjusted to remove the effects of all items whose cash 
effects are investing or financing cash flows (determined pursuant to 
paragraph 28(b) of Statement of Financial Accounting Standards No. 95, 
Statement of Cash Flows, subject to the following limitations: the 
adjustment to net income with respect to the cash effects of 
discontinued operations, the cumulative effect of an accounting change, 
an extraordinary item or the gain or loss on extinguishment of debt 
will be limited to reversing the amount charged or credited in 
determining net income for the period.)
    The adjusted net income standard is designed to provide the 
opportunity for substantial companies that are valued more on the basis 
of ``cash flow'' than reported income to list on the Exchange. The NYSE 
will consider each company on a case by case basis and will look not 
only at the specifics of the company's business but will also look to 
its industry, peer group and other relevant factors in performing its 
due diligence with respect to the application of this standard.]

102.05  Minimum Numerical Standards--Real Estate Investment Trusts

    For Real Estate Investment Trusts (REITs) that do not have a three-
year operating history, the following listing standards apply:
     For such companies with at least $60,000,000 in 
stockholders' equity, the Exchange will generally authorize the listing 
of the REIT. For those REITs listing in conjunction with an offering, 
this requirement must be evidenced by a written commitment from the 
underwriter (or, in the case of a spin-off or carve-out, from the 
parent company's investment banker or other financial advisor) on 
behalf of the REIT;
     For such companies with stockholders' equity below 
$60,000,000, the Exchange will not consider the REIT eligible for 
listing.
* * * * *
103.00  Non-U.S. Companies
* * * * *
103.01  Minimum Numerical Standards--Non U.S Companies--Equity Listings
    103.01A. A company must meet the following distribution and size 
requirements:
[Distribution]

Number of shareholder, holders of 100 or    5,000 Worldwide
 more shares.
Number of shares publicly held............  2.5 million Worldwide
Market value of publicly-held shares (A)..  $100 million Worldwide (B)
 

    (A) Shares held by directors, officers, or their immediate families 
and other concentrated holdings of 10 percent or more are excluded in 
calculating the number of publicly-held shares. If a company either has 
a significant concentration of stock, or if changing market forces have 
adversely impacted the public market value of a company which otherwise 
would qualify for listing on the Exchange such that its public market 
value is no more than 10 percent below $100,000,000, the Exchange will 
generally consider $100,000,000 in stockholders' equity as an alternate 
measure of size and therefore, as an alternative basis to list the 
company.
    (B) For companies that list at the time of their initial public 
offerings (``IPOs''), if necessary, the Exchange will rely on a written 
commitment from the underwriter to represent the anticipated value of 
the company's offering in order to determine a company's compliance 
with this listing standard. Similarly, for spin-offs, the Exchange will 
rely on a representation from the parent company's investment banker 
(or other financial advisor) or transfer agent in order to estimate the 
market value based upon the as disclosed distribution ratio. For 
purpose of this paragraph, an IPO is an offering by an issuer which, 
immediately prior to its original listing, does not have a class of 
common stock registered under the Securities Exchange Act of 1934. An 
IPO includes a carve-out, which is defined for purposes of this 
paragraph as the initial offering of an equity security to the public 
by a publicly traded company for an underlying interest in its existing 
business (may be a subsidiary, division, or business unit).

[Size and Earnings
    Net tangible assets...................  $100 million Worldwide
    Pre-tax income........................  $100 million cumulative for
                                             latest 3 years with $25
                                             million minimum for any one
                                             of the 3 years]
 


[[Page 23713]]

    103.01B. A company must meet one of the following financial 
standards:
    (I) (1) Pre tax earnings from continuing operations and after 
minority interest and equity in the earnings or losses of investees as 
adjusted (C)(D) for items specified in para. 102.01C(I)(2)(a) through 
(i) above, and 103.01B(I)(2) below, must total at least:

$100,000,000 in the aggregate for the last three fiscal years together 
with a minimum of $25,000,000 in each of the three years.

    (2) Additional Adjustment Available for Foreign Currency 
Devaluation. Non-operating adjustments when associated with translation 
adjustments representing a significant devaluation of a country's 
currency (e.g., the currency of a company's country of domicile 
devalues by more than 10 percent against the U.S. dollar within a six-
month period). Adjustments may not include those associated with normal 
currency gains or losses.

OR

    (II) Companies with not less than $500,000,000 market 
capitalization and $200,000,000 revenues in the most recent 12 month 
period must demonstrate from the operating activity section of its cash 
flow statement that its operating cash flow excluding changes in 
operating assets and liabilities is at least $25,000,000 in the 
aggregate for the last three fiscal years, where each year is reported 
as a positive amount as adjusted (C)(D) for Para. 102.01C(I)(2) (a) and 
(b).
    (C) Only adjustments arising from events specifically so indicated 
in the company's SEC filing(s) as to both categorization and amount can 
and must be made. Any such adjustment applies only in the year in which 
the event occurred except with regard to the use of proceeds or 
acquisitions and dispositions. Any company for which the Exchange 
relies on adjustments in granting clearance must include all relevant 
adjusted financial data in its listing application as specified in 
Para. 702.04, and disclose the use of adjustments by including a 
statement in a press release (i) that additional information is 
available upon which the NYSE relied to list the company and is 
included in the listing application and (ii) that such information is 
available to the public upon request.
    (D) Interested parties should apply the list of adjustments in 
accordance with any relevant accounting literature, such as that 
published by the Financial Accounting Standards Board (``FASB''), the 
Accounting Principles Board (``APB''), the Emerging Issues Task Force 
(``EITF''), the American Institute of Certified Public Accountants 
(``AICPA''), and the SEC. Any literature is intended to guide issuers 
and investors regarding the affected adjustment listed. If successor 
interpretations (or guidelines) are published with respect to any 
particular adjustment, the most recent relevant interpretations (or 
guidelines) should be consulted.
    103.01C. Policy on restated financial statements due to a change 
from an unacceptable to acceptable accounting principal or a correction 
of errors
    If at any time following the Exchange's initial determination that 
a company meets the Exchange's original listing criteria, the company 
restates its financial statements due to a change from an unacceptable 
to an acceptable accounting principle or a correction of errors, and 
the restatement encompasses financial statements included in its SEC 
filings at the time of application for listing on the Exchange, the 
Exchange will re-evaluate the company's listing status. In this regard, 
the Exchange will determine whether, at the time of the original 
clearance, the company would have qualified under the Exchange's 
original listing standards utilizing the restated financial data. If 
not, unless the company meets original listing standards at the time of 
the restatement, the company will be notified that it does not meet the 
original listing standards and, if its securities have been listed, 
such securities will be suspended from trading and the company will 
immediately be subject to the delisting procedures in Para. 804.
* * * * *

Section 7

Listing Applications
* * * * *
702.04  Supporting Documents
* * * * *
Financial Statements--
* * * * *
Adjustments to historical financial data--

    If the Exchange requires any adjustments to historical financial 
data submitted by the company during the financial eligibility review 
process and such data is necessary to demonstrate that the company 
meets the Exchange's listing standards, the company must include such 
data in its listing application. Exchange Staff will advise the company 
as to which, if any, adjustments to historical financial data submitted 
to it by the company must be included in the listing application. Such 
information must include the agreed upon procedures report, if any, 
submitted to the Exchange.
* * * * *

Section 8

Suspension and Delisting
* * * * *
801.00   Policy
* * * * *
    In connection with this rule, the Exchange has adopted certain 
quantitative and qualitative continued listing criteria. When a company 
falls below any criterion, the Exchange will review the appropriateness 
of continued listing. The Exchange may give consideration to any 
definitive action that a company would propose to take that would bring 
it [in line with original listing standards] above continued listing 
standards. The specific procedures and timelines regarding such 
proposals are delineated in Para. 802.02 and 802.03. [However, changes 
that a company might consider or make that would bring it above 
continued listing standards but not in line with original listing 
standards would normally not be adequate reason to warrant continued 
listing.]
* * * * *
802.00  Continued Listing [Criteria]
802.[00] 01  Continued Listing Criteria
* * * * *
Earnings--


 Aggregate market value of shares outstanding        $12,000,000
 (excluding treasury stock) is less than...................
and average net income (A) after taxes for past 3 years is      $600,000
 less than.................................................
 
 Net tangible assets available to common stock are   $12,000,000
 less than.................................................
and average net income (A) after taxes for past 3 years is      $600,000
 less than.................................................
 

    (A) For a company that included in its original listing application 
adjustments to historical financial data, during the first three years 
following the date of its original listing, the Exchange will calculate 
the company's average net income after taxes for any year considered in 
assessing its qualification for listing taking into consideration those 
specific adjustments made to the company's historical financial data 
for that year in the original listing application.

[[Page 23714]]

802.02  Continued Listing
Evaluation and Follow-Up Procedures for Domestic Companies
    The following procedures shall be applied by the Exchange to 
domestic companies which are identified as being below the Exchange's 
continued listing criteria. Notwithstanding the above, when the 
Exchange deems it necessary for the protection of investors, trading in 
any security can be suspended immediately, and application made to the 
SEC to delist the security.
    Once the Exchange identifies, through internal reviews or notice (a 
press release, news story, company communication, etc.), a company as 
being below the continued listing criteria set forth in Para. 802.01, 
the Exchange will notify the company by letter of its status within 10 
business days. This letter will also provide the company with an 
opportunity to provide the Exchange with a plan (the ``Plan'') advising 
the Exchange of definitive action the company has taken, or is taking, 
that would bring it into conformity with continued listing standards 
within 18 months of receipt of the letter. Within 10 business days 
after receipt of the letter, the company must contact the Exchange to 
confirm receipt of notification, discuss any possible financial data of 
which the Exchange may be unaware, and indicate whether or not it plans 
to present a Plan; otherwise, suspension and delisting procedures will 
commence. If the company submits a Plan, it must identify specific 
quarterly milestones against which the Exchange will evaluate the 
company's progress.
    The company has 45 days from the receipt of the letter to submit 
its Plan to the Exchange for review; otherwise, suspension and 
delisting procedures will commence. Exchange staff will evaluate the 
Plan, including any additional documentation that supports the Plan, 
and make a determination as to (1) whether the Plan shows the company 
meeting the continued listing standards within the 18 months and (2) 
whether the company has made a reasonable demonstration in the Plan of 
an ability to come into conformity with continued listing standards. 
The Exchange will make such determination within 45 days of receipt of 
the proposed Plan, and will promptly notify the company of its 
determination in writing.
    The company also has 45 days from receipt of the letter to issue a 
press release disclosing the fact that it has fallen below the 
continued listing standards of the Exchange. If the company fails to 
issue this press release during the allotted 45 days, the Exchange will 
issue the requisite press release.
    If the Exchange does not accept the Plan, the Exchange will 
promptly initiate suspension and delisting procedures and issue a press 
release disclosing the forthcoming suspension and application to the 
SEC for delisting of the company's securities.
    If the Exchange accepts the Plan, the Exchange will review the 
company on a quarterly basis for compliance with the Plan. If the 
company fails to meet the material aspects of the Plan or any of the 
quarterly milestones, the Exchange will review the circumstances and 
variance, and determine whether such variance warrants commencement of 
suspension and delisting procedures. Should the Exchange determine to 
proceed with suspension and delisting procedures, it may do so 
regardless of the company's continued listing status at that time. In 
any event, if the company does not meet continued listing standards at 
the end of the 18-month period, the Exchange promptly will initiate 
suspension and delisting procedures.
* * * * *
802.03  Continued Listing
Evaluation and Follow-up Procedures for Non-U.S. Companies
    The following procedures shall be applied by the Exchange to non-
U.S. companies who are identified as being below the Exchange's 
continued listing criteria. Notwithstanding the above, when the 
Exchange deems it necessary for the protection of investors, trading in 
any security can be suspended immediately, and application made to the 
SEC to delist the security.
    Once the Exchange identifies, through internal reviews or notice (a 
press release, news story, company communication, etc.), a company as 
being below the continued listing criteria set forth in Para. 802.01, 
the Exchange will notify the company by letter of its status within 10 
business days. This letter will also provide the company with an 
opportunity to provide the Exchange with a plan (the ``Plan'') advising 
the Exchange of definitive action the company has taken, or is taking, 
that would bring it into conformity with continued listing standards 
within 18 months of receipt of the letter. Within 30 business days 
after receipt of the letter, the company must contact the Exchange to 
confirm receipt of notification, discuss any possible financial data of 
which the Exchange may be unaware, and indicate whether or not it plans 
to present a Plan; otherwise, suspension and delisting procedures will 
commence. If the company submits a Plan, it must identify specific 
semi-annual milestones against which the Exchange will evaluate the 
company's progress.
    The company has 90 days from the receipt of the letter to submit 
its Plan to the Exchange for review; otherwise, suspension and 
delisting procedures will commence. Exchange staff will evaluate the 
Plan, including any additional documentation that supports the Plan, 
and make a determination as to (1) whether the Plan shows the company 
meeting the continued listing standards within the 18 months and (2) 
whether the company has made a reasonable demonstration in the Plan of 
an ability to come into conformity with continued listing standards. 
The Exchange will make such determination within 45 days of receipt of 
the proposed Plan, and will promptly notify the company of its 
determination in writing.
    The company also has 90 days from receipt of the letter to issue a 
press release disclosing the fact that it has fallen below the 
continued listing standards of the Exchange. If the company fails to 
issue this press release during the allotted 90 days, the Exchange will 
issue the requisite press release.
    If the Exchange does not accept the Plan, the Exchange will 
promptly initiate suspension and delisting procedures and issue a press 
release disclosing the forthcoming suspension and application to the 
SEC for delisting of the company's securities.
    If the Exchange accepts the Plan, the Exchange will review the 
company on a semi-annual basis for compliance with the Plan. If the 
company fails to meet the material aspects of the Plan or any of the 
semi-annual milestones, the Exchange will review the circumstances and 
variance, and determine whether such variance warrants commencement of 
suspension and delisting procedures. Should the Exchange determine to 
proceed with suspension and delisting procedures, it may do so 
regardless of the company's continued listing status at that time. In 
any event, if the company does not meet continued listing standards at 
the end of the 18-month period, the Exchange will promptly initiate 
suspension and delisting procedures.

[[Page 23715]]

NYSE Rules

Delisting of Securities

Suspension from Dealings or Removal from List by Action of the 
Exchange

    The aim of the New York Stock Exchange is to provide the foremost 
auction market for securities of well-established companies in which 
there is a broad public interest and ownership.

Rule 499.

    .20  NUMERICAL AND OTHER CRITERIA.--WHEN A COMPANY FALLS BELOW ANY 
OF THESE CRITERIA, THE EXCHANGE MAY GIVE CONSIDERATION TO ANY 
DEFINITIVE ACTION THAT A COMPANY WOULD PROPOSE TO TAKE THAT WOULD BRING 
IT ABOVE CONTINUED LISTING STANDARDS. [IN LINE WITH ORIGINAL LISTING 
STANDARDS. ON THE OTHER HAND, CHANGES THAT A COMPANY MIGHT CONSIDER OR 
MAKE THAT WOULD BRING IT ABOVE THE DELISTING CRITERIA BUT NOT IN LINE 
WITH ORIGINAL LISTING STANDARDS WOULD NORMALLY NOT BE ADEQUATE REASON 
TO WARRANT CONTINUED LISTING.]
* * * * *
.50  [Procedure for Delisting.--] Continued Listing Evaluation and 
Follow-up Procedures for Domestic Companies
    The following procedures shall be applied by the Exchange to 
domestic companies which are identified as being below the Exchange's 
continued listing criteria. Notwithstanding the above, when the 
Exchange deems it necessary for the protection of investors, trading in 
any security can be suspended immediately, and application made to the 
SEC to delist the security.
    Once the Exchange identifies, through internal reviews or notice (a 
press release, news story, company communication, etc.), a company as 
being below the continued listing criteria set forth in Para. 802.01, 
the Exchange will notify the company by letter of its status within 10 
business days. This letter will also provide the company with an 
opportunity to provide the Exchange with a plan (the ``Plan'') advising 
the Exchange of definitive action the company has taken, or is taking, 
that would bring it into conformity with continued listing standards 
within 18 months of receipt of the letter. Within 10 business days 
after receipt of the letter, the company must contact the Exchange to 
confirm receipt of notification, discuss any possible financial data of 
which the Exchange may be unaware, and indicate whether or not it plans 
to present a Plan; otherwise, suspension and delisting procedures will 
commence. If the company submits a Plan, it must identify specific 
quarterly milestones against which the Exchange will evaluate the 
company's progress.
    The company has 45 days from the receipt of the letter to submit 
its Plan to the Exchange for review; otherwise, suspension and 
delisting procedures will commence. Exchange staff will evaluate the 
Plan, including any additional documentation that supports the Plan, 
and make a determination as to (1) whether the Plan shows the company 
meeting the continued listing standards within the 18 months and (2) 
whether the company has made a reasonable demonstration in the Plan of 
an ability to come into conformity with continued listing standards. 
The Exchange will make such determination within 45 days of receipt of 
the proposed Plan, and will promptly notify the company of its 
determination in writing.
    The company also has 45 days from receipt of the letter to issue a 
press release disclosing the fact that it has fallen below the 
continued listing standards of the Exchange. If the company fails to 
issue this press release during the allotted 45 days, the Exchange will 
issue the requisite press release.
    If the Exchange does not accept the Plan, the Exchange will 
promptly initiate suspension and delisting procedures and issue a press 
release disclosing the forthcoming suspension and application to the 
SEC for delisting of the company's securities.
    If the Exchange accepts the Plan, the Exchange will review the 
company on a quarterly basis for compliance with the Plan. If the 
company fails to meet the material aspects of the Plan or any of the 
quarterly milestones, the Exchange will review the circumstances and 
variance, and determine whether such variance warrants commencement of 
suspension and delisting procedures. Should the Exchange determine to 
proceed with suspension and delisting procedures, it may do so 
regardless of the company's continued listing status at that time. In 
any event, if the company does not meet continued listing standards at 
the end of the 18-month period, the Exchange promptly will initiate 
suspension and delisting procedures.
.60 [Procedure for Delisting.--] Continued Listing Evaluation and 
Follow-up Procedures for Non-US Companies
    The following procedures shall be applied by the Exchange to non-
U.S. companies who are identified as being below the Exchange's 
continued listing criteria. Notwithstanding the above, when the 
Exchange deems it necessary for the protection of investors, trading in 
any security can be suspended immediately, and application made to the 
SEC to delist the security.
    Once the Exchange identifies, through internal reviews or notice (a 
press release, news story, company communication, etc.), a company as 
being below the continued listing criteria set forth in Para. 802.01, 
the Exchange will notify the company by letter of its status within 10 
business days. This letter will also provide the company with an 
opportunity to provide the Exchange with a plan (the ``Plan'') advising 
the Exchange of definitive action the company has taken, or is taking, 
that would bring it into conformity with continued listing standards 
within 18 months of receipt of the letter. Within 30 business days 
after receipt of the letter, the company must contact the Exchange to 
confirm receipt of notification, discuss any possible financial data of 
which the Exchange may be unaware, and indicate whether or not it plans 
to present a Plan; otherwise, suspension and delisting procedures will 
commence. If the company submits a Plan, it must identify specific 
semi-annual milestones against which the Exchange will evaluate the 
company's progress.
    The company has 90 days from the receipt of the letter to submit 
its Plan to the Exchange for review; otherwise, suspension and 
delisting procedures will commence. Exchange staff will evaluate the 
Plan, including any additional documentation that supports the Plan, 
and make a determination as to (1) whether the Plan shows the company 
meeting the continued listing standards within the 18 months and (2) 
whether the company has made a reasonable demonstration in the Plan of 
an ability to come into conformity with continued listing standards. 
The Exchange will make such determination within 45 days of receipt of 
the proposed Plan, and will promptly notify the company of its 
determination in writing.
    The company also has 90 days from receipt of the letter to issue a 
press release disclosing the fact that it has fallen below the 
continued listing standards of the Exchange. If the

[[Page 23716]]

company fails to issue this press release during the allotted 90 days, 
the Exchange will issue the requisite press release.
    If the Exchange does not accept the Plan, the Exchange will 
promptly initiate suspension and delisting procedures and issue a press 
release disclosing the forthcoming suspension and application to the 
SEC for delisting of the company's securities.
    If the Exchange accepts the Plan, the Exchange will review the 
company on a semi-annual basis for compliance with the Plan. If the 
company fails to meet the material aspects of the Plan or any of the 
semi-annual milestones, the Exchange will review the circumstances and 
variance, and determine whether such variance warrants commencement of 
suspension and delisting procedures.
    Should the Exchange determine to proceed with suspension and 
delisting procedures, it may do so regardless of the company's 
continued listing status at that time. In any event, if the company 
does not meet continued listing standards at the end of the 18-month 
period, the Exchange will promptly initiate suspension and delisting 
procedures.

.70 Procedure for Delisting.--

* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to clarify and codify 
how the Exchange evaluates a company's listing eligibility, codify the 
Exchange's application and interpretation of certain original listing 
standards, change the benchmark used as an alternate measure of size, 
codify its original listing standard for real estate investment trusts, 
and codify both existing and enhanced procedures applicable to 
companies identified as being below the Exchange's continued listing 
criteria. Where applicable, conforming changes are proposed regarding 
non-U.S. listings. In proposing these rule codifications and changes, 
the Exchange seeks to ensure that its original and continued listing 
standards are fully transparent, applied consistently and easily 
auditable.
    Original Listing Criteria and Procedures. The Exchange's numerical 
listing criteria include requirements regarding size, earnings and 
share distribution of a company. With regard to the size component of 
the financial eligibility criteria, and general eligibility, the 
Exchange proposes to make four amendments:

     The proposed amendment clarifies and codifies the 
Exchange staff's authority to delve further into the suitability of 
the applicant company for auction market trading on the Exchange 
even if the applicant meets the Exchange's quantitative criteria. 
The Exchange notes that such authority is specifically codified in 
the suspension and delisting section of the Manual and believes that 
it is equally appropriate to codify its authority in the original 
listing section.
     The current original listing criteria include a 
requirement that a company have an aggregate market value of 
publicly-held shares of $40 million. The Exchange proposes to raise 
this requirement to $100 million for all listings other than spin-
offs and initial public offerings (``IPOs'') (including carve-outs 
\4\), as to which the Exchange proposes raising the standard to $60 
million. The Exchange proposes to raise the current $40 million 
standard somewhat less for IPOs, carve-outs and spin-offs because 
these are companies that have not had the opportunity to establish 
themselves as public companies.\5\
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    \4\ The Exchange proposes to define a carve-out as the initial 
offering of an equity security to the public by a publicly-traded 
company for an underlying interest in its existing business (which 
may be a subsidary, division, or business unit). In the case of a 
``target stock,'' the security is treated in the same way as any 
other second class of stock of the issuer.
    \5\ The Exchange proposes to define an IPO as a company that, 
prior to its original listing did not have a class of common stock 
registered under the Act. The Exochange notes that this definition 
differs from the definition of an IPO in Section 12(f)(1)(G)(i) of 
the Act, which turns on whether a company has a reporting obligation 
under the Act prior to a stock offering. Because the Exchange is 
applying its definition of IPO in the context of the original 
listing of common stock, the Exchange believes it is more 
appropriate to focus on the existense of U.S. publicly-traded stock 
rather than on prior reporting requirement. For example, while a 
company could have a reporting requirement under the Act if it 
conducted a public sale of debt securities, that would not be 
relevant in considering the appropriateness of listing a company's 
first public class of common stock.
---------------------------------------------------------------------------

     The current additional measure of a company's size is a 
net tangible assets (``NTAs'') test. The Exchange proposes two 
changes:
    a. First, the word ``additional in this context has been read by 
some to imply that NTAs are a stand-alone measure of size that must 
be met in addition to the market value standard. This reading was 
never intended. The Exchange clarifies that the test, as modified 
below, is an alternate measure of size to be relied upon in those 
instances where circumstances warrant an alternate measure and where 
the public market capitalization is no more than 10 percent below 
the public market value listing standard. Such circumstances would 
include occurrences such as large private holdings that drive down 
the public market capitalization or changing market forces that 
drive down the price of the stock.
    b. Second, the Exchange proposes to replace the NTA test with a 
stockholders' equity test ($60 million for IPOs or spin-offs and 
$100 million for all other domestic listings \6\ The Exchange views 
stockholders' equity as a better reflection of a company's value in 
the current economy, where a company's value often is not based 
solely on hard assets, but also on intangibles. The Exchange would, 
in reviewing a company, look to the composition of the stockholders' 
equity in order to determine the origination of such equity. 
Furthermore, stockholders' equity is a more straight-forward 
calculation than NTAs.
---------------------------------------------------------------------------

    \6\ For non-U.S. companies, the $100 million requirement applies 
to all issuers and will be measured under this proposal in 
stockholders' equity instead of the current NTA valuation.
---------------------------------------------------------------------------

     The Exchange proposes to codify its practice of 
accepting a written commitment from the underwriter for IPOs (for 
spin-offs, from the parent company's investment banker or other 
financial advisor) to demonstrate that the company will satisfy the 
public market value requirement of $60 million ($100 million 
worldwide for non-U.S. issuers).

    Original Financial Listing Criteria and Procedures. i. Overview and 
Discussion of Current Practice Regarding Financial Listing Standards.
    In addition to specific criteria regarding the size of a listing 
applicant, the Manual also contains criteria regarding a company's 
earnings. The Exchange is proposing a series of amendments relating to 
this section of the Manual.
    Under the current provisions of the Manual, a company that seeks to 
qualify for listing on the Exchange under its domestic standards must 
meet one of three financial tests. Two of the tests call for an 
analysis of the company's ``demonstrated earning power under 
competitive conditions.'' The third test, which only applies to 
companies with at least $500,000,000 in market capitalization and 
$200,000,000 in revenues during the most recent fiscal year, analyzes 
the company's ``demonstrated earning power--adjusted net income,'' as 
such latter term is defined in the current accompanying

[[Page 23717]]

footnotes. The Exchange proposes both to codify its current policies 
and practices with respect to the interpretation of these criteria and 
to amend certain of its policies. In doing so, the Exchange seeks to 
ensure that the financial criteria applied to companies seeking to list 
on the Exchange are fully transparent, applied consistently and easily 
auditable.
    The Exchange seeks to ascertain the financial strength of the 
company as it will exist on the day of listing. For more than 60 years, 
it has been the policy and practice of the Exchange to give 
consideration to certain adjustments to assure that at the time of 
listing the company has the earnings capacity--the ``demonstrated 
earning power'' requisite to auction-agency trading of its securities 
on the Exchange.
    In conducting its review of the financial condition of an applicant 
company, the Exchange historically relied upon financial statements 
presented to it by the company, both historical and pro forma; in many 
cases, such financial information included that obtained from SEC 
filings (e.g., for an acquisition, pro forma financial statements may 
have been provided by the listing applicant acquiror and presented to 
Exchange staff from the relevant past SEC filings for the acquiree if 
it was a reporting company). Finally, if the Exchange relied on the 
adjustments in granting financial clearance to the company, the company 
would be required to include them in its original listing application 
as a condition to eligibility clearance. Thus, any adjustments were 
available to the public because the listing application is a matter of 
public record.
    The Exchange has not accepted all pro forma adjustments presented 
by the listing applicant. Moreover, the Exchange has required pro forma 
adjustments from companies in instances where the outcome was not 
favorable to the company if the adjustments were considered necessary 
to accurately evaluate the company's financial eligibility.
    While the Exchange believes that the current process has served 
investors and the listed company community well, the Exchange 
recognizes the need to provide more transparency as to the application 
of the financial criteria and the financial analysis used in the 
listing process. Thus, the proposed rule change sets forth more 
explicit standards and enumerates specifically the applicable 
adjustments. In addition, the proposed rule change makes conforming, 
clarifying changes to the non-U.S. financial listing standards in 
Section 103.01 of the Manual.
    ii. Proposed Changes to Financial Eligibility Standards. The 
proposed rule change codifies the Exchange's financial listing 
standards and current practices, as well as clarifies and modifies the 
relevant interpretations. The modifications have been made to ensure 
transparency, auditability, replicability and certainty in the 
application of the standards. In detailing its standards, the Exchange 
has sought to preserve its goal of analyzing the financial strength of 
a listing applicant as the entity will exist at the time of listing. 
Specifically, the Exchange seeks to continue to be able to determine 
whether the company in its current form is financially suited for 
trading on the Exchange, taking into account (1) changes in 
capitalization, (2) acquisitions completed or committed to, and (3) 
excluding certain items which, based upon the Exchange's experience, 
should not be considered in assessing earnings strength on a going 
forward basis, because, by their nature, they are not necessarily 
recurring.
    a. Standard #1--``Pre-Tax Adjusted Earnings. The Exchange proposes 
to replace its current requirement that applicants ``demonstrate 
earning power under competitive conditions'' with a standard providing 
more specificity. The proposed standard is ``pre-tax earnings from 
continuing operations and after minority interest and equity in the 
earnings or losses of investees as adjusted''. In turn, the ``as 
adjusted'' phrase refers the reader to various items that are a part of 
the test. Each element of the restated test is discussed separately 
below.
    First, ``pre-tax earnings'' captures the current standard of 
``income before federal income taxes.'' Thus, the Exchange proposes to 
continue to begin its analysis with a company's income before the 
application of all income taxes (state income taxes, although removed 
for NYSE analysis purposes in the past, have not materially altered any 
listing eligibility decision and, therefore, are now excluded as such) 
in order to create a picture of the company's gross income potential.
    Second, ``from continuing operations'' focuses our analysis on 
ongoing operations and excludes any discontinued operations included in 
the company's historical financial statements. Discontinued operations 
by definition do not go forward and thus are not considered to be 
relevant to the entity being considered for listing. The Exchange notes 
that accounting rules specify that, upon management's commitment to 
discontinue an operation, financial statements for all relevant periods 
presented must be restated. Therefore, if the commitment is made after 
the period under Exchange review and the historical financial 
statements have not yet been restated, the Exchange will rely on the 
company to prepare this presentation of the adjusted data and accompany 
such presentation with an agreed upon procedures letter provided by the 
company's outside audit firm at the request of the company. The 
auditor's letter will state the procedures performed with respect to 
calculating the pre-tax earnings from continuing operations and after 
minority interest and equity in the earnings or losses of investees as 
adjusted giving effect to the discontinuance for each period under 
review.
    Third, ``after minority interest'' removes results of an affiliate 
of the applicant company accrued to owners other than the applicant 
company due to its less than 100 percent ownership. The Exchange does 
not consider those results to be reflective of the equity interest in 
the security that would be trading on the Exchange. For example, in the 
case of a subsidiary that has a 20 percent privately held interest 
(i.e., a 20 percent minority interest), only 80 percent of the interest 
in the subsidiary is reflected in the public stock. In this scenario, 
although 100 percent of the subsidiary is consolidated into the 
applicant parent's operations, only 80 percent of the subsidiary's 
earnings will accrue to common stock holders of the applicant parent 
company, as the 20 percent minority interest will be reflected as a 
liability on the company's books and removed from its consolidated 
operations. The Exchange would make the appropriate adjustment in its 
analysis to essentially include 80 percent of the earnings in the 
subsidiary by adjusting the pre-tax income for the reported minority 
interest provided such minority interest is not included as part of the 
company's pre-tax income on the face of the financial statement.\7\
---------------------------------------------------------------------------

    \7\ The Exchange notes that in the case of equity in the 
earnings or losses of investees, the reporting of the amount may not 
necessarily be included in ``pre-tax earnings'' but might be 
reported by the company below this presentation in its income 
statement. Accordingly, the Exchange would make the requisite 
adjustment for these amounts if necessary.
---------------------------------------------------------------------------

    Fourth, ``after equity in the earnings or losses of investees'' 
arises when an applicant company has an ownership interest in another 
corporation, the results of which are not consolidated into the 
applicant company's financial statements due to the application of the 
governing accounting principles. The Exchange considers these results 
to be part of the financial picture of the applicant company because 
they

[[Page 23718]]

represent income or losses that will affect its income stream on an 
ongoing basis. Thus, any results of investments that accrue to the 
company will be accounted for in the Exchange's analysis to determine 
whether or not the company is eligible for listing in order to reflect 
all of the earnings accruing to the common shareholders. This will be 
effected by including these results from the company's income statement 
provided such results are not included as part of the company's pre-tax 
income on the face of the financial statement.
    Fifth, the Exchange proposes to enumerate the adjustments to be 
made to the amount computed pursuant to the preceding four paragraphs. 
These adjustments would be part of the proposed standard and, as such, 
apply to every listing applicant. Applicant companies may only apply 
those adjustments arising from events specifically identified in the 
company's SEC filing(s) as to both categorization and amount. Thus, in 
order for an adjustment to be appropriately applied, it must be 
specifically identified and the amount applied must be specifically 
disclosed in the SEC filing, or subject to an agreed upon procedures 
letter in certain cases as discussed below. The following discussion 
itemizes and clarifies the Exchange's interpretation of the adjustments 
to be made to pre-tax income from continuing operations after minority 
interest and equity in the earnings and losses of investees.
    The above-referenced adjustments are measured and recognized in 
accordance with the relevant accounting literature, such as that 
published by the Financial Accounting Standards Board (``FASB''), the 
Accounting Principles Board (``APB''), the Emerging Issues Task Force 
(``EITF''), the American Institute of Certified Public Accountants 
(``AICPA''), and the SEC.
    Use of Proceeds. When the financial status of a company is 
evaluated in anticipation of an equity offering, whether an IPO or a 
secondary offering, the application of its intended use of proceeds to 
the company's historical financial statements can affect its ongoing 
earnings strength. Because it is this post-offering and recapitalized 
entity that is applying to list on the Exchange, its financial 
eligibility can best be analyzed by taking into account the application 
and intended use of the offering proceeds.
    The Exchange has a long-standing policy of using the proceeds for 
all periods in determining the financial eligibility of a company 
seeking to list its securities on the Exchange. The company's 
registration documents (e.g., Form S-1) often include pro-forma 
capitalization information that takes into effect the net proceeds and 
the ultimate intended use. The Exchange's practice is conceptually 
consistent with the Commission's rules governing pro forma statements, 
which permit the application and use of proceeds in the capitalization 
table with regard to deleveraging, and in the pro forma financial 
statement section of a registration statement with regard to both 
deleveraging and acquisitions and dispositions.
    With respect to the scope of the application, however, the Exchange 
has a three-year eligibility review period and evaluates companies 
accordingly. In reviewing a company's historical results, the Exchange 
will continue to consider the effect of the offering on that three-year 
review period where the proceeds are used to pay existing indebtedness 
or to fund an acquisition. Thus, for a company that is in registration 
with the SEC and is in the process of an equity offering, the Exchange 
proposes to give effect to the pro forma presentation in the 
registration statement and to continue to give effect to the net 
proceeds of that offering, and its specified intended application, in 
two circumstances--deleveraging and acquisitions and dispositions.
    With regard to use of proceeds for deleveraging, the Exchange's 
practice is to analyze the financial data that reflect the 
recapitalized entity seeking to qualify for listing on the Exchange. In 
doing so, because a recapitalization can fundamentally change the 
financial viability of a company, the Exchange will conduct its review 
as if the recapitalization occurred on the first day of the first year 
of its three-year analysis. In applying the standard, the actual 
historic interest paid each year on the debt to be retired by the 
application of the proceeds will be removed, and the principal amount 
of the debt will be retired. The pro forma effects of the deleveraging 
for the latest fiscal year and the interim period will be reflected in 
the company's SEC filing. If that specific debt was incurred prior to 
that period, the company would need to prepare adjusted financial 
statement data to account for the relevant preceding periods. 
Adjustments will not be made on any interest or principal payment(s) 
made on indebtedness other than that specifically being retired. To 
ensure reliability and accuracy of the adjusted data, the Exchange 
proposes to require that this adjustment be accompanied by an agreed 
upon procedures letter provided by the company's outside audit firm at 
the request of the company. The auditor's letter will state the 
procedures performed with respect to: (1) The existence of the debt and 
(2) the accuracy of the adjustments applied to the company's historical 
pre-tax earnings reflecting the retirement of the principal amount of 
the debt and the actual historic interest payments made.
    Similarly, with regard to use of proceeds for acquisitions, the 
Exchange conducts its review as if the acquisition occurred on the 
first day of the first year of its analysis, provided the historical 
financial statements of the acquiree for such period are included in 
the company's SEC filings. The starting point for this analysis is the 
company's SEC filing, which will include a pro forma presentation for 
the latest fiscal year and the subsequent interim period. This pro 
forma presentation will give effect to those acquisitions that meet the 
significance test of SEC Rule 3-05 of Regulation S-X (``Rule 3-05''). 
Generally, the historical financial statements of the acquiree included 
in the filing also will be limited to the requisite periods disclosed 
pursuant the Rule 3-05 significance test.\8\
---------------------------------------------------------------------------

    \8\ The Exchange notes that, depending upon the industry group 
of the listed company, other SEC rules and regulations may govern 
this concept. For example, real estate operations would be guided by 
SEC Rule 3-14 of Regulation S-X.
---------------------------------------------------------------------------

    The second step of the analysis is to review the historical 
financials of the company included in the registration statement and 
record the acquisition as if it was consummated on the first day of the 
earliest fiscal year included in the acquiree's financial statements 
presented in the filing. The requisite document preparation entails 
combining the historical results of the company with the historical 
results of the acquiree and reflects the purchase accounting of the 
acquisition for the periods presented. Specifically, the adjustments 
would be limited to the combination, as well as (1) the allocation of 
the purchase price including adjusting assets and liabilities of the 
acquiree to fair value recognizing any intangibles (and associated 
amortization and depreciation) and (2) the effects of any additional 
financing to complete the acquisition.
    The Exchange notes that the heading ``acquisitions'' encompasses 
the purchase of complete companies, divisions, subsidiaries, and 
underlying equity interests. For instance, if company A intends to use 
proceeds from an offering to acquire company B, and company B has a 
division that will not be part of the transaction, then company B's 
financial statements excluding that division would be relevant 
financials of the acquiree. In

[[Page 23719]]

sum, if an acquisition includes only a portion of a company or if, as 
part of a transaction, the acquiror simultaneously discontinues a 
portion of the acquiree, the net purchase effect would be deemed to be 
the acquisition component applicable to the Exchange's financial review 
during the full applicable review period (i.e., for all periods 
presented in the SEC filing).
    As in the deleveraging analysis described above, to ensure 
reliability and accuracy of the adjusted data provided, the Exchange 
proposes to require that these adjustments, if not set forth in the SEC 
filing, be accompanied by an agreed upon procedures letter provided by 
the company's outside audit firm at the request of the company. The 
auditor's letter would state the procedures performed with respect to 
showing the effect of the relevant acquisition on the applicant 
company.
    In conclusion, the proposed process of giving effect to the use of 
proceeds of an offering to fund an acquisition or pay down existing 
debt differs from current practice in four respects: (1) all historic 
annual financial statements used in the analysis will be included in 
the SEC filing, (2) the Manual will contain a concise, transparent 
guideline as to both when and for how many periods adjustments will be 
made, (3) the financial data and related adjustments used in the 
eligibility analysis will be limited to the four corners of the SEC 
filing, and (4) an agreed upon procedures letter will be required with 
respect to use of proceeds and acquisitions.
    Acquisitions and Dispositions. In instances other than those 
associated with the use of proceeds, the Exchange proposes to limit its 
analysis to those acquisitions and dispositions that are disclosed as 
such in a company's financial statements in accordance with Rule 3-05 
and Article 11-01(b)(2) of Regulation S-X. Unlike the use of proceeds 
to fund an acquisition, in this instance, the adjustment for the 
acquisition or disposition will be limited to those periods for which 
pro forma financial data are presented in the SEC filing. The analysis 
again begins with the pro forma presentation prepared in accordance 
with Article 11 of Regulation S-X and included in the company's SEC 
filing. Depending upon the significance test of Rule 3-05, the 
company's SEC filing will have a number of periods of historical 
financial statements of the acquiree. The filing also will have certain 
pro forma presentations that vary in their specificity depending upon 
the significance test of Rule 3-05.
    For purposes of conducting the financial eligibility review, if 
there is a pro forma presentation included in the company's SEC filing 
that does not specify pre-tax earnings from continuing operations, 
minority interest, and equity in the earnings or losses of investees, 
the company must prepare the relevant data. As with the use of proceeds 
in the context of an acquisition, the presentation of the adjusted data 
will need to be accompanied by an agreed upon procedures letter 
provided by the company's outside audit firm at the request of the 
company. The auditor's letter will state the procedures performed with 
respect to showing the effect of the expansion of the pro forma 
presentation from the SEC filing into a more comprehensive income 
statement that contains the itemizations necessary for the Exchange to 
conduct its analysis (i.e., pre-tax earnings from continuing operations 
after minority interest and equity in the earnings or losses of 
investees). If no detailed disclosure is provided for a particular 
acquisition or disposition, and the acquisition or disposition is only 
a factual, non-material, un-quantified reference, then the acquisition 
or disposition will not be given effect because it cannot be 
substantiated within the four corners of the company's SEC filing.
    In the event that the applicant company has less than three years 
of operating history and is acquiring (either completed or committed) 
an entity with the requisite operating history, the Exchange will 
consider the combined operating history of the acquiror and acquiree 
for the preceding period(s) in conducting its financial eligibility 
review. If it is necessary to combine historical financial statements 
of the acquiree and aquiror in order to enable the Exchange to conduct 
its analysis (e.g., overlapping fiscal years), then the combined data 
would need to be accompanied by an agreed upon procedures letter 
provided by the company's outside audit firm at the request of the 
company. The auditor's letter will state the procedures performed with 
respect to any necessary combination of historical data.
    The Exchange notes that, in conducting a financial eligibility 
review for a company with an acquisition or disposition (either 
completed or committed), the agreed upon procedures letter will not be 
required if the SEC filing under review makes it self-evident that the 
company would qualify for listing on the Exchange irrespective of the 
acquisition or disposition. Thus, if the filing on its face shows that 
the company would qualify both before and after using proceeds to 
consummate the acquisition (e.g., a de minimus acquisition or an 
acquisition where both entities independently qualify for listing), an 
agreed upon procedures letter would not be required. Similarly, for 
other acquisitions or dispositions, if the filing on its face shows 
that the company would qualify on both a stand-alone and combined 
basis, an agreed upon procedures letter would not be required. For 
instance, if the combined entity resulting from two major companies, 
each of which have several hundred million dollars in market 
capitalization and no losses over the past three years, was to be 
subject to an original listing eligibility review, the Exchange would 
be unnecessarily imposing a cost and burden upon the applicant entity 
by requiring the company to provide an agreed upon procedures letter to 
the Exchange, provided there was no other information that would lead 
the Exchange to another conclusion.
    Merger or Acquisition Related Costs Recorded under Pooling of 
Interests. The Exchange proposes to exclude legal and accounting fees 
and other costs incurred by a company in effecting a merger or 
acquiring another entity accounted for as a pooling of interests 
(whether or not the transaction is consummated). When the transaction 
is accounted for under the pooling of interests method, merger and 
acquisition costs are recorded on the company's income statement. To 
remove the effect of this transaction from the company's financial 
statements, the company will make the requisite adjustment. For 
business combinations requiring purchase accounting, there is no need 
to separately address this issue as the cost does not affect the 
company's current income (the cost is considered part of the purchase 
price and any goodwill is amortized prospectively over the appropriate 
amoritization period).
    Certain Charges or Income Specifically Disclosed in the Filing. 
Consistent with past practice, the Exchange proposes to exclude several 
items in assessing the applicant company's earnings strength or its 
cash flow. These items have been excluded either because they are 
associated with a company's adopted exit plan as defined in the 
accounting literature or, based on the Exchange's experience in 
assessing ongoing earnings strength, they are not necessarily 
recurring. Thus, the Exchange has found that making adjustments for 
these items presents a more accurate picture of the applicant company's 
earnings strength on a going forward basis. The items subject to 
adjustment are somewhat more limited

[[Page 23720]]

than those previously considered by the Exchange. In the interest of 
enhancing the transparency of the listing standards, the list of 
adjustments has been limited to those that can be objectively defined.

--Charges or Income Related to an Adopted Exit Plan

    When a company adopts a specified exit plan, the charges or income 
of four items, if disclosed in the company's SEC filing, recorded in 
the company's financial statements in accordance with GAAP, and 
associated with the implementation of that plan, would be excluded by 
the Exchange in its proposed financial analysis: first, the costs of 
severance and termination benefits that are incurred as part of an exit 
plan (e.g., involuntary termination of employees associated with a 
corporate down-sizing); second, costs and associated revenues and 
expenses associated with the elimination or reduction of product lines 
for which an exit plan has been adopted; third, costs incurred to 
consolidate, close, or re-locate plant or office facilities associated 
with an exit plan; and fourth, loss or gain on disposal of long-lived 
assets, which, by its definition, relates to assets that will no longer 
be held by the company.

--Environmental Clean-Up Costs

    Environmental clean-up costs incurred in the remediation of 
environmental problems would be removed from the company's historical 
financial results. However, companies may not make adjustments for 
annual maintenance or on-going costs of compliance with environmental 
laws.

--Litigation Settlements

    Litigation settlement costs, including any settlement amounts, 
interest payments and penalties so disclosed in a company's filings 
would be removed from the company's historic financial results. 
Companies may not make an adjustment for on-going, customary legal 
fees.
    Impairment Charges on Long-lived Assets. Asset write downs that 
reflect the net realizable value of a long-lived asset (e.g., property, 
plant and equipment, and goodwill) would be excluded from historic 
financial results. For instance, company A previously acquires company 
B and, at that time, establishes goodwill of $100 million. Two years 
later, company B's business significantly deteriorates. The 
recoverability of the previously recorded $100 million in goodwill can 
no longer be fully realized and the company determines that the net 
realizable amount is $60 million. The $40 million difference would 
represent the impairment charge (less any amortization to date). 
Because current assets are more likely to be operating assets, and thus 
akin to the day-to-day working capital of the company, no adjustment is 
made for any loss in their value. For instance, a company may not take 
write-downs on inventory or loans.
    Gains or Losses Associated with Sales of a Subsidiary's or 
Investee's Stock. If a company has an ownership interest in another 
entity, or has a wholly-owned subsidiary, any gain or loss associated 
with the sale of all or part of the company's interest would be 
excluded from the company's historic results. For instance, if an 
applicant company owns 30 percent of another entity, for which it paid 
$1 million, the company has a cost basis of $1 million representing the 
purchase price of the acquisition. Were the company to sell that 
interest for $2 million, it would not be permitted to include that $1 
million gain in the adjusted earnings submitted to the Exchange for 
evaluation of the company's financial eligibility status. These types 
of gains or losses would be reported separately by the company as non-
operating items.
    In Process Purchased Research and Development Charges. Purchased 
in-process research and development represents the value assigned in a 
purchase business combination to research and development projects of 
the acquired business that were commenced, but not yet completed, at 
the date of acquisition, and which, if unsuccessful, have no 
alternative future use in research and development activities or 
otherwise. Amounts assigned to purchased in-process research and 
development meeting this description must be charged to expense at the 
date of consummation of the business purchase combination. The Exchange 
will exclude this charge from a company's historical financial results.
    Regulation S-X Article 11 Adjustments. Pro forma adjustments 
contained in a company's pro forma financial presentation provided in a 
current filing with the SEC are required to be made in accordance with 
SEC rules and regulations governing Article 11 ``Pro forma information 
of Regulation S-X Part 210--Form and Content of and Requirements for 
Financial Statements.'' The Exchange will review the company's 
financial statements in the context of any such adjustments, which are 
subject to SEC review. These adjustments would be limited to the 
current registration statement as to types of adjustments, amounts and 
years disclosed (except for use of proceeds as discussed above).
    Adoption of New Accounting Standard. When an accounting rule is 
changed, a company may adopt it prospectively or record the cumulative 
effect of the adjustment. Typically, when the new rule is announced, it 
is either specifically indicated that the implementation must be 
cumulative or companies are given the option regarding implementation. 
When the adoption of a new standard results in a cumulative effect of 
the accounting standard, the company will take a charge in the current 
year to make up for all past years as if the change had been previously 
in place. The effect of change in accounting principle disclosed in 
accordance with APB 20 is excluded from the company's financial 
statement for purposes of the Exchange's review.
    b. Standard 2--``Adjusted Cash Flow''. In 
addition to the Pre-Tax Adjusted Earnings standard discussed above, a 
second standard is available to companies with at least $500 million of 
market capitalization and $200 million of revenues in the most recent 
12 month period. Companies that meet the size criteria may, in the 
current Manual, use an ``adjusted net income'' test, as that term is 
defined in the current accompanying footnote, of an aggregate for the 
last three years of at least $25 million with all years being positive.
    The Exchange proposes to restate the standard applicable to the 
companies meeting the above-stated $500 million/$200 million threshold 
to make the standard more transparent by incorporating the fundamental 
aspects of the footnote in the current Manual into the standard itself. 
In addition, the standard will explicitly indicate that the test 
includes adjustments for two purposes: the use of proceeds and 
acquisitions. Both of these categories of adjustments are discussed in 
detail in the discussion of the ``Pre-Tax Adjusted Earnings'' standard 
discussed above. The Exchange is proposing to limit the adjustments 
incorporated into this standard because the remaining adjustments may 
or may not have cash-flow implications for a particular company. Those 
that do have a cash flow effect will already have been accounted for in 
the operating activity section of the company's cash flow statement.
    Policy Clarifications. The Exchange is also proposing to adopt 
several policies clarifying the use of the adjustments enumerated 
above, requiring the issuance of a press release by companies whose 
adjusted financial data were relied upon by the Exchange in granting

[[Page 23721]]

eligibility clearance, and delineating the consequences of restated 
financial statements.
    First, all adjustments must be disclosed as such in the SEC filing 
of the applicant company--the amount must be within the four corners of 
the SEC filing or subject to an agreed upon procedures letter as 
discussed above. For example, if a company reports a consolidated line 
item for all losses or gains on disposal of assets without something in 
the filing providing specificity as to what portion of that number 
accounts for long-lived assets, the Exchange will not venture outside 
of the SEC filing to attempt to ascertain the appropriate amount for 
purposes of applying the test. This is because the cumulative number 
could include items such as inventory write-downs, which are not 
subject to adjustment.
    Second, as noted above, as a general rule, the Exchange will only 
accept the application of an adjustment in the year in which the event 
giving rise to the adjustment occurred. Thus, no event can give rise to 
an adjustment in the financial statements for any prior year. The two 
exceptions are (1) the use of proceeds for deleveraging and 
acquisitions and dispositions (for companies currently in registration 
for an equity offering) and (2) acquisitions and dispositions. The 
reason for a proposed longer scope of application for the two 
exceptions is detailed in the discussion above.
    Third, any company for which the Exchange relies on adjustments to 
historical financial figures in granting financial eligibility 
clearance must take steps to ensure full public disclosure of how it 
qualified. The Exchange recognizes that, although listing applications 
are a matter of public record, many investors may not be aware that 
they are available and may believe that only the most recent publicly 
available SEC document is relied upon in evaluating a company. Thus, 
the Exchange proposes to impose two requirements on issuers. First, the 
Exchange proposes to codify its requirement that any adjusted financial 
data relied upon by the Exchange in granting financial clearance to the 
company must be included in the company's listing application. Second, 
the Exchange proposes to require these issuers to issue a press release 
stating that (1) pro forma financial adjustments were used to qualify 
the company and (2) all relevant additional information is available to 
the public upon request.
    With respect to companies that restate financial statements due to 
a change from unacceptable to acceptable accounting principles and/or 
correction of errors, the Exchange proposes to codify its policy of 
reviewing the company's status at the time of the restatement. Once a 
company issues a restatement that affects one of the years used by the 
Exchange to qualify the company for listing, the Exchange will 
determine whether or not the company would have qualified at the time 
of its original financial clearance with the restated numbers. If not, 
the company will be subject to suspension and delisting procedures 
unless the company meets the original listing standards at the time of 
the restatement using the most recent three fiscal years of financial 
statements as restated. The Exchange is adopting this policy because it 
would be unnecessarily disruptive to delist a company for its failure 
to meet the standards of the Exchange at some point in the past, when 
the company could immediately reapply for listing and qualify for 
listing the very next day.
    Non-U.S. Standards. The Exchange is proposing several changes to 
Section 103 of the Manual pertaining to non-U.S. companies (1) to carry 
forward relevant items from the revisions pertaining to domestic 
companies, and (2) to clarify the drafting of this section. Four 
aspects of these changes deserve mention:
     The non-U.S. public market value requirement is already 
$100 million worldwide; thus, no change is required.
     Replacement of NTAs with stockholders' equity as an 
alternate measure of size is the same except that the threshold for 
non-U.S. companies will remain at $100 million.
     The definition of IPOs is the same as for domestic 
issuers, but the representation of market value to be received in 
connection with a spin-off may also come from the parent company's 
transfer agent.
     Adjustments for foreign currency are appropriate for non-
U.S. companies because their operations are inherently tied to the 
underlying fundamentals of their respective national economies. Thus, 
the Exchange does not consider their effect to be a part of the 
company's on-going operations if it is due to a significant economic 
devaluation. For purposes of this adjustment, the Exchange deems a 
currency devaluation of more than ten percent as against the U.S. 
dollar to be significant.
    A domestic issuer with foreign operations would not be able to make 
this adjustment because the Exchange deems currency losses to be a cost 
of doing business in a foreign country.
    Real Estate Investment Trusts. The Exchange is also proposing to 
codify a policy it has applied regarding the original listing criteria 
for real estate investment trusts (REITs). The Exchange generally lists 
REITs either in connection with an IPO or shortly thereafter, when the 
REIT does not have a three-year operating history. Specifically, the 
standard proposed for such newly-formed REITs, similar conceptually to 
that recently adopted for Funds, \9\ is:
---------------------------------------------------------------------------

    \9\ Securities Exchange Act Release No. 40979 (January 26, 
1999), 64 FR 5332 (February 3, 1999).
---------------------------------------------------------------------------

     If the REIT has at least $60 million in stockholders' 
equity, the Exchange will generally authorize the listing of the REIT.
     For those REITs listing in conjunction with an offering, 
this requirement would need to be evidenced by a written commitment 
from the underwriter (or, in the case of a spin-off or carve-out, from 
the parent company's investment banker or other financial advisor). In 
this regard, the Exchange notes that this is the minimum stockholders' 
equity requirement for listing.
     The Exchange retains the discretion to deny listing to a 
REIT if it determines that, based upon a comprehensive financial 
analysis, it is unlikely to be able to maintain its financial status.
     Any newly-formed REIT with less than $60 million in 
stockholders' equity will not be considered for listing.
    Continued Listing Procedures. The Exchange is proposing two 
amendments regarding the continued listing of a company. The first is a 
codification of existing practice with respect to companies that 
qualify for listing based, at least in part, upon adjusted historical 
data.
    Specifically, the Exchange's continued listing criteria subjects a 
company to delisting if it had NTAs or an aggregate market value of its 
common stock of less than $12 million and average net income of less 
than $600,000 for the past three years. In calculating average net 
income for a company during the initial three years following its 
listing, the Exchange takes into consideration those specific 
adjustments made to the company's historical financial data for the 
relevant year in the original listing application. This consideration 
is limited both as to the specific adjustment made during the initial 
clearance as well as to the year in which the adjustment was made. 
Otherwise, companies often would be subject to suspension and delisting 
immediately upon listing--an inconsistent outcome.
    The second amendment proposed by the Exchange is a revision and 
codification of the procedures to be

[[Page 23722]]

instituted when a company is identified by Exchange staff as being 
below the continued listing criteria. The Exchange is proposing to 
impose specific time frames with respect to the notification, 
monitoring, and suspension and delisting, where appropriate, of these 
companies' securities. In addition, the Exchange proposes to change its 
current practice of requiring companies to return to original listing 
standards within 36 months of falling below continued listing 
standards. Instead, the Exchange proposes to require these companies to 
return to good standing by emerging from the below continued listing 
standards status within six quarters of being notified of this status, 
as described in more detail below. Specifically, the changes are as 
follows:

     Once the Exchange identifies a company as being below 
the continued listing criteria, the Exchange will notify the company 
by letter within 10 business days;
     The notification letter will provide the company with 
an opportunity to provide the Exchange with a plan to return to 
compliance within 18 months of receipt of the letter (the ``Plan), 
identify quarterly (semi-annual for non-U.S. issuers) milestones 
against which the company's progress would be measured by Exchange 
staff, and allow 45 days (90 days for non-U.S. issuers) for the 
submission of such a Plan;
     The company will be required to contact the Exchange 
within 10 business days (30 business days for non-U.S. issuers) of 
receipt of the letter, or be subject to suspension and delisting, to 
confirm receipt of the notification, discuss any possible financial 
data of which the Exchange may be unaware, and indicate whether or 
not it intends to submit a Plan;
     The Exchange's procedures for evaluating the 
qualification of non-U.S. companies for continued listing are 
substantively identical to those for domestic issuers, but makes 
allowances for somewhat longer time zone and communication 
differences and the absence of a quarterly filing requirement;
     Failure to submit a Plan within the allotted 45 days 
(90 days for non-U.S. issuers) will subject the company to 
suspension and delisting procedures;
     Upon receipt of a Plan, Exchange staff will evaluate 
the Plan and make a determination within 45 days of receipt of the 
Plan as to whether or not to accept the Plan;
     If the Exchange does not accept the Plan, the company 
will be subject to suspension and delisting procedures;
     If the Exchange does accept the Plan, the company will 
be subject to quarterly (semi-annual for non-U.S. issuers) 
monitoring against the Plan's milestones. If the company fails to 
meet the material aspects of the Plan, any of the quarterly (semi-
annual for non-U.S. issuers) milestones, or the 18-month deadline, 
the Exchange will review the circumstances and variance, and take 
appropriate action that may include the initiation of suspension and 
delisting procedures. Should the Exchange determine to proceed with 
suspension and delisting procedures, it may do so regardless of the 
company's continued listing status at that time (in any event, if 
the company does not meet continued listing standards at the end of 
the 18-month period, the Exchange promptly will initiate suspension 
and delisting procedures); and

     Within the aforementioned 45-day (90-day for non-U.S. 
issuers) period, the company must issue a press release disclosing the 
fact that it has fallen below the continued listing standards of the 
Exchange; if it fails to do so, then the Exchange will issue the 
requisite press release.
2. Statutory Basis
    The basis under the Act for the proposed rule change is the 
requirement under Section 6(b)(5) \10\ that an Exchange have rules that 
are designed to promote just and equitable principles of trade, to 
remove impediments to, and perfect the mechanism of a free and open 
market and, in general, to protect investors and the public interest.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange represents that the proposed rule change will impose 
no burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing 
for Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549-
0609. Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-NYSE-99-13 and 
should be submitted by May 24, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-10984 Filed 4-30-99; 8:45 am]
BILLING CODE 8010-01-U