[Federal Register Volume 66, Number 130 (Friday, July 6, 2001)]
[Notices]
[Pages 35686-35689]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-16883]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44484; File No. SR-NYSE-2001-12]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Amending the Original 
Listing Standard for Cash Flow Revenue and Requiring Press Release 
Announcement from Companies Below Continued Listing Criteria By Reason 
of Share Price

June 28, 2001.
    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 May 17, 2001, 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. 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 NYSE proposes to amend Sections 102 and 103 of the Exchange's 
Listed Company Manual to align the cash flow revenue original listing 
standard with that in the global market capitalization standard. The 
proposed rule change also would amend Section 802 and NYSE Rule 499 to 
require a press release announcement when a company is notified it is 
below the $1.00 price standard. The text of the proposed rule change is 
as follows: Proposed additions are italicized and proposed deletions 
are in brackets.\3\
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    \3\ The proposed rule language has been marked against Sections 
102, 103, 802, and NYSE Rule 499 as amended by SR-NYSE-2001-02 in 
Securities Exchange Act Release No. 44481 (June 27, 2001). Telephone 
conversation between James F. Duffy, Senior Vice President and 
Associate General Counsel, NYSE; Florence Harmon, Senior Special 
Counsel, Division of Market Regulation (``Division''), Commission; 
and Susie Cho. Special Counsel, Division, Commission, June 26, 2001.
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* * * * *

[[Page 35687]]

102.00 Domestic Companies

102.01 Minimum Numerical Standards--Domestic Companies--Equity 
Listings

* * * * *

102.01C A company must meet one of the following financial 
standards.

* * * * *
    (II) A Company with not less than $500,000,000 market 
capitalization and [$200,000,000] $100,000,000 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 $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. 102.10C(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.
* * * * *

103.00 Non-U.S. Companies

103.01 Minimum Numerical Standards Non-U.S. Companies Equity 
Listings Distribution

* * * * *

103.01B. A company must meet one of the following financial 
standards:

* * * * *
    (II) A company [Companies] with not less than $500,000,000 market 
capitalization and [$200,000,000] $100,000,000 in 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 
$100,000,000 in the aggregate for the last three fiscal years, where 
each of the two most recent years is reported at a minimum of 
$25,000,000 as adjusted (C)(D) for Para. 102.01C(I)(2)(a) and (b). 
Reconciliation to U.S. GAP of the third year back would only be 
required if the Exchange determines that reconciliation is necessary to 
demonstrate that the aggregate $100,000,000 threshold is satisfied.
* * * * *

802.00 Continued Listing

802.01 Continued Listing Criteria

    The exchange would normally give consideration to delisting a 
security either a domestic or non-U.S. issuer when;
* * * * *

802.01C Price Criteria

    Average closing price of a security is less than $1.00 over a 
consecutive 30-trading-day period (E)
    (E) Once notified, the company must bring its share price and 
average share price back above $1.00 by six months following receipt of 
the notification. If this is the only criteria that makes the company 
below the Exchange's continued listing standards, the procedures 
outlined in Paras. 802.02 and 802.03 do not apply. The company must, 
however, notify the Exchange, within 10 business days of receipt of the 
notification, of its intent to cure this deficiency or be subject to 
suspension and delisting procedures. In addition, the company has 45 
days (90 days in the case of a non-U.S. company) from receipt of the 
notification 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 or 90 
days, the Exchange will issue the requisite press release. In the event 
that at the expiration of the six-month cure period, both a $1.00 share 
price and a $1.00 average share price over the preceding 30 trading 
days are not attained, the Exchange will commence suspension and 
delisting procedures. Notwithstanding the foregoing, if a company 
determines that, if necessary, it will cure the price condition by 
implementing a reverse stock split, it must so inform the Exchange in 
the above referenced notification, must obtain shareholder approval for 
the reverse by no later than its next annual meeting, and must 
implement the reverse promptly thereafter. The price condition will be 
deemed cured if price promptly exceeds $1.00 per share, and the price 
remains above that level for at least the following 30 trading days. 
Notwithstanding the foregoing, if the subject security is not the 
primary trading common stock of the company (e.g., a tracking stock or 
a preferred class) or is a stock listed under the Affiliated Company 
standard where the parent remains in ``control'' as that term is used 
in that standard, the Exchange may determine whether to apply the Price 
Criteria to such security after evaluating the financial status of the 
company and/or the parent/affiliated company, as the case may be.
* * * * *

Delisting of Securities

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

* * * * *
    Rule 499. Securities admitted to the list may be suspended from 
dealings or removed from the list at any time.
    * * * Supplementary Material:
* * * * *

.20 NUMERICAL AND OTHER CRITERIA

    The Exchange would normally give consideration to suspending or 
removing from the list a security of a company, whether it be a 
domestic or non-U.S. issuer, when:
* * * * *
    8. Average closing price of a security is less than $1.00 over a 
consecutive 30 trading-day period. Once notified, the company must 
bring its share price and average share price back above $1.00 by six 
months following receipt of the notification. If this is the only 
criteria that makes the company below the Exchange's continued listing 
standards, the procedures outlined in Paras. .50 and .60 of this Rule 
499 do not apply. The company must, however, notify the Exchange, 
within 10 business days of receipt of the notification, of its intent 
to cure this deficiency or be subject to suspension and delisting 
procedures. In addition, the company has 45 days (90 days in the case 
of a non-U.S. company) from receipt of the notification 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 or 90 days, the 
Exchange will issue the requisite press release. In the event that at 
the expiration of the cure period, both a $1.00 share price and a $1.00 
average share price over the preceding 30 trading days are not 
attained, the Exchange will commence suspension and delisting 
procedures. Notwithstanding the foregoing, if a company determines 
that, if necessary, it will cure the price condition by taking an 
action that will require approval of its shareholders, it must so 
inform the Exchange in the above referenced notification, must obtain 
the shareholder approval by no later than its next annual meeting, and 
must implement the action promptly thereafter. The price condition will 
be deemed cured if the price promptly exceeds $1.00 per share, and the 
price

[[Page 35688]]

remains above that level for at least the following 30 trading days.
    Notwithstanding the foregoing, if the subject security is not the 
primary trading common stock of the company (e.g., a tracking stock or 
a preferred class) or is a stock listed under the Affiliated Company 
standard where the parent remains in ``control'' as that term is used 
in that standard, the Exchange may determine whether to apply the Price 
Criteria to such security after evaluating the financial status of the 
company and/or the parent/affiliated company, as the case may be.

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 my 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 amend Sections 102 
and 103 of the Exchange's Listed Company Manual to align the cash flow 
revenue original listing standard with that in the global market 
capitalization standard. The proposed rule change also would amend 
Section 802 and NYSE Rule 499 to require a press release announcement 
when a company is notified it is below the $1.00 price standard.
Amendments to Sections 102 and 103 (Original Listing)
    Sections 102 and 103 set forth the criteria for original listing 
of, respectively, domestic and foreign issuers. Last year, the Exchange 
reduced the per annum revenue required under the $1 billion global 
market capitalization standard from $200 million to $100 million.\4\ 
The Exchange represents that its experience with that amended standard 
suggests that a similar change would be appropriate in the cash flow 
standard,\5\ which otherwise requires a company to have a market 
capitalization of not less than $500 million and aggregate cash flow 
over its these most recent fiscal years of a least $25 million ($100 
million for non-U.S. companies). Accordingly, the Exchange purposes to 
reduce the 12-month revenue required under the cash flow standard from 
$200 million to $100 million.
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    \4\ See Listed Company Manual Sections 102.01C(III) (domestic 
companies) and 103.01B(III) (non-U.S. companies). See Securities 
Exchange Act Release No. 43027 (July 12, 2000), 65 FR 44556 (July 
18, 2000) (approving SR-NYSE-00-27).
    \5\ See Listed Company Manual Sections 102.01C(II) (domestic 
companies) and 103.01B(II) (non-U.S. companies).
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Amendments to Section 802 (Continued Listing) \6\
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    \6\ Parallel amendments would also be made to Exchange Rule 499. 
In addition, a phrase that appears in Section 802.01C of the Listed 
Company Manual but not at the parallel spot in Exchange Rule 499 
would be added to Exchange Rule 499 herein.
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    Section 802.01C provides that a company will be below criteria 
(``BC'') if its average closing share price over a connective 30 
trading-day period is less than $1.00. Such a company is required to 
bring its 30 trading-day average closing price above $1.00 by the later 
of its next annual meeting date or six months after receipt of 
notification from the Exchange of the price condition. While companies 
falling below the Exchange's other financial continued listing criteria 
related to market capitalization and shareholders' equity are required 
to put out a press release announcement after they are notified of 
their BC status by the Exchange,\7\ the same is not required of 
companies that become BC for the reason of their share price. The 
Exchange represents that its experience with the existing press release 
requirement suggests that a similar press release requirement would be 
appropriate for companies that become BC for share price. The same time 
frame for issuance of the press release would also seem appropriate. 
Accordingly, the Exchange proposes to require a U.S. company ot put out 
a press release announcing its BC status no later than 45 days, and a 
non-U.S. company to put out a press release no later than 90 days, 
after being notified by the Exchange of the price condition. The 
Exchange believes that, as is that case with the press release 
requirement relating to the other BC standards, the time period for 
issuance of the press release would allow companies some time to 
formulate an action plan for dealing with the situation. Thus, any 
public announcement would include information about the actions the 
company proposes to alter its BC status.
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    \7\ See Listed Company Manual Sections 802.02 (domestic 
companies) and 802.03 (non-U.S. companies).
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2. Statutory Basis

    The Exchange believes the basis under the Act for the proposed rule 
change is the requirement under Section 6(b)(5) \8\ that an Exchange 
have rules that are designed to prevent fraudulent and manipulative 
acts and practices, 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.
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    \8\ 15 U.S.C. 78f(b)(5).
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B.  Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act.

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

    The Exchange has neither solicited nor received written comments on 
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 self-regulatory organization 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 NW, Washington, DC 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

[[Page 35689]]

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 in the Commission's Public 
Reference Room. Copies of such filing will also be available for 
inspection and copying at the principal office of the NYSE. All 
submissions should refer to File No. SR-NYSE-2001-12 and should be 
submitted by July 27, 2001.

    For the Commission, by Division of Market Regulation, pursuant 
to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 01-16883 Filed 7-5-01; 8:45 am]
BILLING CODE 8010-01-M