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



[[Page 58479]]

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Part III





Securities and Exchange Commission





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17 CFR Parts 210, 229, 240, and 249



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

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

[[Page 58480]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, 240 and 249

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


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

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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

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

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

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

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

I. Background and Overview of Rule Amendments

A. The Exchange Act Reporting System

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

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

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

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

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

[[Page 58482]]

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

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

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

II. Discussion of Amendments

A. Reporting Deadlines for Annual and Quarterly Reports

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

[[Page 58484]]

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

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

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

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

    Another common concern was that the proposed deadlines would impair 
the ability of management, external auditors, boards of directors and 
especially audit committees to scrutinize and review filings properly 
and give appropriate consideration to the form, substance and priority 
of disclosures, especially MD&A disclosures and financial statement 
footnotes.\43\ These commenters feared that disclosures could be 
reduced or become more boilerplate if companies have less time to 
prepare and review them. These commenters believed that accelerating 
deadlines in the manner proposed would also undermine the governance 
and review mechanisms that have been put in place to ensure quality. We 
have separately proposed and the Sarbanes-Oxley Act of 2002 establishes 
new requirements to ensure that procedures are in place to ensure that 
a company is able to collect, process and disclose the information 
required in its periodic reports and for senior officers to certify the 
accuracy of those reports.\44\
---------------------------------------------------------------------------

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

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

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

    Commenters objecting to the original proposals also were concerned 
that

[[Page 58485]]

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

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

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

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

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

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

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

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

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

[[Page 58486]]

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

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

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

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

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

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

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

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

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

------------------------------------------------------------------------
                                                      Form 10-  Form 10-
                                                          K         Q
                                                      deadline  deadline
                                                        (days     (days
         For fiscal years ending on or after            after     after
                                                       fiscal    fiscal
                                                        year     quarter
                                                        end)      end)
------------------------------------------------------------------------
December 15, 2002...................................        90        45
December 15, 2003...................................        75        45
December 15, 2004...................................        60        40
December 15, 2005...................................        60        35
------------------------------------------------------------------------

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

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

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

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

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

[[Page 58487]]

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

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

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

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

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

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

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

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

    While our proposals did not directly address the contents of 
earnings releases, many commenters supported additional efforts by the 
Commission in this area. Several recommended that earnings or other 
standardized earnings information be filed with the Commission, such as 
on Form 8-K.\80\ Others thought the Commission should consider issuing 
or promoting minimum requirements or guidelines for the contents of 
earnings releases, such as a GAAP reconciliation.\81\ While we will 
continue to explore ways to improve earnings releases, and the 
Sarbanes-Oxley Act of 2002 requires us to take steps in this area, we 
believe these are separate initiatives from the need to accelerate 
periodic report deadlines.\82\ We recognize that the information in 
periodic reports is more extensive than that contained in earnings 
releases, and that it would be difficult to eliminate any gap between 
the earnings release and the filing of the report. As mentioned above, 
however, we believe periodic reports contain valuable information for 
investors, and comments received from the users of this information 
uniformly indicated their desire to receive the reports at the earliest 
time that is consistent with receiving quality information.\83\
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    \80\ See, for example, the Letters of the ABA; Deloitte & Touche 
LLP; FEI; Joseph A. Grundfest; Investment Company Institute; Intel 
Corporation; Merrill Lynch & Co., Inc.; Nucor Corporation; SCANA 
Corporation; SIA; The Southern Company; TIAA- CREF; and Trover 
Solutions, Inc.
    \81\ See, for example, the Letters of Ernst & Young LLP; FEI, 
Fidelity Management & Research Company; Investment Company 
Institute; KPMG LLP; NAREC; NAREIT; NIRI; Papa John's International, 
Inc.; Shearman & Sterling; SIA; and Valmont Industries, Inc.
    \82\ See, for example, Sections 401(b) and 409 of the Sarbanes-
Oxley Act of 2002 [Pub. L. No. 107-204, Sec. Sec.  401(b) and 409, 
116 Stat. 745 (2002)].
    \83\ See, for example, the Letter of Fidelity Management & 
Research Company.
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B. Definition of ``Accelerated Filer''

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

[[Page 58488]]

a company would determine its public float for purposes of determining 
whether it would become an accelerated filer as of a date no more than 
60 and no less than 30 days before the end of its fiscal year. In 
addition, as proposed, a company would become an accelerated filer at 
any time during the year if it met the public float test on a previous 
determination date and subsequently met the reporting requirements 
during the year.
2. Comments on the Proposal
    Comments were mixed on the proposed definition of accelerated 
filer. Several commenters believed that all public companies should be 
required to adhere to the same filing deadlines, regardless of a 
company's size or experience in preparing filings.\84\ These commenters 
thought it would be confusing to investors and companies to have 
differing filing deadlines. They also believed that investors in 
companies with a public float of less than $75 million should expect 
the same timely access to prompt disclosure as investors in larger 
companies. They argued that such prompt disclosure may be even more 
important for smaller companies. Several commenters also thought that 
while large firms may have more resources, they tend to have more 
complex and geographically widespread operations, numerous consolidated 
entities and segments and complicated financial transactions.\85\
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    \84\ See, for example, the Letters of the ABA; FEI; NYCBA; 
Caremark Rx, Inc.; Comcast Corporation; The Dow Chemical Company; 
Monsanto Company; and Troutman Sanders LLP.
    \85\ See, for example, the Letters of the ABA; American Electric 
Power; Cleary, Gottlieb, Steen & Hamilton; Grant Thornton, LLP; 
HealthSouth Corporation; and Union Planters Corporation.
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    Other commenters agreed with the notion of excluding smaller 
companies.\86\ Smaller companies may have operations that are just as 
complicated as large companies. More importantly, accelerated reporting 
may be particularly burdensome for smaller companies because they may 
not have the necessary resources or infrastructure to report on an 
accelerated basis. Many of these issuers have small staffs and limited 
technological resources, so the imposition of accelerated deadlines may 
have a disproportionate impact on these companies. In addition, 
auditors may be more likely to postpone their reviews of smaller 
companies' financial statements until they have completed their work 
for larger clients. There also may not be sufficient market interest in 
these companies to justify the costs and burdens needed to accelerate a 
smaller company's reporting processes.\87\
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    \86\ See, for example, the Letters of the AFL-CIO; Corning 
Incorporated; Crowe, Chizek and Company LLP; KPMG LLP; NAREC; 
NAREIT; NYSBA; and The Williams Companies, Inc.
    \87\ See, for example, the Letters of Community Bankshares, Inc; 
First Capital Bank Holding Corporation; and GrandSouth 
Bancorporation.
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    Comments also were somewhat mixed on the use of public float as a 
method to differentiate between companies.\88\ Several commenters 
questioned the use of public float as a measure indicative of a 
company's ability to file sooner. According to these commenters, 
smaller companies with limited operations and personnel could easily 
develop a significant public float. These commenters offered several 
alternative measures, including revenues, assets or some measure of 
trading volume. Other commenters thought the proposed $75 million 
public float threshold was too low.\89\ These commenters recommended a 
number of alternative thresholds, ranging from $150 million to $10 
billion. Several other commenters thought the proposed public float 
measurement date occurred too late in the fiscal year to give companies 
sufficient time to modify their systems and prepare for accelerated 
reporting.\90\
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    \88\ Compare, for example, the Letters of the AFP; KPMG LLP; and 
Western Wireless Corporation with the Letters of the ABA; AICPA; 
American Bankers Association; Arris Group, Inc.; BDO Seidman, LLP; 
Ernst & Young LLP; Foley, Hoag & Eliot LLP; Grant Thornton LLP; 
Joseph A. Grundfest; NYCBA; NYSBA; PricewaterhouseCoopers LLP; 
Shearman & Sterling; Southern Union Company; and United States Steel 
Corporation.
    \89\ See, for example, the Letters of the AICPA; American 
Bankers Association; Arris Group, Inc.; Baldwin & Lyons, Inc.; Ernst 
& Young LLP; HealthSouth Corporation; KPMG LLP; NAREC; NYSBA; 
Perkins Coie LLP; Triarc Companies, Inc.; and Troutman Sanders LLP.
    \90\ See, for example, the Letters of the ABA; AICPA; Ernst & 
Young LLP; KMPG LLP; and Troutman Sanders LLP.
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    In the Proposing Release, we also requested comment on whether the 
deadline for annual reports of foreign private issuers on Form 20-F 
should be shortened. Comments were mixed on this request. Some 
commenters did not think there was a reason to not also shorten 
deadlines for foreign filers.\91\ Others thought that the issues 
involving foreign issuers are sufficiently different as to warrant a 
separate study and rule proposal.\92\ A few others thought the 
deadlines for foreign issuers should not be accelerated at all.\93\
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    \91\ See, for example, the Letters of the AIMR; Brown-Forman 
Corporation; Chevron Phillips Chemical Company LLP; Comcast 
Corporation; Deloitte & Touche LLP; The Dow Chemical Company; Markel 
Corporation; Maverick Capital Ltd.; and SBC Communications Inc.
    \92\ See, for example, the Letters of the AICPA; Ernst & Young 
LLP; Institute of Management Accountants; KMPG LLP; and 
PricewaterhouseCoopers LLP.
    \93\ See, for example, the Letters of Cleary, Gottlieb, Steen & 
Hamilton and NYCBA.
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3. Final Rules
    After evaluating the comments on this aspect of the proposal, we 
are adopting the amendments substantially as proposed with some minor 
clarifications. Under the final rules, accelerated deadlines will apply 
to a company after it first meets the following conditions as of the 
end of its fiscal year:
    [sbull] Its common equity public float was $75 million or more as 
of the last business day of its most recently completed second fiscal 
quarter;
    [sbull] The company has been subject to the reporting requirements 
of Section 13(a) or 15(d) of the Exchange Act for a period of at least 
12 calendar months;
    [sbull] The company has previously filed at least one annual report 
pursuant to Section 13(a) or 15(d) of the Exchange Act; and
    [sbull] The company is not eligible to use Forms 10-KSB and 10-QSB.
    The public float and reporting history aspects of this definition 
are being adopted substantially as proposed. These requirements are 
based primarily on the current eligibility requirements for 
registration of primary offerings for cash on Form S-3.\94\ These 
companies can take advantage of short-form registration, including the 
resultant benefits of incorporation by reference and quick access to 
the capital markets through ``shelf registration.'' Shortening the 
periodic reporting deadline for these companies, coupled with our 
conforming revisions to the financial statement timeliness requirements 
discussed below, promises that investors will receive information about 
these companies sooner. This enhances the timeliness of information 
received for primary purchasers in these offerings in addition to 
secondary market purchasers. These changes also ensure that investors 
receive consistent financial information regardless of the particular 
registration form a company uses. In identifying companies that will be 
subject to this new requirement, we also thought it would be 
appropriate to use a pre-existing threshold to reduce regulatory 
complexity.
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    \94\ See General Instructions I.A.3 and I.B.1 of Form S-3.
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    While we agree that investors in smaller companies value the 
timeliness of corporate disclosures, we must balance the market's need 
for information with the ability of companies to prepare that 
information without undue burden. The possible detrimental effects of 
accelerating the reporting process for companies least able to bear the 
burden of these changes may outweigh the potential advantages

[[Page 58489]]

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

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

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

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

C. Conforming Amendments

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

[[Page 58490]]

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

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

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

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

    We recognize that in making these conforming changes, for some 
short period of time, accelerated filers may be prevented from going to 
market.\100\ However, it is our view that, when a company is an 
accelerated filer and is attempting to raise capital in the marketplace 
after audited financial information would be required to be filed under 
the Exchange Act, it is reasonable to delay registration until such 
financial statements become available. We believe this change is in the 
best interest of the investing public and will not create any 
additional burden on the large majority of accelerated filers because 
the required financial information already will be required to have 
been filed. Also, as in the past, we will consider waivers to the rules 
where unusual circumstances dictate the need for them.\101\
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    \100\ For example, after the phase-in period is complete, an 
accelerated filer would need to include updated financial statements 
in its registration statements up to 30 days earlier than under the 
current rules.
    \101\ See, for example, Rule 3-13 of Regulation S-X [17 CFR 
210.3-13].
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a. Filings Within 90 Days of Year-End
    Currently, a reporting issuer is not required to include audited 
financial statements for its most recent fiscal year until the 90th day 
after the end of the fiscal year if it satisfies three conditions:
    [sbull] The company has filed all required Exchange Act reports;
    [sbull] The company reasonably, and in good faith, expects income, 
after taxes but before extraordinary items and a cumulative effect of a 
change in accounting principle, for its most recent fiscal year; and
    [sbull] For at least one of the two immediately preceding fiscal 
years, the company has reported income, after taxes but before 
extraordinary items and cumulative effect of a change in accounting 
principle.

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

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

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

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

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

[[Page 58491]]

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

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

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

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

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

    As part of our conforming amendments, we are amending Rule 3-09 of 
Regulation S-X to address these concerns. Separate financial statements 
of subsidiaries not consolidated and 50% or less owned persons required 
by Rule 3-09 of Regulation S-X will not be accelerated for inclusion in 
a company's annual report on Form 10-K if the subsidiary or 50% or less 
owned person is not an accelerated filer. In that instance, the 
financial statements of the subsidiary or 50% or less owned person can 
be filed by amendment within the existing time periods. In addition, we 
are making conforming amendments to still provide companies with 
additional time to file the required financial statements if the fiscal 
years of the investor registrant and the subsidiary or 50% or less 
owned person differ.
2. Time Allowed to Incorporate Form 10-K Information From Definitive 
Proxy or Information Statements
    In the Proposing Release, we did not propose to make a conforming 
change to the 120-day period companies have to file their definitive 
proxy or information statements involving the election of directors to 
allow the incorporation by reference of the information required by 
Part III of Form 10-K.\107\ We requested comment on whether this period 
should be shortened. While two commenters supported accelerating the 
filing of definitive proxy or information statements to ensure that 
investors have timely information,\108\ the majority of commenters that 
responded to our request objected to a conforming change.\109\ The 
objecting commenters thought that a shortened deadline would be overly 
burdensome. We see no significant reason to shorten the deadline at 
this time.
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    \107\ See General Instruction I.G.(3) of Form 10-K.
    \108\ See the Letters of the AIMR and Maverick Capital Ltd.
    \109\ See, for example, the Letters of American Electric Power; 
AFLAC Incorporated; ASCS; The Coca-Cola Company; Comcast 
Corporation; The Dow Chemical Company; Ernst &Young LLP; Intel 
Corporation; LeBoeuf, Lamb, Green & MacRae; McGuireWoods LLP; NYSBA; 
PepsiCo, Inc.; PricewaterhouseCoopers LLP; The Southern Company; and 
Technitrol, Inc.
---------------------------------------------------------------------------

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

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

3. Form 10-K Schedules Required by Article 12 of Regulation S-X
    We did propose to make a conforming change to the date by which all 
schedules required by Article 12 of Regulation S-X may be filed as an 
amendment to the annual report. We proposed to change this date from 
120 calendar days to 90 calendar days for accelerated filers to 
maintain a 30-day period after the due date of the report to file the 
amendment. We requested comment on this change.
    The majority of commenters responding to this request supported 
this change.\111\ Several commenters supported eliminating any delay 
and requiring these schedules to be filed with the Form 10-K.\112\ 
However, we understand that in some instances additional time may be 
necessary to prepare these schedules. As a result, we are adopting 
conforming amendments to maintain a 30-day period after the due date of 
the report to file the schedules.
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    \111\ See, for example, the Letters of American Electric Power; 
ASCS; The Dow Chemical Company; Ernst &Young LLP; and United States 
Steel Corporation. But see the Letter of Triarc Companies, Inc.
    \112\ See, for example, the Letters of the AIMR; Maverick 
Capital Ltd.; and PricewaterhouseCoopers LLP.
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4. Financial Statement Filing Requirements in Rule 3-05 of Regulation 
S-X and Item 7 of Form 8-K
    In the Proposing Release, we requested comment on whether we should 
make conforming revisions to the financial statement filing 
requirements in Item 7 of Form 8-K and Rule 3-05 \113\ of Regulation S-
X for financial statements of businesses acquired. The commenters who 
responded to this request uniformly objected to such a change.\114\ 
Many of these commenters believed that the ability to obtain audited 
financial statements of a significant acquired business generally is 
unrelated to any

[[Page 58492]]

circumstances of the acquirer that cause it to be an accelerated filer 
for purposes of its own financial statements. We see no significant 
reason to shorten the deadline at this time, and therefore we are not 
adopting conforming amendments to these provisions.
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    \113\ 17 CFR 210.3-05.
    \114\ See, for example, the Letters of the AICPA; ASCS; Cleary, 
Gottlieb, Steen & Hamilton; Deloitte & Touche LLP; Ernst &Young LLP; 
KPMG LLP; NYCBA; and PricewaterhouseCoopers LLP.
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D. Website Access to Information

1. Proposed Rules
    We proposed to require accelerated filers to provide additional 
disclosure in their annual reports of where investors can obtain access 
to company filings. This would have included disclosure regarding the 
availability of information from the Commission, the company's website 
address and whether the company makes available free of charge on its 
website, if it has one, its annual, quarterly and current reports, and 
all amendments to those reports, as soon as reasonably practicable 
after, and in any event on the same day as, such material is 
electronically filed with or furnished to the Commission. If a company 
chose not to make its filings available on its website in this manner, 
the proposals would have required it to disclose why it does not do so 
and where else the public can access these filings immediately upon 
filing and whether there is a fee for such access. Companies also would 
have to disclose whether they voluntarily will provide electronic or 
paper copies of its filings upon request.
    Widespread access to timely corporate information promotes the 
efficient functioning of the secondary markets by enabling investors to 
make informed investment and voting decisions. Further, ready access to 
Exchange Act information is critical to short-form registration of 
securities offerings by seasoned issuers under the Securities Act.\115\ 
This form of registration allows certain information about the company 
conducting the offering to be incorporated by reference from the 
company's Exchange Act reports without, in many instances, separate 
delivery of those reports. One rationale for this method of 
registration is that the information in the company's Exchange Act 
reports already has been adequately disseminated and evaluated by the 
marketplace.
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    \115\ Short-form registration is available in varying degrees 
for domestic issuers on Forms S-2 [17 CFR 239.12], S-3, S-4 [17 CFR 
239.25] and S-8.
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    The development of the Internet has revolutionized information 
production, availability, and dissemination.\116\ The increased 
availability of information has helped to promote transparency, 
liquidity and efficiency in our capital markets. One of the key 
benefits of the Internet is that companies can make information 
available to many investors and the financial markets quickly and in a 
cost-effective manner. Online access to Internet information also helps 
to democratize the capital markets by enabling many small investors to 
access corporate information.\117\
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    \116\ See, for example, Report to the Congress: The Impact of 
Recent Technological Advances on the Securities Markets, (Sept. 
1997). That report, like all Commission reports issued after 1996, 
is available on our Internet website (http://www.sec.gov).
    \117\ See, for example, Ianthe Jeanne Dugan, ``Small Investors 
United by Web Find New Power,'' The Washington Post, May 30, 1999, 
at A01.
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    We have taken a number of steps to encourage the dissemination of 
information electronically via the Internet. For 18 years, we have been 
continually improving and modernizing electronic access to companies' 
Exchange Act reports through our EDGAR system, including by providing 
Internet access to these reports.\118\ We now provide electronic access 
to the public on a real-time basis through our Internet website.\119\
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    \118\ Numerous third-party vendors also make information filed 
with the Commission electronically available to investors, but many 
charge fees for this service.
    \119\ See note 32 above.
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    Without regard to EDGAR, an efficient and economical method for 
companies to make information available about themselves to many 
investors is through their Internet websites. In addition to other 
existing sources of company information, such as our website, a 
company's website is often an obvious place for investors to find 
information about a company. A company also may use different formats 
and other approaches to making information available in ways it 
believes are useful to investors. Most companies, realizing the 
benefits of this technology for information dissemination, already 
provide access to their Commission filings through their websites. A 
study by our Office of Economic Analysis revealed that approximately 
83% of companies with a public float of at least $75 million provide 
some form of access to their Commission filings through their websites, 
either via a hyperlink with a third-party service providing real-time 
access to the filings (45%), by posting the filings directly on their 
websites (29%) or via a hyperlink to our EDGAR database (15%).
    Modernizing the disclosure system under the federal securities laws 
involves recognizing the importance of the Internet in fostering prompt 
and more widespread dissemination of information.\120\ We believe 
company disclosure should be more readily available to investors on a 
timely basis in a variety of locations to facilitate investor access to 
that information. We believe it is important for companies to make 
investors aware of the different sources that provide access to company 
information. We applaud those that already provide access to their 
Commission filings through their websites, and encourage every 
reporting company to do so.
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    \120\ Congress has already recognized the importance of 
utilizing the Internet to disseminate information. For example, 
Section 403(a) of the Sarbanes-Oxley Act of 2002 [Pub. L. 107-204, 
Section 403(a), 116 Stat. 745 (2002)] added Section 16(a)(4) of the 
Exchange Act [15 U.S.C. 78p(a)(4)] requiring companies to provide 
Section 16(a) filings on their corporate websites. Other countries 
also have begun to recognize the importance of the Internet to 
disseminate information. For example, the listing standards for the 
S.T.A.R. Market segment of the Italian Exchange (Borsa Italiana) 
require listed companies to post their periodic reports on their 
websites. See Article 2.2.3, paragraph 3.e) of Regolamento Dei 
Mercati Organizzati E Gestiti Da Borsa Italiana S.P.A. [Rules of the 
Markets Organized and Managed by the Italian Exchange] (July 15, 
2002).
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2. Comments on the Proposal
    We received responses from 141 commenters on the proposals for 
disclosure concerning access to company filings. The vast majority of 
commenters representing investors, investor groups, companies and 
professional associations were supportive of the proposals. Sixty 
commenters supported the requirement as proposed and concurred with our 
objective to provide investors with information on where they can 
access company reports.\121\ These commenters believed the proposal 
would aid in encouraging companies to make information available in a 
variety of locations and hence make corporate information more widely 
accessible and disseminated. One professional association mentioned 
that almost 90% of companies in its survey expected to accomplish the 
objectives of the proposal with ease.\122\ The commenter also referred 
to other studies demonstrating that corporate websites are a 
significant source of information to investors and the media.
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    \121\ See, for example, the Letters of the AFP; AIA; AIMR; The 
Allstate Corporation; AOL Time Warner Inc.; Armstrong World 
Industries, Inc.; BDO Seidman, LLP; the Business Roundtable; CCBN; 
CII; Jason Cook; Deloitte & Touche LLP; Delphi Corporation; Dollar 
Tree Stores, Inc.; The Dow Chemical Company; EDGAR Online; Eli Lilly 
and Company; Grant Thornton LLP; Investment Company Institute; 
Jefferson-Pilot Corporation; NIRI; Pharmacia Corporation; Principal 
Financial Group, Inc.; SunTrust Banks, Inc.; TIAA-CREF; UnionBanCal 
Corporation; UnumProvident Corporation; and XTO Energy Inc.
    \122\ See the Letter of the NIRI.
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    Forty commenters concurred with our objective but offered 
modifications to

[[Page 58493]]

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

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

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

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

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

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

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

Accelerated filers must begin complying with the new disclosure 
requirement starting with their annual reports on Form 10-K to be filed 
for fiscal years ending on or after December 15, 2002.
    In response to comment, we have eliminated the proposed requirement 
that registrants disclose that filings are available on our website and 
in our public reference room as unnecessary. We have also eliminated 
the proposed disclosure relating to where else the public can access 
company filings immediately upon filing if the company does not provide 
real-time website access as real-time access to filings is now 
available through our Web site.
    We understand that companies provide website access to their 
Exchange Act reports in a variety of ways, including by establishing a 
hyperlink to its Exchange Act reports via a third-party service in lieu 
of maintaining the reports themselves.\132\ For purposes of the 
disclosure element for website access to reports, hyperlinking to a 
third-party service is acceptable so long as the reports are made 
available in the appropriate time frame and access to the reports is 
free of charge to the user. To clarify that hyperlinking to a third 
party website is acceptable, we have slightly modified the proposed 
language to specify that a company can provide access on or through its 
website. A company should hyperlink directly to its reports (or to a 
list of its reports) instead of just to the home page or general search 
page of the third-party service.\133\ We note that many companies 
already provide this level of specificity in their hyperlinks as a 
matter of best practice.
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    \132\ In Release No. 33-7856 (Apr. 28, 2000) [65 FR 25843] (the 
``2000 Release''), we provided interpretive guidance on the possible 
effects of hyperlinking to a third party website. See the 2000 
Release, at n.48 and the accompanying text.
    \133\ Companies could present the viewer with an intermediate 
screen stating that the visitor is leaving the company's website. 
Also, a disclaimer of responsibility for the accuracy of the third 
party service will not make the website posting ineffective for 
purposes of the disclosure requirement.
---------------------------------------------------------------------------

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

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

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

[[Page 58494]]

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

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

    The website access contemplated by the amendments includes access 
to all exhibits and supplemental schedules electronically filed with 
the reports or amendments. Information incorporated by reference is not 
required to be separately posted, although we encourage companies to do 
so if it will aid investor access to the information.
    While the amendments do not cover how long a company's report must 
be made available on or through its website, we encourage companies to 
provide ongoing website access to their reports. At a minimum, we 
suggest companies provide website access to their previous reports for 
at least a 12 month period. It would be desirable for companies to 
provide access to their previous reports on an appropriately archived 
portion of their website over an even longer timeframe. Finally, we 
encourage companies to provide website access to all of their filings 
with the Commission, including their filings under the proxy rules and 
their Securities Act filings.
    Regarding the requirement that a company disclose its website 
address in its annual report on Form 10-K, some commenters were 
concerned as to whether including the website address in the filing 
constitutes incorporation by reference of any website information into 
the filing.\136\ If a company is complying with this disclosure item in 
its annual report on Form 10-K, the inclusion of the company's website 
address will not, by itself, include or incorporate by reference the 
information on the site into the company's Commission filing, unless 
the company otherwise acts to incorporate the information by 
reference.\137\
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    \136\ See, for example, the Letters of the ABA; ASCS; Caremark 
Rx, Inc.; NYCBA; NYSBA; PricewaterhouseCoopers LLP; and Sullivan & 
Cromwell.
    \137\ In the 2000 Release, we provided interpretive guidance on 
the effect of including a website address in other situations. See 
the 2000 Release, note 132 above, at n.41 and the accompanying text. 
We are not changing that guidance for those other situations.
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    We understand that a company may have multiple Web sites that it 
uses for various purposes, such as investor relations, product 
information and business-to-business activities. We interpret the 
requirement to disclose the company's website address to mean the 
website the company normally uses for its investor relations functions.
    The revisions we adopt today create new disclosure obligations that 
are designed to create duties only under Sections 13(a) and 15(d) of 
the Exchange Act. The new disclosure is not an antifraud rule, and it 
is not designed to create new duties under the antifraud provisions of 
the federal securities laws or in private rights of action or to alter 
any existing liability provisions. The new disclosure also does not 
separately create or otherwise affect a company's duty to update its 
prior statements.
    As proposed, we are initially limiting the amendments to 
accelerated filers. Commenters were nearly unanimous in thinking that 
we should extend the amendments to all filers, including smaller 
issuers and foreign issuers.\138\ According to these commenters, the 
utility of information about report access is likely to be just as 
great or even greater for these issuers compared to the minimal 
incremental cost that may be associated with the proposals. We will 
continue to study this issue and consider extending the requirement to 
all reporting companies after evaluating our initial experience with 
the requirement by accelerated filers.
---------------------------------------------------------------------------

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

III. Paperwork Reduction Act

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

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

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

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

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

[[Page 58495]]

portion of the burden is reflected as a cost.

A. Summary of Amendments

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

B. Summary of Comment Letters and Revisions to Proposals

    We requested comment on the PRA analysis contained in the Proposing 
Release. We received responses from two companies addressing the 
Commission's overall estimates for preparing reports.\142\ Both 
commenters questioned our original estimate of the allocation of the 
burden between the company (25% of the burden) and outside 
professionals retained by the company (75% of the burden). Both 
believed the estimate for the amount of work prepared in-house should 
be much higher.\143\ Subsequent to the Proposing Release, we have 
changed our estimates of the allocation of the burden between the 
company and outside advisors to 75% for in-house work and 25% for 
outside advisors.\144\ We recognize that not all companies may utilize 
in-house resources to the extent mentioned by the commenters, but we 
believe the new allocation more accurately reflects current practice 
for annual and quarterly reports.
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    \142\ See the Letters of PPL Corporation and Southern Union 
Company.
    \143\ One commenter believed the estimate should be 90% for in-
house work and 10% for outside professionals. See the Letter of PPL 
Corporation. The other commenter mentioned it prepares over 95% of 
its reports by in-house personnel. See the Letter of Southern Union 
Company.
    \144\ See note 141 above.
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    One of the commenters believed the Commission's estimate of the 
average number of hours each entity spends completing Form 10-Q (136 
hours) is too low.\145\ The commenter also believed that the 
Commission's estimate of the average number of hours each entity spends 
completing the Form 10-K (1,720 hours) was more accurate. We have not 
concluded that our estimates should be changed as a result of this 
comment, although we will continue to monitor registrant response to 
our burden hour estimates.
---------------------------------------------------------------------------

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

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

C. Revisions to Reporting and Cost Burden Estimates

    We estimate that approximately 59% of Form 10-K and Form 10-Q 
respondents, or 5,494 respondents, will satisfy our proposed definition 
of accelerated filer, and thus will be subject to accelerated deadlines 
and the requirement to make the enhanced disclosure in their Form 10-K 
regarding website access to their Exchange Act reports.\146\
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    \146\ We arrived at this estimate by multiplying the approximate 
number of respondents that file on Form 10-K that do not only have a 
class of securities registered under Section 15(d) of the Exchange 
Act (and hence are less likely to have listed equity and therefore a 
public float) (7,384) by 74.4%, which represents the percentage of 
companies in Standard & Poors Research Insight Compustat Database 
with a market capitalization above $75 million out of the total 
number of companies in the Compustat Database with a market 
capitalization above $25 million (the upper limit for small business 
filers on Form 10-KSB). It is our understanding that the data in the 
Compustat Database is derived principally from larger companies, so 
our estimate may overstate the actual percentage of companies that 
would be affected by the proposals.
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    For our amendments regarding filing deadlines, the amount of 
information required to be included in Exchange Act reports will remain 
the same. Accordingly, solely for purposes of the Paperwork Reduction 
Act, our estimate is that the amount of time necessary to prepare the 
reports, and hence, the total amount of burden hours, will not change.
    As proposed, we estimate that the preparation of the required 
disclosure regarding information access in a respondent's Form 10-K 
will add 0.50 burden hours to each annual report on Form 10-K. Thus, we 
estimate this aspect of the amendments will add an additional 2,747 
burden hours to the current Form 10-K (0.50 hours x 5,494 respondents). 
We estimate that 75% of the burden is carried by the respondent (0.50 x 
5,494 x 0.75 = 2,060).\147\ We estimate that 25% of the burden is 
prepared by outside advisors retained by the respondent at an average 
cost of $300 per hour (0.50 x 5,494 x 0.25 x $300 = $206,025). This 
portion of the burden is reflected as a cost.
---------------------------------------------------------------------------

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

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

IV. Cost-Benefit Analysis

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

[[Page 58496]]

    The rule and form changes will enhance the timeliness and 
availability of disclosure to investors in two ways:
    [sbull] Shorten the due dates of quarterly and annual reports (and 
transition reports) for domestic reporting companies that meet certain 
public float and reporting history requirements; \148\ and
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    \148\ We also are making conforming amendments to the timeliness 
requirements for the inclusion of financial information in proxy 
statements, information statements and Securities Act and Exchange 
Act registration statements.
---------------------------------------------------------------------------

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

A. Acceleration of Quarterly and Annual Report Due Dates

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

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

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

[[Page 58497]]

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

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

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

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

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

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

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

[[Page 58498]]

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

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

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

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

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

[[Page 58499]]

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

B. Web Site Access to Information

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

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

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

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

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

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

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

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

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

[[Page 58500]]

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

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

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

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

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

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

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

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

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

[[Page 58501]]

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

VI. Final Regulatory Flexibility Analysis

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

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

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

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

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

A. Need for the Amendments

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

B. Significant Issues Raised by Public Comment

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

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

C. Small Entities Subject to the Amendments

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

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

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

[[Page 58502]]

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

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

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

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

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

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

E. Agency Action to Minimize Effect on Small Entities

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

[[Page 58503]]

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

VII. Update to Codification of Financial Reporting Policies

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

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

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

VIII. Statutory Authority and Text of Rule Amendments

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

Text of Rule Amendments

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

    Reporting and recordkeeping requirements, Securities.

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

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

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

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


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


Sec.  210.3-01  Consolidated balance sheets.

* * * * *

[[Page 58504]]

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

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


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

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

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


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

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

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

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

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

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


Sec.  229.101  (Item 101) Description of business.

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

[[Page 58505]]

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

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

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

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

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


Sec.  240.12b-2  Definitions.

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


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


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

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


Sec.  240.13a-10  Transition reports.

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

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


Sec.  240.15d-10 Transition  reports.

* * * * *
    (j)(1) For transition reports to be filed on the form appropriate 
for annual reports of the issuer, the number of days shall be:
    (i) For accelerated filers (as defined in Sec.  240.12b-2):
    (A) 90 days for fiscal years ending on or after December 15, 2002 
and before December 15, 2003;

[[Page 58506]]

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

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

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

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


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

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

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


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

Form 10-Q

General Instructions

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

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

FORM 10-Q

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

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

    14. Section 249.310 is revised to read as follows:


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

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

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

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

Form 10-K

* * * * *

General Instructions

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

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

[[Page 58507]]

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

FORM 10-K

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

    Dated: September 5, 2002.

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