[Federal Register Volume 70, Number 247 (Tuesday, December 27, 2005)]
[Rules and Regulations]
[Pages 76626-76643]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-24479]



[[Page 76625]]

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Part III





Securities and Exchange Commission





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17 CFR Parts 210, 229, 240 and 249



Revisions to Accelerated Filer Definition and Accelerated Deadlines for 
Filing Periodic Reports; Final Rule

  Federal Register / Vol. 70 , No. 247 / Tuesday, December 27, 2005 / 
Rules and Regulations  

[[Page 76626]]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 210, 229, 240 and 249

[Release Nos. 33-8644; 34-52989; File No. S7-08-05]
RIN 3235-AJ29


Revisions to Accelerated Filer Definition and Accelerated 
Deadlines for Filing Periodic Reports

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: We are adopting amendments to the accelerated filing deadlines 
that apply to periodic reports so that a ``large accelerated filer'' 
(an Exchange Act reporting company with a worldwide market value of 
outstanding voting and non-voting common equity held by non-affiliates 
of $700 million or more) will become subject to a 60-day Form 10-K 
annual report filing deadline, beginning with the annual report filed 
for its first fiscal year ending on or after December 15, 2006. Until 
then, large accelerated filers will remain subject to a 75-day annual 
report deadline. Accelerated filers will continue to file their Form 
10-K annual reports under a 75-day deadline, with no further reduction 
scheduled to occur under the revised rules. Accelerated filers and 
large accelerated filers will continue to file their Form 10-Q 
quarterly reports under a 40-day deadline, rather than the 35-day 
deadline that was scheduled to apply next year under the previously 
existing rules. Further, the amendments revise the definition of the 
term ``accelerated filer'' to permit an accelerated filer that has 
voting and non-voting common equity held by non-affiliates of less than 
$50 million to exit accelerated filer status at the end of the fiscal 
year in which its equity falls below $50 million and to file its annual 
report for that year and subsequent periodic reports on a non-
accelerated basis. Finally, the amendments permit a large accelerated 
filer that has voting and non-voting common equity held by non-
affiliates of less than $500 million to exit large accelerated filer 
status at the end of the fiscal year in which its equity falls below 
$500 million and to file its annual report for that year and subsequent 
periodic reports as an accelerated filer, or a non-accelerated filer, 
as appropriate.

DATES: Effective Date: December 27, 2005.
    Compliance Dates: See Section III.D.

FOR FURTHER INFORMATION CONTACT: Katherine W. Hsu, Special Counsel, 
Office of Rulemaking, at (202) 551-3430, Division of Corporation 
Finance, U.S. Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549.

SUPPLEMENTARY INFORMATION: We are adopting amendments to Rules 3-01, 3-
09 and 3-12 \1\ of Regulation S-X,\2\ Item 101 \3\ of Regulation S-
K,\4\ Forms 10-Q, 10-K and 20-F \5\ under the Securities Exchange Act 
of 1934 (``Exchange Act'') \6\ and Exchange Act Rules 12b-2, 13a-10 and 
15d-10.\7\
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    \1\ 17 CFR 210.3-01; 17 CFR 210.3-09; and 17 CFR 210.3-12.
    \2\ 17 CFR 210.1-01 et seq.
    \3\ 17 CFR 229.101.
    \4\ 17 CFR 229.10 et seq.
    \5\ 17 CFR 249.308a; 17 CFR 249.310; and 17 CFR 249.220f.
    \6\ 15 U.S.C. 78a et seq.
    \7\ 17 CFR 240.12b-2; 17 CFR 240.13a-10; and 17 CFR 240.15d-10.
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Table of Contents

I. Background
II. Proposed Amendments
III. Discussion of Final Amendments We Are Adopting Today
    A. Amended Accelerated Filing Deadlines for Annual Reports on 
Form 10-K and Quarterly Reports on Form 10-Q
    1. Deadlines for Accelerated Filers that Are Not Large 
Accelerated Filers
    2. Large Accelerated Filers
    3. Form 10-K Deadline for Large Accelerated Filers
    4. Form 10-Q Deadline for Large Accelerated Filers
    5. Other Comments on the Amended Filing Deadlines
    B. Exit Requirements from Accelerated Filer and Large 
Accelerated Filer Status
    C. Other Amendments
    D. Effective Date and Compliance Dates
IV. Paperwork Reduction Act
V. Cost-Benefit Analysis
    A. Accelerated Filing Deadlines
    1. Benefits
    2. Costs
    B. Exiting Accelerated Filer or Large Accelerated Filer Status
VI. Consideration of Impact on the Economy, Burden on Competition 
and Promotion of Efficiency, Competition and Capital Formation
VII. Final Regulatory Flexibility Analysis
    A. Need for the Amendments
    B. Significant Issues Raised by Public Comment
    C. Small Entities Subject to the Final Amendments
    D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements
    E. Agency Action to Minimize Effect on Small Entities
VIII. Update to Codification of Financial Reporting Policies
IX. Statutory Authority and Text of Amendments

I. Background

    The Commission first established the accelerated filing deadlines 
for periodic reports filed by larger public companies in September 
2002.\8\ The rules provided for a system of filing deadlines that 
required companies meeting the accelerated filer definition in Rule 
12b-2 of the Exchange Act to file their Form 10-K annual reports and 
Form 10-Q quarterly reports under deadlines that were shorter than the 
90-day Form 10-K and 45-day Form 10-Q deadlines that previously applied 
to all companies filing these forms. Accelerated filers generally 
included companies with an aggregate market value of voting and non-
voting common equity held by non-affiliates of the issuer (referred to 
as ``public float'') of $75 million or more, as of the last business 
day of the issuer's most recently completed second fiscal quarter.\9\ 
The definition of an accelerated filer was based, in part, on the 
requirements for registration of primary offerings for cash on Form S-
3.\10\
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    \8\ Release No. 33-8128 (Sept. 5, 2002) [67 FR 58480].
    \9\ Under the accelerated filer rules, before today's adoption 
of the amendments, a company was an accelerated filer once it met 
all of the following conditions as of the end of its fiscal year:
     The issuer had an aggregate market value of voting and 
non-voting common equity held by non-affiliates of the issuer of $75 
million or more, as of the last business day of the issuer's most 
recently completed second fiscal quarter;
     The issuer had been subject to the reporting 
requirements of Section 13(a) or 15(d) of the Exchange Act [15 
U.S.C. 78m(a) or 78o(d)] for a period of at least 12 calendar 
months;
     The issuer previously had filed at least one annual 
report; and
     The issuer was not eligible to use Forms 10-KSB and 10-
QSB [17 CFR 249.310b and 17 CFR 249.308b] for its annual and 
quarterly reports.
    \10\ 17 CFR 239.13. See Section II.B.3 in Release No. 33-8128.
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    The 2002 rules provided for a gradual three-year phase-in period in 
order to transition accelerated filers into filing under shortened 
deadlines and to afford companies and their auditors more time to make 
the requisite adjustments to their schedules to prepare for the new 
deadlines.\11\ The rules ultimately would have shortened the Form 10-K 
annual report deadline to 60 days after fiscal year end, and the Form 
10-Q quarterly report deadline to 35 days after fiscal quarter end, for 
all accelerated filers. Companies that did not meet the Exchange Act 
definition of an accelerated filer were permitted to

[[Page 76627]]

continue filing annual reports under a 90-day deadline and quarterly 
reports under a 45-day deadline.
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    \11\ The phase-in schedule adopted in 2002 provided for a 75-day 
annual report deadline for accelerated filers beginning with the 
annual report filed for fiscal years ending on or after December 15, 
2003 and before December 15, 2004, and a 40-day quarterly report 
deadline for subsequently filed quarterly reports. Under the 2002 
schedule, a 60-day annual report deadline was scheduled to be 
implemented for annual reports filed for fiscal years ending on or 
after December 15, 2004 and a 35-day quarterly report deadline was 
to apply to subsequently filed quarterly reports.
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    In the 2002 adopting release, we stated our belief that periodic 
reports filed under the Exchange Act contain valuable information for 
investors, and expressed concern that an undue delay in making 
available the periodic report information may cause the information to 
be less valuable to investors.\12\ We also acknowledged the need to 
balance the demand for timely information to investors with the time 
companies need to prepare their reports without undue burden. We 
further emphasized that the amended filing deadlines should speed the 
flow of information to investors without sacrificing accuracy or 
completeness or imposing undue burden and expense on registrants.\13\
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    \12\ Section II.A.1 in Release No. 33-8128.
    \13\ Id.
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    During the three-year phase-in period, the accelerated filing 
deadlines have remained a topic of discussion. In particular, in year 
two of the phase-in period, issuers and their auditors expressed 
concern over their ability to make the necessary preparations to file 
reports on a timely basis, especially given our adoption of new 
reporting and attestation requirements regarding the effectiveness of 
internal control over financial reporting under Section 404 of the 
Sarbanes-Oxley Act of 2002.\14\ Our rules implementing Section 404 
require companies to include in their annual reports a report of 
management on the company's effectiveness of internal control over 
financial reporting and an accompanying auditor's report, and to 
evaluate, as of the end of each fiscal quarter,\15\ any change in the 
company's internal control over financial reporting.\16\
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    \14\ 15 U.S.C. 7262.
    \15\ In the case of a foreign private issuer filing on Forms 20-
F and 40-F [17 CFR 249.20f and 249.40f], this evaluation is 
conducted as of the end of each fiscal year.
    \16\ Exchange Act Rules 13a-15 and 15d-15 [17 CFR 240.13a-15 and 
17 CFR 240.15d-15] and Item 308 of Regulations S-K and S-B [17 CFR 
229.308 and 17 CFR 228.308], as adopted in Release No. 33-8238 (June 
5, 2003) [68 FR 36636].
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    We first acted in response to these concerns in February 2004 when 
we extended the Section 404 compliance dates to require an accelerated 
filer to begin complying with the internal control over financial 
reporting requirements for its first fiscal year ending on or after 
November 15, 2004, rather than its first fiscal year ending on or after 
June 15, 2004.\17\ Then, in November 2004, we postponed the final 
phase-in of the accelerated filing deadlines for one year.\18\ As a 
result of the postponement, prior to our action today, the final phase-
in of the accelerated filing deadlines was scheduled to occur beginning 
with periodic filings made in 2006. Specifically, accelerated filers 
were to become subject to the 60-day deadline beginning with their 
annual reports on Form 10-K filed for fiscal years ending on or after 
December 15, 2005, and to the 35-day deadline for their subsequently 
filed quarterly reports on Form 10-Q.
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    \17\ Release No. 33-8392 (Feb. 24, 2004) [69 FR 9722]. The 
compliance date for a company that is not an accelerated filer has 
been extended until the company files an annual report for its first 
fiscal year ending on or after July 15, 2007. Release No. 33-8618 
(Sept. 22, 2005) [70 FR 56825].
    \18\ Release No. 33-8507 (Nov. 17, 2004) [69 FR 68232].
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II. Proposed Amendments

    On September 22, 2005, we proposed rule and form changes to the 
periodic report filing deadlines and to the Exchange Act Rule 12b-2 
``accelerated filer'' definition.\19\ As noted in the proposing 
release, the proposed deadlines were consistent with a recommendation 
adopted by the SEC Advisory Committee on Smaller Public Companies on 
August 10, 2005 that smaller public companies not be made subject to 
any further acceleration of due dates for annual and quarterly 
reports.\20\ The proposals also were prompted by discussions and 
comments provided at the Commission's roundtable on internal control 
over financial reporting,\21\ comments related to our release on the 
temporary postponement of the final phase-in of the accelerated filing 
deadlines,\22\ and comments on our release proposing the Securities 
Offering Reform rules.\23\
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    \19\ Release No. 33-8617 (Sept. 22, 2005) [70 FR 56862].
    \20\ Materials related to the August 10, 2005 meeting held by 
the SEC Advisory Committee on Smaller Public Companies are available 
on-line at http://www.sec.gov/info/smallbus/acspc.shtml.
    \21\ See, e.g., testimony from Bob Miles of Washington Mutual 
and letters from Ernst & Young LLP (``E&Y'') (Apr. 4, 2005); Glass 
Lewis & Co. (Apr. 12, 2005); and Crowe Chizek & Co. LLC (Mar. 28, 
2005). Materials related to the roundtable, including an archived 
broadcast and a transcript of the roundtable are available on-line 
at http://www.sec.gov/spotlight/soxcomp.htm. The roundtable was held 
on April 13, 2005. See SEC Press Release Nos. 2005-20 (Feb. 22, 
2005) and 2005-50 (Apr. 7, 2005).
    \22\ See, e.g., letters from the AICPA; Becker & Poliakoff; 
P.A.; BDO Seidman, LLP (``BDO Seidman''); The Chubb Corporation, 
Deloitte & Touche LLP (``Deloitte''); E&Y First Federal Bancshares 
of Arkansas; Federal Signal Corporation; Franklin Financial Services 
Corporation; MBNA Corporation; Pfizer Inc.; Protective Life 
Corporation; and Spectrum Organic Products, submitted in response to 
Release No. 33-8477 (Aug. 25, 2004) [69 FR 67392].
    \23\ See, e.g., letters from the AICPA; BDO Seidman; E&Y and 
KPMG, submitted in response to Release No. 33-8501 (Nov. 3, 2004) 
[69 FR 71126].
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    The proposals that we issued in September of this year called for 
the establishment of three, rather than two, tiers of periodic report 
filing deadlines. The proposals contemplated the creation of a new 
``large accelerated filer'' category of Exchange Act reporting 
companies to be comprised of issuers having $700 million or more in 
public float. As a related change, the proposals would have revised the 
``accelerated filer'' definition to include issuers having $75 million 
or more, but less than $700 million, in public float.
    Under the proposals, the contemplated large accelerated filers were 
to be the only companies to remain subject to the previously adopted 
final phase-in of the accelerated filing transition schedule requiring 
annual reports on Form 10-K for fiscal years ending on or after 
December 15, 2005 to be filed within 60 days after fiscal year end. The 
proposed revisions would have permitted large accelerated filers to 
continue to file their quarterly reports on Form 10-Q within the same 
40-day deadline under which accelerated filers have been filing these 
reports for the last two years.
    Under the proposals, the final phase-in of accelerated deadlines 
would not have applied to the middle tier of companies, the accelerated 
filers. We proposed to permit those companies to continue to file their 
Form 10-K annual reports within a 75-day deadline and their Form 10-Q 
quarterly reports within a 40-day deadline. The 75-day and 40-day 
deadlines are the same deadlines under which accelerated filers have 
been filing their periodic reports for the last two years.
    The proposed revisions would not have affected the filing deadlines 
of non-accelerated filers. The proposing release also confirmed that 
the deadlines for foreign private issuers that file annual reports on 
Form 20-F would not be affected by the proposed revisions.\24\
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    \24\ While the accelerated filer definition does not by its 
terms exclude foreign private issuers, to date, the filing deadlines 
for accelerated filers have had application only with respect to 
foreign private issuers that file annual reports on Form 10-K and 
quarterly reports on Form 10-Q.
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    In addition, the proposals sought to amend the requirements for 
exiting accelerated filer status to permit an accelerated filer that 
has a public float of less than $25 million, as of the last business 
day of its most recently completed second fiscal quarter, to exit 
accelerated filer status beginning with the annual report for the 
fiscal year in which the company's public float

[[Page 76628]]

dropped below $25 million. We proposed to permit a company to exit 
large accelerated filer status if its public float fell below $75 
million, as of the last business day of its most recently completed 
second fiscal quarter.
    We received 46 comment letters on the proposed revisions.\25\ More 
than half of the comment letters were submitted by companies. Other 
commenters included professional and trade associations, accounting 
firms, law firms, a sole practitioner, one institutional investor 
organization, the Nasdaq stock market, and one individual. A large 
majority of the commenters supported the proposed revisions to provide 
relief from the previously adopted filing deadlines and to maintain the 
Form 10-K annual report deadline at 75 days and the Form 10-Q quarterly 
report deadline at 40 days for accelerated filers. A majority of the 
commenters, however, urged the Commission to consider revising the 
rules further so that even the large accelerated filers would not 
become subject to the previously adopted 60-day deadline for annual 
reports on Form 10-K.
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    \25\ The public comments we received are available for 
inspection in the Commission's Public Reference Room at 100 F 
Street, NE., Washington, DC 20549 in File No. S7-08-05. They are 
also available on-line at http://www.sec.gov/rules/proposed/s70805.shtml.
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    Some of the 46 comment letters also discussed our proposed 
requirements for exiting accelerated filer or large accelerated filer 
status. Most of these commenters supported our efforts to make it 
easier for accelerated filers to exit accelerated filer status, but 
many offered recommendations for modifications that would ease exit 
restrictions further than proposed. These comments are described in 
detail below.

III. Discussion of Final Amendments We Are Adopting Today

    After consideration of the public comments that were received, we 
are adopting the rules substantially as proposed, but with two 
significant modifications, which (1) provide large accelerated filers 
with an additional year before they are required to comply with the 60-
day Form 10-K deadline and (2) relax the exit requirements from 
accelerated filer or large accelerated filer status further than 
proposed. We are amending the periodic report filing deadlines to:
     Create a new category of accelerated filer, the ``large 
accelerated filer,'' that encompasses an issuer after it first has an 
aggregate worldwide market value \26\ of voting and non-voting common 
equity held by non-affiliates of the issuer of $700 million or more, as 
of the last business day of the issuer's most recently completed second 
fiscal quarter; \27\
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    \26\ As discussed later in this release, we are modifying the 
Exchange Act Rule 12b-2 definition of ``accelerated filer'' to refer 
to the issuer's ``aggregate worldwide market value'' rather than 
``aggregate market value.'' We also refer to this term in the 
definition of ``large accelerated filer.''
    \27\ See paragraph 2 of the Exchange Act Rule 12b-2 definition 
of ``accelerated filer and large accelerated filer.''
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     Re-define an ``accelerated filer'' as an issuer after it 
first has an aggregate worldwide market value of voting and non-voting 
common equity held by non-affiliates of the issuer of $75 million or 
more, but less than $700 million, as of the last business day of the 
issuer's most recently completed second fiscal quarter;
     Amend the Form 10-K annual report deadline for the newly 
established category of large accelerated filers so that they will be 
required to file their annual reports under the 60-day deadline 
beginning with the first annual report filed for a fiscal year ending 
on or after December 15, 2006 (until then, they will remain subject to 
the 75-day deadline);
     Eliminate the final phase-in of the Form 10-Q quarterly 
report deadline for large accelerated filers and thus continue to apply 
a 40-day deadline to the quarterly reports; and
     Eliminate the final phase-in of the Form 10-K annual 
report deadline and Form 10-Q quarterly report deadline for the 
accelerated filers that are not large accelerated filers and thus 
continue to apply a 75-day and 40-day deadline to the annual and 
quarterly reports, respectively.
    Further, we are amending the requirements for exiting accelerated 
filer or large accelerated filer status to:
     Permit an accelerated filer with less than $50 million 
aggregate worldwide market value of voting and non-voting common equity 
held by its non-affiliates, as of the last business day of its most 
recently completed second fiscal quarter, to exit accelerated filer 
status without a second year's determination or other delay; \28\ and
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    \28\ See paragraph 3(ii) of the Exchange Act Rule 12b-2 
definition of ``accelerated filer and large accelerated filer.''
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     Permit a large accelerated filer with less than $500 
million aggregate worldwide market value of voting and non-voting 
common equity held by its non-affiliates, as of the last business day 
of its most recently completed second fiscal quarter, to exit large 
accelerated filer status.\29\ This filer would have to comply with 
accelerated filer or non-accelerated filer requirements depending on 
whether its public float was $50 million or more, or less than $50 
million, as of the last business day of its most recently completed 
second fiscal quarter.
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    \29\ See paragraph 3(iii) of the Exchange Act Rule 12b-2 
definition of ``accelerated filer and large accelerated filer.''
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A. Amended Accelerated Filing Deadlines for Annual Reports on Form 10-K 
and Quarterly Reports on Form 10-Q

1. Deadlines for Accelerated Filers That Are Not Large Accelerated 
Filers
    An overwhelming majority of commenters supported our proposal to 
amend the filing deadlines so that accelerated filers with a public 
float of $75 million or more but less than $700 million, could continue 
to file their annual reports on Form 10-K within 75 days after fiscal 
year end.\30\ Most commenters also supported the proposed amendments to 
maintain the 40-day deadline for quarterly reports on Form 10-Q for 
accelerated filers and large accelerated filers.\31\
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    \30\ See, e.g., letters from American Bar Association (``ABA''); 
America's Community Bankers (``ACB''); Central Pacific Financial 
Corporation (``Central Pacific''); The Chubb Corporation 
(``Chubb''); Cogent Communications Group, Inc. (``Cogent''); 
Commercial Metals Company (``CMC''); Cytokinetics, Inc. 
(``Cytokinetics''); Deloitte (Oct. 31, 2005); Sean Dempsey; Emerson; 
E&Y Ferrellgas Partners, LP (``Ferrellgas''); Forest City 
Enterprises (``Forest City''); Gander Mountain Company (``Gander''); 
Glacier Bancorp, Inc. (``Glacier''); General Motors Corporation 
(``GM''); Hercules Incorporated (``Hercules''); Independent 
Community Bankers of America (``ICBA''); J.C. Penney Company, Inc. 
(``JC Penney''); KPMG; LNR Property Holdings Ltd. (``LNR 
Property''); The Nasdaq Stock Market, Inc. (``Nasdaq''); National 
Retail Federation (``NRF''); Association of the Bar of the City of 
New York (``NYCBA''); PwC; Safeway, Inc. (``Safeway''); Sidley 
Austin Brown & Wood LLP (``Sidley Austin''); Southwest Gas 
Corporation (``Southwest Gas''); Greg Swalwell; Torchmark 
Corporation (``Torchmark''); UnionBanCal Corporation 
(``UnionBanCal''); URS Corporation (``URS''); Vitria Technology, 
Inc. (``Vitria''); Von Briesen & Roper, s.c.; Whole Foods Markets, 
Inc. (``Whole Foods''); Williams-Sonoma, Inc. (``Williams-Sonoma''); 
and Wilmington Trust Company (``Wilmington Trust'').
    \31\ See, e.g., letters from ABA; ACB; American Bankers; The 
Business Roundtable; Central Pacific; Chubb; CMC; Cytokinetics; 
Deloitte (Sept. 16, 2005 and Oct. 31, 2005); E&Y Emerson; Financial 
Executives International (``FEI''); Ferrellgas; Financial Reporting 
Advisors, LLP (``FinRA''); Gander; GM; Hercules; ICBA; KPMG; 
Southwest Gas; Greg Swalwell; URS; Whole Foods; Williams-Sonoma; and 
Wilmington Trust.
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    We are adopting these amendments to the accelerated filing 
deadlines as proposed so that accelerated filers that are not large 
accelerated filers will become permanently subject to the 75-day and 
40-day deadlines, the deadlines

[[Page 76629]]

to which all accelerated filers have been subject since their annual 
reports filed for fiscal years ending on or after December 15, 2003. 
After considering the comments on this proposal, we believe that it is 
appropriate to provide relief to these smaller companies, given the 
costs that might be incurred as a result of the further acceleration of 
the periodic report deadlines for these companies. We have reason to 
believe that the costs for these companies to comply with the further 
acceleration of their filing deadlines would be greater than the 
compliance costs for larger companies.\32\ The companies that comprise 
the redefined category of ``accelerated filers'' comprise less than 5% 
of the total U.S. equity market capitalization.\33\ We do not believe 
that these costs would be justified by the benefits that investors 
would obtain from earlier access to the reports.
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    \32\ See Section V.A below on the cost-benefit analysis of the 
filing deadline amendments.
    \33\ See Section II.A.1 of Release No. 33-8591 (July 19, 2005) 
[70 FR 44722]. See also Section V of this release. The Office of 
Economic Analysis provided data indicating that the public float of 
companies possessing between $75 and $700 million of public float 
represented 4.3% of the total public float of companies on NYSE, 
Amex, Nasdaq, the Over the Counter Bulletin Board, and Pink Sheets, 
LLC. These calculations were based on public float and market 
capitalization measurements from 2004 and 2005.
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2. Large Accelerated Filers
    We did not propose to alter the previously adopted 60-day Form 10-K 
deadline for the largest accelerated filers; instead, we proposed to 
create a new group of accelerated filers called ``large accelerated 
filers,'' to which that deadline would apply. We proposed to define an 
issuer as a ``large accelerated filer'' once it meets the following 
conditions for the first time at its fiscal year end:
     The issuer had an aggregate worldwide market value of 
voting and non-voting common equity held by its non-affiliates of $700 
million or more, as of the last business day of the issuer's most 
recently completed second fiscal quarter;
     The issuer has been subject to the reporting requirements 
of Exchange Act Section 13(a) or 15(d) \34\ for a period of at least 12 
calendar months;
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    \34\ 15 U.S.C. 78m(a) or 78o(d).
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     The issuer has filed at least one annual report pursuant 
to Section 13(a) or 15(d); and
     The issuer is not eligible to use Forms 10-KSB and 10-QSB 
\35\ for its annual and quarterly reports.
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    \35\ 17 CFR 249.310b and 17 CFR 249.308b.
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    The comments that we received on the proposed definition were mixed 
and focused on the 60-day Form 10-K deadline for these companies. Some 
commenters supported the establishment of this separate category of 
companies and agreed with our assertion that larger companies tend to 
have access to additional resources and a well-developed 
infrastructure, which makes them better able to support the further 
acceleration of the annual report deadline.\36\ Many commenters, 
however, disagreed that larger companies are better able to comply with 
accelerated filing deadlines and pointed out that larger companies 
frequently have more complex business systems than smaller companies, 
involving more complicated transactions, and often have operations that 
are geographically widespread.\37\ A few commenters discouraged the use 
of ``market float'' or ``size-based differentiated requirements'' among 
issuers to determine filing deadlines.\38\
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    \36\ See, e.g., letters from American Bankers; ACB; Cogent; 
ICBA; and KPMG.
    \37\ See, e.g., letters from Chubb; Emerson; Forest City; 
Glacier; JC Penney; Safeway; Sidley Austin; UnionBanCal; URS; and 
Whole Foods.
    \38\ See, e.g., letters from NYCBA and Council of Institutional 
Investors (``CII'').
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    A few commenters, despite disagreeing with the application of the 
previously adopted 60-day Form 10-K filing deadline for large 
accelerated filers, said that they would support a distinction between 
large accelerated filers and other accelerated filers if the Commission 
determined not to revise the previously adopted 60-day deadline.\39\ 
They agreed that the 60-day Form 10-K annual report deadline should not 
apply to issuers other than large accelerated filers.
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    \39\ See, e.g., letters from ABA; Deloitte (Oct. 31, 2005); and 
PricewaterhouseCoopers LLP (``PwC'').
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    Some commenters suggested a different public float threshold than 
the proposed $700 million threshold.\40\ These commenters recommended 
that we raise the threshold to some higher amount (e.g., to $1 billion 
\41\ or ``to a significantly higher level'' than $700 million \42\). 
One commenter who supported the $700 million threshold stated that, 
alternatively, we could establish a threshold that would fluctuate and 
be designed to capture issuers representing 94% of total U.S. market 
capitalization, given that issuers that currently have a public float 
of $700 million or more represent 94% of the total U.S. market 
capitalization.\43\ None of these commenters provided empirical data to 
support a different public float threshold.
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    \40\ See, e.g., letters from Cytokinetics; Deloitte (Oct. 31, 
2005); and Gander.
    \41\ See letters from Cytokinetics and Gander.
    \42\ See letter from Deloitte (Oct. 31, 2005).
    \43\ See letter from American Bankers.
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    One commenter was of the view that we should not align the large 
accelerated filer definition with that of a well-known seasoned issuer, 
as proposed, if we chose to create the large accelerated filer 
category.\44\ This commenter noted that, while many of the Securities 
Offering Reform final rules apply to both equity and debt-only issuers, 
the accelerated filing deadlines do not apply to issuers that have 
registered only a class of debt securities under the Exchange Act. On 
the other hand, another commenter supported the $700 million threshold 
and favored consistency between the definition of a well-known seasoned 
issuer and the definition of a large accelerated filer.\45\ Another 
commenter suggested that we consider further our initial decision not 
to include debt-only issuers in the accelerated filing system.\46\ This 
commenter, along with others,\47\ thought that debt-only issuers should 
only be allowed to file their periodic reports on a non-accelerated 
basis if they were willing to forgo the automatic shelf registration 
benefits that they may qualify for as well-known seasoned issuers.
---------------------------------------------------------------------------

    \44\ See letter from PwC.
    \45\ See letter from American Bankers.
    \46\ See letter from AICPA.
    \47\ Two other commenters requested that the Commission consider 
an ``opt-in'' or ``opt-out'' approach whereby large accelerated 
filers who could qualify as a well-known seasoned issuer could 
choose to opt-out of the benefits of automatic shelf registration 
and instead file their annual reports under a 75-day deadline. See 
letters from ABA and E&Y.
---------------------------------------------------------------------------

    Although commenters raised several issues and concerns that we 
considered, we continue to believe that the establishment of the new 
category of large accelerated filers is appropriate. While we 
acknowledge the concerns of some commenters that larger issuers may 
have more complex business systems than smaller issuers that could 
potentially cause them to experience difficulties in meeting the most 
accelerated Form 10-K deadline, we do not believe that these 
observations warrant granting larger issuers permanent relief from the 
additional 15-day acceleration of the Form 10-K deadline. We believe 
that it is appropriate to establish the large accelerated filer 
category, noting that companies with a public float of $700 million or 
more represent nearly 95% of the U.S. equity market capitalization and 
are more closely followed by the markets and by securities analysts 
than

[[Page 76630]]

other issuers.\48\ Based on our experience with the accelerated filing 
deadlines, we continue to believe that larger issuers generally have 
sufficient financial reporting resources and sufficiently robust 
infrastructures to comply with the 60-day deadlines, when they take 
effect for annual reports filed for fiscal years ending on or after 
December 15, 2006.\49\ In addition, the $700 million public float 
threshold that is an element of the large accelerated filer definition 
mirrors the public float eligibility requirement used in the new 
Securities Act of 1933 (``Securities Act'') \50\ definition of ``well-
known seasoned issuer.'' \51\
---------------------------------------------------------------------------

    \48\ See Section V.A below and Section II.A.1 in Release No. 33-
8591.
    \49\ In addition, internal data suggests that companies with a 
market capitalization of $700 million or more may currently be 
filing their annual reports on Form 10-K on an average of 70 days 
after fiscal year end. Our data was derived from Audit Analytics. 
Market capitalization was used as an approximation for public float 
data.
    \50\ 15 U.S.C. 77a et seq.
    \51\ See Release No. 33-8591. The definition of a well-known 
seasoned issuer is set forth in Securities Act Rule 405 [17 CFR 
230.405]. We chose to incorporate the $700 million public float 
threshold in connection with the extensive research conducted by our 
Office of Economic Analysis during the development of the Securities 
Offering Reform rules and demonstrable differences between companies 
with this threshold and those with a lower public float threshold.
---------------------------------------------------------------------------

    In using the same public float threshold in both definitions, 
however, we are not equating large accelerated filer status with well-
known seasoned issuer status. As we noted in the proposing release, the 
timing for measuring an issuer's public float for the purpose of 
determining accelerated filer or large accelerated filer status is 
different from the timing for measuring public float for the purpose of 
determining well-known seasoned issuer status. Moreover, debt-only 
issuers are excluded from the category of both accelerated filers and 
large accelerated filers. In addition, unlike with the large 
accelerated filer definition, certain issuers known as ``ineligible 
issuers'' are excluded from well-known seasoned issuer status, but not 
from large accelerated filer status.\52\
---------------------------------------------------------------------------

    \52\ For example, a large accelerated filer that is not current 
with respect to its periodic report filing obligations, or that was 
a blank check, shell company (other than a business combination 
related shell company) or an issuer of penny stock as defined in 
Exchange Act Rule 3a51-1 [17 CFR 240.3a51-1] during the three years 
before the determination date specified in the ineligible issuer 
definition, would not be eligible to become a well-known seasoned 
issuer.
---------------------------------------------------------------------------

    An accelerated filer's public float threshold is to be measured as 
of the last business day of the issuer's most recently completed second 
fiscal quarter. We received some comments recommending that the public 
float measurement be tied to a longer period of time or based on an 
average of multiple dates instead of being tied to a single point in 
time.\53\ These commenters reasoned that measurements required to be 
made at a single point in time could cause companies that are 
experiencing only temporary swings in stock price at the time that the 
public float is measured to be pulled into the accelerated filer or 
large accelerated filer definition.\54\ Commenters did not provide 
empirical evidence that this is other than an isolated occurrence.
---------------------------------------------------------------------------

    \53\ See, e.g., letters from ACB; BDO Seidman; Deloitte (Oct. 
31, 2005); PwC; and Greg Swalwell.
    \54\ See, e.g., letter from ACB; BDO Seidman; and Deloitte (Oct. 
31, 2005).
---------------------------------------------------------------------------

    We have considered the comments, but continue to believe that the 
proposed measurement, which is consistent with the measurement that has 
been in place since 2002, is an appropriate method for the purpose of 
accelerated filing. Further, our revisions to the rules regarding 
exiting accelerated filer status should address commenters' concerns to 
some extent. As we stated in the 2002 adopting release, when we 
developed a fixed determination date in advance of year-end in response 
to comments, determining public float on the last day of the company's 
second fiscal quarter provides a company with six months advance notice 
as to whether or not it will be subject to accelerated filing at the 
end of its fiscal year so it can begin making the appropriate 
preparations.\55\ We have required companies to disclose this 
computation on the Form 10-K cover page. We are not sufficiently 
persuaded that we should change the method of computing public float 
that was included in the original accelerated filer definition that we 
adopted in consideration of comments in 2002.
---------------------------------------------------------------------------

    \55\ See Section II.B3 of Release No. 33-8128.
---------------------------------------------------------------------------

    In connection with our establishment of the large accelerated filer 
category, we also are amending the definition of the term ``accelerated 
filer'' to include only those companies that have a public float of $75 
million or more, but less than $700 million, as of the last business 
day of the issuer's most recently completed second fiscal quarter.
3. Form 10-K Deadline for Large Accelerated Filers
    A majority of commenters, mostly companies and their auditors or 
advisers or groups representing these interests, urged the Commission 
to consider revising the rules to eliminate the final phase-in to the 
60-day Form 10-K filing deadline for even the large accelerated 
filers.\56\ These commenters provided various reasons as to why the 
Commission should revise this deadline. First, several commenters 
argued that the 60-day deadline would negatively affect the quality of 
annual reports.\57\ They suggested, for example, that involvement of 
the audit committee, board of directors, lawyers, auditors, and outside 
experts in the annual report review process could be meaningfully 
reduced under the 60-day deadline.\58\ Some commenters cautioned that a 
shortened deadline may increase the chance of error.\59\ One commenter 
noted that issuers may have an increased incentive to use recasted 
language or limited analysis in the Management's Discussion and 
Analysis section of the reports when pressured to meet a rigid 
deadline.\60\ Second, some commenters reasoned that companies' more 
frequent filing of current reports on Form 8-K,\61\ as well as the 
shortened Form 8-K filing deadline, has reduced the need for further 
acceleration of the Form 10-K deadline.\62\ Third, a number of 
commenters pointed out the difficulties in meeting the accelerated 
deadline given the time and costs involved in complying with various 
regulatory demands, including the requirements regarding internal 
control over financial reporting mandated by Section 404 of the 
Sarbanes-Oxley Act of 2002.\63\ In addition, commenters claimed that 
the accelerated deadline will increase costs without incremental

[[Page 76631]]

benefit,\64\ and some commenters claimed that the deadline will impose 
stress and strain on those responsible for preparing the annual 
report.\65\ Some companies provided timelines of the tasks needed to be 
completed in preparing the annual report in order to show that they had 
little time to spare.\66\
---------------------------------------------------------------------------

    \56\ See, e.g., letters from ABA; AICPA; Central Pacific; Chubb; 
CMC; Cytokinetics; Deloitte (Sept. 16, 2005 and Oct. 31, 2005); Sean 
Dempsey; Emerson; E&Y Ferrellgas; Forest City; Gander; Glacier; GM; 
Hercules; JC Penney; LNR Property; NRF; NYCBA; PwC; Safeway; Sidley 
Austin; Southwest Gas; Greg Swalwell; Torchmark; UnionBanCal; URS; 
Vitria; Whole Foods; Williams-Sonoma; and Wilmington Trust.
    \57\ See, e.g., letters from ABA, AICPA; Central Pacific; Chubb; 
CMC; Cytokinetics; Deloitte (Sept. 16, 2005 and Oct. 31, 2005); E&Y 
Ferrellgas; Forest City; Gander; Glacier; GM; Hercules; JC Penney; 
LNR Property; NRF; NYCBA; PwC; Safeway; Sidley Austin; Southwest 
Gas; Greg Swalwell; Torchmark; UnionBanCal; URS; Vitria; Williams-
Sonoma; and Wilmington Trust.
    \58\ See, e.g., letters from GM and Sidley Austin.
    \59\ See, e.g., letters from Whole Foods and Wilmington Trust.
    \60\ See letter from Sidley Austin.
    \61\ 17 CFR 249.308.
    \62\ See, e.g., letters from ABA; CMC; Cytokinetics; Deloitte 
(Sept. 16, 2005 and Oct. 31, 2005); JC Penney; GM; NRF; PwC; 
Safeway; Sidley Austin; and Whole Foods.
    \63\ See, e.g., letters from ABA; AICPA; BDO Seidman; CMC; 
Deloitte (Sept. 16, 2005); Ferrellgas; Forest City; Glacier; GM; 
Hercules; JC Penney; NRF; Safeway; Sidley Austin; Greg Swalwell; 
UnionBanCal; and Williams-Sonoma.
    \64\ See, e.g., letters from BDO Seidman; CMC; Deloitte (Sept. 
16, 2005); Emerson; E&Y Gander; JC Penney; LNR Property; NRF; PwC; 
and Safeway.
    \65\ See, e.g., letters from AICPA; Central Pacific; Chubb; Sean 
Dempsey; GM; JC Penney; LNR Property; PwC; Safeway; Sidley Austin; 
and UnionBanCal.
    \66\ See, e.g., letters from Chubb; Ferrellgas; GM; and 
Southwest Gas.
---------------------------------------------------------------------------

    A minority of commenters supported the application of the final 
phase-in to the 60-day Form 10-K filing deadline to large accelerated 
filers.\67\ One commenter provided empirical data supporting its 
position. It analyzed 855 companies and noted that, while most of the 
companies did not currently file their Form 10-K within 60 days after 
fiscal year end, more issuers filed them within 60 days for their 
fiscal year 2004 than for their fiscal year 2002 and these companies 
filed, on average, within 70 days after fiscal year end.\68\
---------------------------------------------------------------------------

    \67\ See, e.g., letters from CII; FinRA; ICBA; KPMG; and Nasdaq.
    \68\ See letter from KPMG.
---------------------------------------------------------------------------

    Despite the comments requesting that we consider adopting a 
permanent 75-day annual report deadline for even the large accelerated 
filers, we do not think it is appropriate to do so. While the 
information filed on Form 8-K current reports clearly is important, we 
do not believe that it is an adequate substitute for the timely 
availability of the information included in annual reports. While we 
are mindful of the potential costs that may be incurred by large 
accelerated filers in complying with the 60-day Form 10-K filing 
deadline, for the reasons discussed in 2002 at the time of its original 
adoption, we believe that the 60-day deadline continues to 
appropriately balance, for these issuers, the time necessary to prepare 
annual reports on Form 10-K with the need of the markets to receive 
important information in a timely manner.
    However, in acknowledgement of the recent responsibilities assumed 
by even the largest companies, especially those associated with Section 
404 of the Sarbanes-Oxley Act and regarding internal control over 
financial reporting, we are postponing the implementation of the 60-day 
Form 10-K deadline for the large accelerated filers for an additional 
year. Under the amendments we are adopting, large accelerated filers 
will be subject to the current 75-day Form 10-K deadline for fiscal 
years ending before December 15, 2006. With respect to annual reports 
filed for fiscal years ending on or after December 15, 2006, large 
accelerated filers will become permanently subject to the 60-day Form 
10-K deadline.
4. Form 10-Q Deadline for Large Accelerated Filers
    A majority of the commenters supported our proposal not to subject 
even large accelerated filers to the final phase-in for quarterly 
reports to 35 days so that they could continue to file their quarterly 
reports on Form 10-Q within 40 days after fiscal quarter end.\69\ One 
association noted that this topic met with the most concern among the 
accelerated filers in its membership.\70\ Another commenter who 
supported the 60-day deadline for the Form 10-K for large accelerated 
filers provided some empirical data to show that a 35-day deadline 
could hinder the quality of management's review as well as reduce 
dialogue with the audit committee.\71\ Although we requested comment on 
whether large accelerated filers should be required to file their 
reports within 35 days, none of the commenters responded affirmatively.
---------------------------------------------------------------------------

    \69\ See, e.g., letters from ABA; ACB; American Bankers; The 
Businees Roundtable; Central Pacific; Chubb; CMC; Cytokinetics; 
Deloitte (Sept. 16, 2005 and Oct. 31, 2005); E&Y Emerson; FEI; 
Ferrellgas; FinRA; Gander; GM; Hercules; ICBA; KPMG; Southwest Gas; 
Greg Swalwell; URS Corporations; Whole Foods; William-Sonoma; and 
Wilmingron Trust.
    \70\ See letter from American Bankers.
    \71\ See letter from KPMG.
---------------------------------------------------------------------------

    We are adopting the amendments as proposed so that even large 
accelerated filers will be subject to a 40-day Form 10-Q quarterly 
report deadline, instead of the previously adopted 35-day deadline. We 
proposed these amendments based on comments that we have received from 
the public about the difficulties of meeting the 35-day deadline. 
Consistent with the comments that we have received on the proposal, we 
believe that these amendments appropriately relieve companies from the 
further acceleration of the Form 10-Q quarterly report deadline. Also, 
we do not perceive a net benefit from continuing to accelerate the Form 
10-Q for large accelerated filers, given the size of the decrease in 
the number of filing days (from 40 days to 35 days).\72\ We believe 
that these amendments appropriately balance the time needed to prepare 
quarterly reports on Form 10-Q with the need of the markets to receive 
the information in a timely manner.
---------------------------------------------------------------------------

    \72\ See also Section V.A below on the cost-benefit analysis of 
the filing deadline amendments.
---------------------------------------------------------------------------

5. Other Comments on the Amended Filing Deadlines
    In the proposing release, we also requested comment on whether:
     Alternate structures for filing deadlines would be 
preferable;
     The filing deadlines should be changed for any category of 
issuer;
     The filing deadlines would cause confusion among 
investors; and
     The filing deadlines for accelerated filers and non-
accelerated filers that are longer than the deadlines for large 
accelerated filers would unduly disadvantage investors in companies 
that are not large accelerated filers.
    Some commenters believed that the three tiers of filing deadlines 
were too complex and may be confusing to investors.\73\ One commenter, 
however, indicated that, while it thought that three filer categories 
and sets of deadlines were not necessary, it suspected that the 
investor community would adjust quickly to the deadlines.\74\ Another 
commenter requested that we reconsider the longer deadlines for 
companies that are not large accelerated filers in the next two years, 
during which time, technologies and competency should improve allowing 
shorter deadlines for all companies.\75\ Some commenters offered 
recommendations for alternate deadlines--for example, that non-
accelerated filers should be subject to 90-day annual report and 45-day 
quarterly report deadlines while all accelerated filers, even the 
larger ones, should be subject to 75-day annual report and 40-day 
quarterly report deadlines.\76\ A few commenters recommended that the 
Commission uniformly apply 75-day annual report and 40-day quarterly 
report deadlines to all reporting companies, including those with a 
public float below $75 million.\77\ One commenter noted in response to 
our request for comment asking whether the proposed deadlines would 
unduly disadvantage investors in smaller companies, that although it 
believed that investors in smaller companies would benefit from the 
earlier availability of reports, such benefits are not significant 
enough to justify the costs associated with further acceleration.\78\ A 
few commenters suggested that the Commission conduct

[[Page 76632]]

further study on the appropriate deadlines for companies.\79\
---------------------------------------------------------------------------

    \73\ See, e.g., letters from ACB; AICP; CII; Ferrellgas; FRA; 
and NRF.
    \74\ See letter from PwC.
    \75\ See letter from CII.
    \76\ See letter from BDO Seidman and E&Y.
    \77\ See, e.g., letters from Emerson; LNR Property; NYCBA; and 
Whole Foods.
    \78\ See letter from PwC.
    \79\ See, e.g., letter from Deloitte (Oct. 31, 2005) and Forest 
City.
---------------------------------------------------------------------------

    After considering all of these comments, we continue to believe 
that the three-tier structure, combined with the provision of an 
additional year before the phase-in of the 60-day deadline for large 
accelerated filers, appropriately balances differing resources and 
needs of companies with investor protection interests. Any potential 
confusion that may be caused initially by the changing deadlines should 
be mitigated by the requirement that a company check a box on the cover 
pages of its Form 10-K and Form 10-Q reports indicating whether it is a 
large accelerated filer, an accelerated filer, or a non-accelerated 
filer.
    The following chart depicts the three tiers of filing deadlines 
that will take effect for the fiscal years ending on or after December 
15, 2005 \80\ as a result of the amendments:
---------------------------------------------------------------------------

    \80\ See Section III.D below.

----------------------------------------------------------------------------------------------------------------
                                                       Revised deadlines for filing periodic reports
            Category of filer            -----------------------------------------------------------------------
                                                 Form 10-K deadline                  Form 10-Q deadline
----------------------------------------------------------------------------------------------------------------
Large Accelerated Filer ($700MM or more)  75 days for fiscal years ending   40 days.
                                           before December 15, 2006 and 60
                                           days for fiscal years ending on
                                           or after December 15, 2006.
Accelerated Filer ($75MM or more and      75 days.........................  40 days.
 less than $700MM).
Non-accelerated Filer (less than $75MM).  90 days.........................  45 days.
----------------------------------------------------------------------------------------------------------------

    Also, as noted in the proposing release, we do not intend to change 
the deadlines for filing an annual report on Form 20-F. However, the 
definition of accelerated filer and large accelerated filer do not 
exclude companies that qualify as foreign private issuers. As a result, 
a foreign private issuer that voluntarily files on Forms 10-K and 10-Q 
is required to determine whether it is an accelerated filer or large 
accelerated filer and, if so, must comply with the applicable deadlines 
for filing these forms. A foreign private issuer that loses its status 
as a foreign private issuer and is, therefore, required to file reports 
on Forms 10-K and 10-Q also must comply with the applicable deadlines 
for filing those forms.

B. Exit Requirements From Accelerated Filer and Large Accelerated Filer 
Status

    In addition to amending the filing deadlines, we also are amending 
the requirements for exiting accelerated filer status and establishing 
requirements for exiting large accelerated filer status. Under the 
rules prior to the amendments, an issuer that became an accelerated 
filer would remain one unless and until the issuer subsequently became 
eligible to use Forms 10-KSB and 10-QSB for its annual and quarterly 
reports. Thus, a reporting issuer that first met the ``small business 
issuer'' definition at the end of a fiscal year was required to wait 
two years from that point before it could begin to file its annual 
report on a non-accelerated filer basis.\81\
---------------------------------------------------------------------------

    \81\ For example, prior to these amendments, if an issuer had 
met the accelerated filer definition at the end of its 2004 fiscal 
year, the issuer would file its 2004 annual report on an accelerated 
filer basis. However, in order to exit accelerated filer status, an 
accelerated filer must have met the definition of small business 
issuer and file on an accelerated filer basis at the end of its 2004 
and 2005 fiscal years, before the prior rules would have allowed the 
company to file on a non-accelerated filer basis beginning with its 
first quarter Form 10-QSB in fiscal 2006.
---------------------------------------------------------------------------

    The proposed rules would have amended the accelerated filer 
definition to allow an issuer to exit accelerated filer status at the 
end of the fiscal year if its public float fell below $25 million, as 
of the last business day of the most recently completed second fiscal 
quarter. The proposed amendments also would have permitted a large 
accelerated filer to exit large accelerated filer status if its public 
float fell below $75 million, as of the last business day of the most 
recently completed second fiscal quarter. Under the proposals, an 
exiting large accelerated filer would become a non-accelerated filer if 
its public float had fallen below $25 million, as of the determination 
date.
    In the proposing release, we noted that there were circumstances 
under the existing accelerated filer definition where a company that no 
longer had common equity securities outstanding, and therefore no 
longer had a duty to file periodic reports with respect to these 
securities, but continued to have a reporting obligation for another 
security, was required to remain an accelerated filer for two years. 
While the instances in which a company no longer would have publicly 
held common equity securities but still would be subject to an Exchange 
Act reporting obligation with respect to another class of non-common 
equity security appeared to be uncommon, they may have occurred 
occasionally in connection with a stock merger or leveraged buyout 
structured as a cash merger or recapitalization.\82\ These companies 
remained subject to the requirement to file their periodic reports on 
an accelerated filer basis despite the fact that they would not have 
been required to initially become an accelerated filer if they had only 
a class of debt securities registered under the Exchange Act. The 
proposed revisions sought to rectify this inequitable result.
---------------------------------------------------------------------------

    \82\ Based on data from the Center for Research in Securities 
Prices Database obtained by the Office of Economic Analysis, we 
estimate that 142 companies met the accelerated filer definition on 
or after their fiscal years ended December 15, 2002 and then 
subsequently delisted their common stock or other common equity from 
a national securities exchange or Nasdaq during the 2003 calendar 
year. Of the 142 companies, we estimate that only four companies 
continued to have an Exchange Act reporting obligation with respect 
to another class of debt or non-common equity securities. It is our 
understanding that the data in CRSP does not include a complete list 
of common equity traded through the OTC Bulletin Board or Pink 
Sheets LLC, so our estimate may understate the actual number of 
companies that would be affected by our proposed revision to the 
accelerated filer definition.
---------------------------------------------------------------------------

    Most of the commenters who remarked on this proposal supported 
removal of unnecessary impediments preventing issuers from promptly 
exiting out of accelerated filer status. Many of these commenters, 
however, offered recommendations for modifying the proposals. These 
recommendations included:
     Raising the public float threshold that a company needs to 
meet before exiting accelerated filer status; \83\
---------------------------------------------------------------------------

    \83\ See, e.g., letters from ABA and ACB.
---------------------------------------------------------------------------

     Raising the public float threshold so that the threshold 
for exiting accelerated filer status is the same as the threshold for 
entering the status; \84\
---------------------------------------------------------------------------

    \84\ See, e.g., letters from AICPA; Deloitte (Oct. 31, 2005); 
E&Y FinRA; and PwC.
---------------------------------------------------------------------------

     Tying the public float measurement to a period of time 
(e.g., 30 days) or requiring the measurement to be based on an average 
public float as measured on multiple days (e.g., the average of 
multiple quarter ends); \85\ and
---------------------------------------------------------------------------

    \85\ See, e.g., letters from BDO Seidman; Deloitte (Oct. 31, 
2005); FinRA; PwC; and Greg Swalwell.

---------------------------------------------------------------------------

[[Page 76633]]

     Requiring companies to provide notice, such as by filing a 
Form 8-K, of a change in filing deadline status.\86\
---------------------------------------------------------------------------

    \86\ See, e.g., letters from ACB; AICPA; E&Y FinRA; Nasdaq; and 
PwC.
---------------------------------------------------------------------------

    A few commenters who acknowledged the importance of maintaining 
filing stability believed that the objective could be achieved by tying 
the measurement to a period of time instead of to a single point in 
time, even if the public float threshold were raised higher than the 
proposed threshold.\87\
---------------------------------------------------------------------------

    \87\ See, e.g., letters from Deloitte (Oct. 31, 2005) and PwC.
---------------------------------------------------------------------------

    We are adopting the exit requirements for accelerated filers and 
large accelerated filers substantially as proposed, except that we are 
raising the public float thresholds below which a large accelerated 
filer must fall before it becomes eligible to exit that status from the 
proposed $75 million to $500 million, and below which an accelerated 
filer must fall before it becomes eligible to exit that status from the 
proposed $25 million public float to a $50 million float. We are not 
amending the method of computing public float for the reasons set forth 
in Section III.A.2 of this release. While we considered the comments 
regarding the filing of a Form 8-K announcing a change in filing 
deadline status, and while we considered whether to require disclosure 
in a company's Form 10-Q for its second fiscal quarter to provide 
investors with advance notice that a company would be exiting 
accelerated filer or large accelerated filer status, we have decided 
that a mandated disclosure requirement is not justified, given the 
infrequency of such an occurrence.\88\ As noted in Section III.C above, 
we also believe that the cover page notations on the Form 10-K and Form 
10-Q should mitigate any potential initial investor confusion regarding 
when a company's reports are due. Some companies may choose, on their 
own, to disclose a change in filing deadline status in a Form 8-K or 
Form 10-Q.
---------------------------------------------------------------------------

    \88\ See text accompanying n.89 below.
---------------------------------------------------------------------------

    The revisions that we are adopting allow an issuer to exit 
accelerated filer status at the end of the fiscal year if its aggregate 
worldwide market value of voting and non-voting common equity held by 
non-affiliates has fallen below $50 million, as of the last business 
day of its second fiscal quarter. As a result, companies will be 
permitted to exit accelerated filer status in the same year that the 
public float measurement reflects the requisite reduction. In addition, 
companies that have lost their public float but were required, under 
the previously existing rules, to continue to file reports on an 
accelerated basis because of a reporting obligation with respect to a 
different class of security will no longer need to do so.
    The proposals would have set the requirement for exiting 
accelerated filer status at $25 million due to the limited following 
and reporting resources of a public issuer with less than $25 million 
in public float. After evaluating comments, we are persuaded that 
similar considerations apply upon a reduction in a company's public 
float to below $50 million and therefore conclude that it is 
appropriate to allow these issuers to exit accelerated filer status 
promptly. Also, available data regarding the number of companies whose 
market capitalization fell from $75 million or more in 2004 to below 
$50 million in 2005 suggests that only a very limited number of 
companies would move out of accelerated filer status if the amendments 
that we are adopting were in place at that time.\89\ We believe that 
this addresses our concern that fluctuations in and out of accelerated 
filer status may cause confusion among investors about a company's 
filing deadlines.
---------------------------------------------------------------------------

    \89\ We used market capitalization data as an approximation for 
public float from the Thomson Worldscope Global Database. The data 
shows that only 11 companies with a market capitalization of $700 
million or more in 2004 had in 2005, its market capitalization drop 
below $500 million, and only 42 companies with a market 
capitalization of $75 million or more in 2004 had in 2005, its 
market capitalization drop below $50 million.
---------------------------------------------------------------------------

    As adopted, the rules provide that once a large accelerated filer's 
public float falls below $500 million, as of the last business day of 
the company's most recently completed second fiscal quarter, it is 
eligible to exit large accelerated filer status at the end of that 
fiscal year and to file its annual report as an accelerated filer or a 
non-accelerated filer, as appropriate. If the company's public float is 
less than $500 million, but $50 million or more, as of the last 
business day of its most recently completed second fiscal quarter, the 
company can begin to file under the deadlines for an accelerated filer 
that is not a large accelerated filer. If the company's public float 
drops below $50 million, as of the determination date, it no longer 
will be required to file its reports on an accelerated basis.

C. Other Amendments

    We also are adopting other related amendments. In the proposing 
release, we proposed to make the same types of conforming changes to 
Rules 3-01, 3-09 and 3-12 of Regulation S-X that we made when we first 
adopted the accelerated filing deadlines in 2002.\90\ In the interest 
of creating uniform requirements, our conforming amendments require 
financial information that must be included in Commission filings other 
than periodic reports filed on Forms 10-K and 10-Q, such as Securities 
Act and Exchange Act registration statements and proxy or information 
statements, to be at least as current as the financial information 
included in these periodic reports.\91\ Second, we proposed to make 
similar changes to the transition reports that a company must make when 
it changes its fiscal year.\92\ We are adopting those changes as 
proposed.
---------------------------------------------------------------------------

    \90\ See Release No. 33-8128.
    \91\ 17 CFR 210.3-01; 17 CFR 210.3-09; and 17 CFR 210.3-12.
    \92\ See paragraph (j)(1) of Exchange Act Rules 13a-10 and 15d-
10.
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    We also proposed to clarify that the public float term in both the 
accelerated filer and large accelerated filer definitions refers to the 
``aggregate worldwide market value of the company's voting and non-
voting common equity held by non-affiliates.'' \93\ We are adopting 
this change as proposed. This reference also is made in the note to the 
definition of ``accelerated filer and large accelerated filer'' 
discussing how to calculate public float. The amendment codifies staff 
interpretation and is consistent with the public float condition in the 
recently adopted Securities Act Rule 405 definition of a ``well-known 
seasoned issuer,'' as well as the public float measurement for 
determining eligibility to file a registration statement on Form F-
3.\94\ The determination of public float is premised on the existence 
of a public trading market for the company's equity securities.\95\
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    \93\ See paragraph (1)(i) and paragraph (2)(i) of the Exchange 
Act Rule 12b-2 definition of ``accelerated filer and large 
accelerated filer.''
    \94\ Securities Act Rule 405 definition of ``well-known seasoned 
issuer'' refers to ``worldwide market value.'' Notwithstanding the 
addition of ``worldwide,'' an issuer with common equity securities 
publicly traded in foreign markets but not subject to a requirement 
to file reports under Section 13(a) or 15(d) of the Exchange Act 
related to such securities (for example, an issuer with common 
equity publicly traded in a foreign market but not only required to 
report as a result of registration or public issuance of one or more 
classes of debt securities) will not be an accelerated filer or a 
large accelerated filer. In addition, regardless of their status, 
foreign private issuers that file their annual reports on Form 20-F 
or 40-F are of course not subject to the accelerated reporting 
requirements that we adopt today.
    \95\ This is consistent with the requirement in General 
Instruction I.B.1 of Form S-3 and Form F-3 that a registrant have a 
$75 million market value. Therefore, an entity with $75 million of 
common equity securities outstanding but not trading in any public 
trading market would not be an accelerated filer or a large 
accelerated filer.

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[[Page 76634]]

D. Effective Date and Compliance Dates

    The revised accelerated filing deadlines begin to apply to an 
accelerated filer's first annual report for a fiscal year ending on or 
after December 15, 2005, except that the final phase-in of the 60-day 
Form 10-K deadline for large accelerated filers is postponed until the 
large accelerated filer files its first annual report for its fiscal 
year ending on or after December 15, 2006. The Commission finds good 
cause to make the rule effective prior to 30 days after publication to 
enable accelerated filers that satisfy the revised requirements for 
exiting accelerated filer status to file their Form 10-K annual reports 
for fiscal year 2005, as discussed below, on a non-accelerated basis. 
The revised exit requirements are less stringent than the requirements 
for exiting accelerated filer status that had been in place prior to 
revision. In addition, because the revised deadlines and revisions to 
the definition of an accelerated filer relieve restrictions on 
companies, we believe that it is appropriate that the effective date of 
the release is December 27, 2005.
    Under the amendments, a company that meets the Exchange Act 
definition of a ``large accelerated filer'' at the end of its fiscal 
year ending on or after December 15, 2006 must comply with the 60-day 
Form 10-K deadline beginning with its annual report on Form 10-K filed 
for that fiscal year. With regard to the amended requirements for 
exiting accelerated filer status, a company that filed its last 
quarterly report as an accelerated filer and had an aggregate worldwide 
market value of the voting and non-voting common equity held by its 
non-affiliates of less than $50 million, as of the last business day of 
its most recently completed second fiscal quarter, will no longer be 
considered an accelerated filer, as of the end of its fiscal year, and 
may begin to file reports on a non-accelerated basis, beginning with 
Form 10-K annual reports for fiscal years ending on or after December 
15, 2005.

IV. Paperwork Reduction Act

    The amendments contain ``collection of information'' requirements 
within the meaning of the Paperwork Reduction Act of 1995, or PRA.\96\ 
Form 10-K (OMB Control No. 3235-0063) and Form 10-Q (OMB Control No. 
3235-0070) were adopted pursuant to Sections 13 and 15(d) of the 
Exchange Act. They prescribe information that a registrant must 
disclose annually and quarterly to the market about its business. 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.
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    \96\ 44 U.S.C. 3501 et seq.
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    The amendments to the Exchange Act Rule 12b-2 definition of 
``accelerated filer'' and to the periodic reporting deadlines will:
     Amend the Exchange Act Rule 12b-2 definition of an 
``accelerated filer'' to create a new category of accelerated filer, 
the ``large accelerated filer,'' for issuers with an aggregate 
worldwide market value of voting and non-voting common equity held by 
non-affiliates (``public float'') of $700 million or more;
     Re-define the term ``accelerated filer'' to include an 
issuer with an aggregate worldwide market value of voting and non-
voting common equity held by non-affiliates of $75 million or more, but 
less than $700 million;
     Amend the accelerated filing deadlines so that accelerated 
filers that are not large accelerated filers can continue to file their 
Form 10-K annual reports within 75 days after fiscal year end, with no 
further reduction scheduled, while large accelerated filers will be 
subject to the 60-day Form 10-K annual report deadline beginning with 
the fiscal years ending on or after December 15, 2006. The final 35-day 
Form 10-Q quarterly report phase-in deadline will not be applied even 
to large accelerated filers, and thus, the quarterly report deadline 
for all accelerated filers will remain at 40 days; and
     Amend the accelerated filer definition to allow 
accelerated filers with less than $50 million in public float to exit 
accelerated filer status without a two-year delay and to allow large 
accelerated filers with less than $500 million public float to exit 
that status.
    The amendments do not change the amount of information required to 
be included in Exchange Act reports. Therefore, they neither increase 
nor decrease the amount of burden hours necessary to prepare Forms 10-K 
and 10-Q, for the purposes of the PRA. This Paperwork Reduction Act 
analysis was contained in the proposing release, and we received no 
comments addressing this analysis.

V. Cost-Benefit Analysis

    The amendments are part of our continuing initiative to improve the 
regulatory system for periodic disclosure under the Exchange Act. We 
first adopted rules regarding accelerated filing deadlines in September 
2002. As adopted, these rules generally required issuers with a public 
float of $75 million or more, as of the last business day of the 
issuer's most recently completed second fiscal quarter,\97\ to meet 
shortened filing deadlines for their Exchange Act periodic reports on 
Form 10-K and Form 10-Q. We are sensitive to the costs and benefits 
that result from our rulemaking. Based on concerns expressed by the 
public, we are adopting rule and form amendments that:
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    \97\ In addition, an issuer will not be an accelerated filer 
unless it meets three other additional conditions. A company will be 
deemed an accelerated filer if, as of the end of its fiscal year, 
the issuer had been subject to the requirements of Section 13(a) or 
15(d) of the Exchange Act for a period of at least 12 calendar 
months; had filed at least one annual report pursuant to Section 
13(a) or 15(d) of the Exchange Act; and is not eligible to use Forms 
10-KSB and 10-QSB for its annual and quarterly reports.
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     Create a new ``large accelerated filer'' category that 
includes issuers with $700 million or more in public float, as of the 
last business day of the issuer's most recently completed second fiscal 
quarter;
     Redefine the term ``accelerated filer'' to include an 
issuer with $75 million or more, but less than $700 million in public 
float, as of the last business day of the issuer's most recently 
completed second fiscal quarter; \98\
---------------------------------------------------------------------------

    \98\ Other than the public float amount, the conditions for the 
accelerated filer definition remain the same.
---------------------------------------------------------------------------

     Amend the accelerated filing deadlines;
     Amend the requirements for exiting accelerated filer 
status; and
     Establish similar requirements for exiting large 
accelerated filer status.
    In this section, we examine the costs and benefits of the 
amendments. We received 46 comment letters on the proposed amendments. 
Some of these comment letters discussed the costs and benefits of the 
proposals. These comments are described further below.

A. Accelerated Filing Deadlines

    The previously adopted accelerated filing transition schedule 
provided for a final phase-in that would have required all accelerated 
filers to file their Form 10-K annual reports within 60 days after 
fiscal year end, with respect to a fiscal year ending on or after 
December 15, 2005, and to file their subsequent Form 10-Q quarterly 
reports within 35 days after quarter end. We are adopting amendments to 
the accelerated filing deadlines, substantially as proposed, to:
     Amend the Form 10-K deadline so that accelerated filers 
that are not large accelerated filers will be subject to a 75-day Form 
10-K deadline, rather than the

[[Page 76635]]

60-day deadline scheduled to take effect next year, while large 
accelerated filers will be subject to final phase-in of the 60-day Form 
10-K deadline, beginning with fiscal years ending on or after December 
15, 2006, and to a 75-day Form 10-K deadline until then; and
     Eliminate the final phase-in of the 35-day Form 10-Q 
deadline for all accelerated filers so that both large accelerated 
filers and accelerated filers will be permanently subject to a 40-day 
Form 10-Q deadline.
1. Benefits
    These amendments may afford various benefits to companies and their 
investors. Since the 2002 adoption of the accelerated filing deadlines, 
we received several comments expressing concern over the ability of 
companies to meet the accelerated filing deadlines, especially in light 
of the new requirements adopted in 2003 by the Commission requiring 
companies to include a report by management, and accompanying auditor's 
report, on the effectiveness of the company's internal control over 
financial reporting in their annual reports. We interpret these 
comments on companies' limited ability to meet more stringent deadlines 
as an expression of concern about the costs to companies of complying 
with the shortened deadlines.
    The primary benefit of the amendments is the expected cost-savings 
to companies that as a result of the amendments will no longer be 
subject to the final phase-in of the accelerated Form 10-K or Form 10-Q 
filing deadlines. In order to comply with the final phase-in of the 
most accelerated deadlines, companies may devote or expend additional 
resources to generate information more quickly and provide the 
information to the market. Smaller companies appear to have access to 
fewer financial resources and less well-developed infrastructure to 
support the further acceleration of the reporting deadlines. For a 
given disclosure, diseconomies of scale may cause smaller companies to 
face greater costs of acceleration than larger companies. The 
amendments may thus confer benefits to smaller companies by relieving 
them from the higher costs of having to meet the final phase-in of 
deadlines.
    As noted in the cost-benefit analysis included in our initial 
accelerated filing release,\99\ additional time to prepare the 
financial reports may lower preparation costs and limit the internal 
resources that must be committed to filing periodic reports. As a 
result of our amendments, smaller companies may therefore allocate 
those resources towards other projects.
---------------------------------------------------------------------------

    \99\ See Section IV.A of Release No. 33-8128.
---------------------------------------------------------------------------

    In addition, not subjecting accelerated filers to the final phase-
in of the accelerated filing deadlines may reduce the cost of capital 
of these companies. Smaller companies may take this into account when 
considering whether to become a public reporting company.
    There have been a number of academic papers that have shown that 
smaller companies face higher costs of compliance per dollar of asset 
value than do larger companies. For example, after the implementation 
of Section 404, the cost of completing the auditing process rose 
dramatically.\100\ This rise in audit fees is related to the size of 
the company. When audit fees are scaled by assets, there is a negative 
relationship between the change in audit fees and company size, 
indicating that smaller companies have a higher cost of compliance than 
larger companies.\101\ We believe that the elimination of the final 
phase-in of the current deadlines will likely result in a reduction in 
compliance costs for smaller companies.
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    \100\ For example, see Susan Eldridge & Burch Kealey, SOX Costs: 
Auditor attestation under Section 404 (University of Nebraska at 
Omaha Working Paper, 2005) and Paul Griffin & David Long, An 
analysis of audit fees following the passage of Sarbanes-Oxley (UC-
Davis Working Paper, 2005).
    \101\ Id.
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    We also are adopting conforming amendments relating to the 
timeliness requirements for the inclusion of financial information in 
Securities Act and Exchange Act registration statements, proxy or 
information statements, and transition reports. The conforming 
amendments provide additional time for affected companies to update the 
financial statements that must be included in their registration 
statements and proxy or information statements and promote consistency 
among our rules. These conforming amendments may indirectly promote 
capital formation, because accelerated filers will have more time 
before the financial information in registration statements become 
stale.
2. Costs
    We believe, and academic studies indicate, that the information 
required to be contained in the Exchange Act periodic reports is 
valuable to investors and the markets.\102\ With regard to the deadline 
for Form 10-Q quarterly reports filed by both large accelerated filers 
and accelerated filers, and the deadline for Form 10-K annual reports 
filed by accelerated filers, our amendments have the effect of delaying 
access to periodic report information to investors and to the capital 
markets relative to the originally established phase-in schedule. 
Information required by Exchange Act reports may provide a verification 
function against other unofficial statements that companies may have 
made. Investors can judge these informal statements against the more 
extensive formal disclosure provided in the reports, including 
financial statements prepared in accordance with generally accepted 
accounting principles. Accelerated filing shortens the delay before 
this verification can occur and speeds the timing for comparative 
financial analyses of information in those reports. Delaying access to 
this information may thereby hinder an investor's ability to make 
informed decisions on as timely a basis as would have been possible if 
the final phase-in of accelerated filing deadlines were completed. 
Thus, the amendments will delay access to information for making 
investment and valuation decisions, and may increase capital market 
inefficiencies in stock valuation and pricing. Likewise, the delay may 
cause Exchange Act reports to have less relevance to investors.
---------------------------------------------------------------------------

    \102\ See, e.g., I. Qi, D. Wu & W. Haw, The Incremental 
Information Content of SEC 10-K Reports Filed under the EDGAR 
System, 15 J. of Acctg., Auditing and Fin. 25-45 (2000).
---------------------------------------------------------------------------

    The Office of Economic Analysis (``OEA'') has provided us with data 
for companies listed on NYSE, Amex, NASDAQ, the Over the Counter 
Bulletin Board (``OTCBB'') and Pink Sheets LLC from which we can 
estimate the number of companies that are affected by these proposals. 
For the most part, the data is based on a public float definition which 
is highly correlated to our definition of public float.\103\ The data 
indicates that 2,307 of the companies that are listed on NYSE, Amex, 
NASDAQ, OTCBB or the Pink Sheets have a public float of between $75 
million and $700 million, while 1,678 of the companies have a public 
float over $700 million. The companies possessing between $75 million 
and $700 million in public float represent 23% of the total number of 
companies on these markets and 4.3% of the total public float of these

[[Page 76636]]

companies on these markets. The companies with a public float of over 
$700 million represent approximately 18% of the total number of 
companies on these markets and nearly 95% of the total public float on 
these markets.\104\
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    \103\ Bloomberg was the source of the public float data. 
Bloomberg defines public float as the number of shares outstanding 
less shares held by insiders and those deemed to be ``stagnant 
shareholders.'' ``Stagnant shareholders'' include ESOP's, ESOT's, 
QUEST's employee benefit trusts, corporations not actively engaged 
in managing money, venture capital companies, and shares held by 
governments. When terms for public float were missing from 
Bloomberg, market capitalization was used as a proxy for public 
float which likely overstates the number of firms in certain 
categories. However, given the low number of companies where market 
capitalization was used, the difference should not be large.
    \104\ In our Securities Offering Reform release, Release No. 33-
8591, we noted that in 2004, the issuers that met the thresholds for 
well-known seasoned issuers represented accounted for about 95% of 
U.S. equity market capitalization. The eligibility requirements for 
a well-known seasoned issuer and the $700 million threshold for a 
large accelerated filer are not the same because, unlike an 
accelerated filer, a well-known seasoned issuer may also be an 
issuer of non-convertible securities, other than common equity. 
Nevertheless, we believe that the numbers in the release for well-
known seasoned issuers still provide us with a good approximation 
for our purposes.
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    We have used this information in analyzing the cost of delaying the 
information contained in periodic reports which we expect to be higher 
on a per share basis for investors in smaller companies, and therefore 
the cost to investors on a per share basis of eliminating the final 
phase-in for smaller companies may be greater than the cost of such a 
step would be for larger companies. A study shows that smaller 
companies experience a larger price impact on a per share basis on the 
filing date than larger companies.\105\ However, because of the much 
smaller overall market size of smaller companies (i.e., large 
accelerated filers in the aggregate have roughly 19 times the market 
capitalization of other filers in the aggregate), the per share impact 
may overestimate the total dollar market impact of investor reactions 
to periodic filings. Larger companies are more widely followed and have 
more information available in the market.\106\ However, to the extent 
that periodic filings for larger companies contain information not 
theretofore in the available mix of information, any per share price 
impact has a greater market impact. This consideration of market impact 
explains our focus on maintaining the final phase-in of the annual 
report filing deadline at 60 days for large accelerated filers.
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    \105\ Paul Griffin, Got Information? Investor Response to Form 
10-K and Form 10-Q EDGAR Filings, 8 Rev. of Acctg. Stud. 433 (2003).
    \106\ See also Section II.A.1 of Release No. 33-8591.
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    While we recognize inherent difficulties in the ability to quantify 
the effect that, for example, the 15-day delay in the filing of the 
annual report by accelerated filers has on the market, we believe that 
eliminating the final phase-in of deadlines incorporates new 
information on the balance between the magnitude of the cost-savings 
for smaller companies engaging in regulatory compliance and the 
potential cost of less timely information. Further, we do not perceive 
a net benefit of continuing to accelerate the Form 10-Q quarterly 
report deadline for large accelerated filers given the size of the 
decrease in the number of filing days (i.e., from 40 days to 35 days). 
We did not receive comments quantifying the impact that the delay would 
have to the market.
    Some commenters suggested that the impact of a 15-day delay would 
not be significant, given that the enhanced Form 8-K requirements have 
greatly improved the timeliness and access of information about 
Exchange Act reporting companies to investors and the markets.\107\ 
While we believe, however, that the access to the information in the 
current reports on Form 8-K is an important method for obtaining 
specified unquestionably or presumptively material information about 
these companies, that information is not an adequate substitute for the 
information provided in Exchange Act periodic reports.
---------------------------------------------------------------------------

    \107\ See, e.g., letters from ABA; CMC; Cytokinetics; Deloitte 
(Sept. 16, 2005 and Oct. 31, 2005); GM; JC Penney; NRF; PwC; 
Safeway; Sidley Austin; and Whole Foods.
---------------------------------------------------------------------------

    We received some comments cautioning that a system of filing 
deadlines composed of three-tiers and based on size-based 
differentiations was too complex and may confuse investors.\108\ We 
have also received comments that suggested that we require companies to 
provide notice, such as by filing a Form 8-K, of a change in filing 
deadline status.\109\ Similarly, we acknowledge the concern that the 
amendments may produce costs as a result of requiring companies and 
their investors to regularly monitor public float levels to determine 
companies' filing deadlines.
---------------------------------------------------------------------------

    \108\ See, e.g., letters from ACB; AIPCPA; CII; Ferrellgas; FRA; 
and NRF.
    \109\ See, e.g., letters from ACB; AICPA; E&Y FinRA; Nasdaq; 
and PwC.
---------------------------------------------------------------------------

    We believe that these concerns are addressed by the requirement 
that companies indicate on the Form 10-K or Form 10-Q cover page 
whether they are a large accelerated filer, accelerated filer or non-
accelerated filer. We recognize that investors may be confused as to 
the delay in the filing of information when a company exits out of 
accelerated filer or large accelerated filer status, because disclosure 
about the change in status is not available until the time of filing. 
We have not required the filing of a Form 8-K, because we believe that 
the requirement would be overly burdensome, and our research indicates 
that the number of companies exiting filing deadline status in any 
given year would be limited.\110\ Companies, however, may choose to 
mitigate investor confusion by voluntarily disclosing changes in filing 
deadline status in a Form 8-K current report or Form 10-Q quarterly 
report. They may have an incentive to provide this disclosure if they 
are concerned that the market may infer that the delay in filing is due 
to a potential problem.
---------------------------------------------------------------------------

    \110\ See Section V.B below.
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    A number of commenters requested that we consider revising the 
rules to maintain the Form 10-K deadline at 75 days after fiscal year 
end, eliminating the final phase-in of the most accelerated 60-day 
deadline for even large accelerated filers.\111\ After careful 
consideration of these comments and based, in large part, on 
information indicating that larger issuers generally possess the 
infrastructure and resources to support further acceleration of the 
annual report filing deadline, we have decided not to eliminate the 
final phase-in of the most accelerated annual report deadline for large 
accelerated filers. We expect that that the accelerated annual report 
deadline for larger companies meeting the definition of a large 
accelerated filer promotes investor protection by providing investors 
in these companies with timely access to important information.
---------------------------------------------------------------------------

    \111\ See n.56 above.
---------------------------------------------------------------------------

    However, the proposed rules have been modified to defer the 60-day 
Form 10-K deadline for an additional year for large accelerated filers. 
We are aiming to provide companies and their auditors more time to 
refine their processes, and we believe that this may help diffuse the 
costs that companies may be facing because of the recent regulatory 
demands combined with a further accelerated annual report deadline. 
This change should alleviate the impact in compliance costs on 
companies caused by the further accelerated annual report deadline.
    In sum, by establishing three tiers of filing deadlines in which 
the largest companies are subject to the shortest annual report 
deadline, the amended rules hasten the delivery of material information 
to investors and capital markets about those issuers that we believe 
are more capable of meeting the accelerated annual report deadline. At 
the same time, we are incorporating an additional one-year period 
before the accelerated annual report deadline is phased-in in order to 
address the potential costs of complying with this deadline.

[[Page 76637]]

B. Exiting Accelerated Filer or Large Accelerated Filer Status

    We have also examined the costs and benefits of the other 
amendments that we are adopting today. Our amendments to the 
requirements for exiting accelerated filer status and large accelerated 
filer status offer benefits similar to our amendments lengthening the 
accelerated filing deadlines. While we continue to believe that it is 
important to minimize fluctuation in and out of accelerated filer 
status, we identified some situations with respect to which we believe 
the current rules are unnecessarily restrictive. One such situation 
involves a company that has de-registered all of its common equity but 
still has an Exchange Act reporting obligation with respect to another 
class of securities. Prior to the adoption of these amendments, this 
company would still be required to file reports on an accelerated 
basis, despite the fact that it would not have been required to become 
an accelerated filer initially if it only had a class of debt 
securities registered under the Exchange Act. We believe that the 
amendment permitting companies to exit accelerated filer status based 
on a public float measurement presents a more balanced approach than 
what the current rules present.
    It is difficult to quantify the number of companies that will be 
affected by our amendments relating to the exit of issuers from 
accelerated filer status or large accelerated filer status. However, 
data available to us suggests that this number will be very limited. 
The amendments to the requirements on exiting accelerated filing 
status, using 2003 data, could allow an estimated four companies who 
have delisted their stock or other common equity from a national 
securities exchange or Nasdaq, but have a reporting obligation with 
regards to a different class of security, to no longer be subject to 
the accelerated filer definition and to be able to file their Exchange 
Act reports up to 15 days later than currently required.\112\ In 
addition, using 2004 and 2005 data, our research indicates that only 42 
companies with $75 million or more market capitalization in 2004 had 
their market capitalization drop to less than $50 million in 2005 and 
therefore would have been eligible to exit accelerated filer status if 
the amendment requirements had been in place.\113\ With regard to our 
provisions for exiting large accelerated status, we also believe that 
the number of companies exiting that status would be few. Our research 
indicates that only 11 companies with $700 million or more market 
capitalization in 2004 had their market capitalization drop to below 
$500 million in 2005 and would have been eligible to exit large 
accelerated filer status if the amended requirements had been in place.
---------------------------------------------------------------------------

    \112\ OEA provided us with a list of companies that delisted 
their common stock or other common equity from a national securities 
exchange or Nasdaq during the 2003 calendar year from the CRSP 
Database. From this list, we identified the companies that met the 
accelerated filer definition for fiscal years ending on or after 
December 15, 2002. Then, we confirmed whether or not the accelerated 
filer continued to have an Exchange Act reporting obligation with 
respect to a class of debt or equity securities on the Commission's 
Electronic Data Gathering, Analysis, and Retrieval System 
(``EDGAR''). It is our understanding that the data in CRSP does not 
include a complete list of common equity traded on the OTC Bulletin 
Board, so our estimate may understate the actual number of companies 
that would be affected by our proposed revision to the accelerated 
filer definition.
    \113\ In deriving these estimates, we used market capitalization 
as an approximation for public float from the Thomson Worldscope 
Global Database.
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VI. Consideration of Impact on the Economy, Burden on Competition and 
Promotion of Efficiency, Competition and Capital Formation

    Section 23(a)(2) of the Exchange Act \114\ requires us, when 
adopting rules under the Exchange Act, to consider the impact that any 
new rule would have on competition. 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. In addition, Section 2(b) of the Securities Act \115\ and Section 
3(f) of the Exchange Act \116\ require 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.
---------------------------------------------------------------------------

    \114\ 15 U.S.C. 78w(a)(2).
    \115\ 15 U.S.C. 77b(b).
    \116\ 15 U.S.C. 78c(f).
---------------------------------------------------------------------------

    The amendments are designed to balance the interest of providing 
timely access of the information contained in Exchange Act reports to 
investors and to markets against the need of companies along with their 
auditors to conduct, without undue cost, high-quality and thorough 
assessments and audits of the companies' financial information, so as 
to increase the likelihood that more complete, reliable, and timely 
information contained in Exchange Act reports is available to the 
market. Our amendment that incorporates the 60-day deadline for large 
accelerated filers after fiscal years ending on or after December 15, 
2006 preserves the timeliness and accessibility of issuer information 
so that investors have more ready access to information for investment 
and voting decisions regarding these companies. We believe that the 60-
day deadline for annual reports for large accelerated filers, when it 
takes effect, is appropriate, given the internal reporting resources of 
large accelerated filers and the greater market interest that they 
generate. We are eliminating the previously adopted final phase-in to 
the 35-day Form 10-Q quarterly report deadline for both accelerated 
filers and large accelerated filers and eliminating the final phase-in 
to the 60-day Form 10-K annual report deadline for accelerated filers 
that are not large accelerated filers. Under the amended rules, issuers 
with a public float that has dropped below $50 million will be allowed 
to exit accelerated filer status promptly.
    Informed investor decisions generally promote market efficiency and 
capital formation. Depending on a company's public float, the 
accelerated filer rules, as amended, require different filing 
deadlines. Companies that are large accelerated filers will be required 
to file under a further accelerated annual report filing deadline 
beginning with the fiscal years ending on or after December 15, 2006, 
while the other accelerated filers remain subject to the same filing 
deadlines under which they currently file their periodic reports. Also, 
under the amended rules, some companies will be permitted to exit 
accelerated filer status more quickly and easily than the current 
rules. These results may enhance competition by avoiding the imposition 
of onerous burdens on smaller competitors who are least able to bear 
them. This may also have the effect of allowing some competitors to 
file their Exchange Act reports later than others, potentially 
providing some competitive advantage to those that can file later.
    Some issuers have expressed concern that accelerated periodic 
report filing deadlines may affect their ability to provide accurate 
and reliable information and that it is increasingly difficult to 
comply with accelerated deadlines given various regulatory demands, 
including requirements associated with Section 404 of the Sarbanes-
Oxley Act.\117\ We have sought to minimize these concerns by amending 
the deadlines so that the previously adopted final phase-in of the 
annual report deadline will apply beginning with the fiscal years 
ending on or after December 15, 2006 to the largest public issuers, 
which are likely to have the greatest internal reporting resources to 
support the deadline.

[[Page 76638]]

Although many commenters urged that we revise the rules even further to 
maintain a permanent 75-day annual report deadline for even the large 
accelerated filers,\118\ we believe that these rules, as we are 
adopting them, appropriately balance the concerns of these issuers with 
the interest in providing investors with timely access to important 
information.
---------------------------------------------------------------------------

    \117\ See text accompanying n.21-23.
    \118\ See n.56 above.
---------------------------------------------------------------------------

    On the other hand, permitting issuers to file under the extended 
deadline requirements would have the effect of delaying the receipt of 
information by investors, and the delay may affect an investor's 
ability to make informed decisions in as timely a fashion. Permitting a 
company to exit accelerated filer status may do likewise. Nevertheless, 
these provisions could also promote capital formation, because they 
diminish the risk that companies would not be eligible for short-form 
registration because of the untimely filing of reports.
    Our conforming amendments to Regulation S-X which cover the 
timeliness of financial information in registration statements and 
proxy or information statements may affect capital formation. This may 
promote capital formation by providing companies with a longer window 
to access capital markets before financial information becomes stale.

VII. Final Regulatory Flexibility Analysis

    This Final Regulatory Flexibility Analysis, or FRFA, has been 
prepared in accordance with the Regulatory Flexibility Act.\119\ This 
FRFA involves amendments to the rules and forms under the Securities 
Act and the Exchange Act that:
---------------------------------------------------------------------------

    \119\ 5 U.S.C. 603.
---------------------------------------------------------------------------

     Create a new ``large accelerated filer'' category defined 
in the same manner as the term accelerated filer but includes an issuer 
with $700 million or more in public float, as of the last business day 
of the issuer's most recently completed second fiscal quarter;
     Re-define the term ``accelerated filer'' to include an 
issuer with an aggregate worldwide market value of voting and non-
voting common equity held by non-affiliates of $75 million or more, but 
less than $700 million, as of the last business day of the issuer's 
most recently completed second fiscal quarter;
     Amend the accelerated filing deadlines so that accelerated 
filers that are not large accelerated filers will be subject to a 75-
day Form 10-K deadline and a 40-day Form 10-Q deadline with no further 
reductions scheduled. Large accelerated filers will be subject to a 60-
day Form 10-K annual report deadline beginning with the fiscal years 
ending on or after December 15, 2006. The Form 10-Q quarterly report 
deadline for large accelerated filers will remain at 40 days;
     Amend the accelerated filer definition to allow an 
accelerated filer with less than $50 million in public float to exit 
accelerated filer status at the end of its fiscal year; and
     Amend the accelerated filer definition to allow a large 
accelerated filer with less than $500 million in public float to exit 
large accelerated filer status.

A. Need for the Amendments

    The amendments seek to balance the interests of investors and of 
the market to have timely access to important information contained in 
periodic reports against the need of companies and their auditors to 
conduct, without undue cost, high-quality and thorough assessments and 
audits of the companies financial information, so as to increase the 
likelihood that more complete, reliable, and timely information 
contained in Exchange Act reports is available to the market. The 
amendments relate to the acceleration of deadlines for filing annual 
reports on Form 10-K and quarterly report on Form 10-Q.
    While we believe that periodic reports contain information that is 
essential to conduct comparative financial analysis, and that timely 
access to these reports can greatly benefit investors and the market, 
we share in some of the concerns expressed by several companies 
regarding the further acceleration of filing deadlines. As a result, we 
adopt amendments that subject only large accelerated filers to the 
shortest annual report accelerated filing deadline, which we believe is 
achievable by these issuers without undue cost and burden. In doing so, 
we acknowledge the relative ability of different issuers to support the 
accelerated report deadlines. We also are providing large accelerated 
filers with an additional year to make the necessary adjustments to 
prepare for the further accelerated annual report deadline. In adopting 
new rules governing the exit from accelerated filer status, we seek to 
achieve a more streamlined, fair, and balanced set of rules.

B. Significant Issues Raised by Public Comment

    In the proposing release, we requested comment on whether the 
proposed amendments could have an effect that we have not considered. 
We also requested that commenters describe the nature of any impact on 
small entities and provide empirical data to support the extent of the 
impact. We did not receive any comments specifically responding to that 
request.

C. Small Entities Subject to the Final Amendments

    For purposes of the Regulatory Flexibility Act, Exchange Act Rule 
0-10(a) \120\ defines an issuer, other than an investment company, to 
be a ``small business'' or ``small organization'' if it had total 
assets of $5 million or less on the last business day of its most 
recent fiscal year.
---------------------------------------------------------------------------

    \120\ 17 CFR 240.0-10(a).
---------------------------------------------------------------------------

    The amendments affect only the Exchange Act reporting companies 
that are defined by Exchange Act Rule 12b-2, as amended, as 
``accelerated filers'' or ``large accelerated filers.'' An issuer 
becomes an accelerated filer once it first meets the following 
conditions as of the end of its fiscal year:
     The issuer has a public float of $75 million or more, but 
less than $700 million, as of the last business day of the issuer's 
most recently completed second fiscal quarter; \121\
---------------------------------------------------------------------------

    \121\ For purposes of the accelerated filer definition, the 
issuer must compute the aggregate worldwide market value of its 
outstanding voting and non-voting common equity 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 its most recently 
completed second fiscal quarter.
---------------------------------------------------------------------------

     The issuer 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;
     The issuer previously has filed at least one annual 
report; and
     The issuer is not eligible to use Forms 10-KSB and 10-QSB 
for its annual and quarterly reports.

An issuer is defined as a large accelerated filer in much the same way, 
except that a large accelerated filer has a public float of $700 
million or more, as of the last business day of the issuer's most 
recently completed second fiscal quarter.
    As we noted in the proposing release, according to the Standard & 
Poors Research Insight Compustat Database, as of a recent date, of the 
990 reporting companies listed with assets of $5 million or less, 28, 
or 2.8%, had a market capitalization greater than $75

[[Page 76639]]

million and three had a market capitalization greater than $700 
million.\122\ Based on our research, we did not expect the proposed 
amendments to affect a substantial number of small entities. We did not 
receive comments addressing this analysis, and we continue to believe 
that the amendments do not substantially affect small entities.
---------------------------------------------------------------------------

    \122\ It is our understanding that the data in the Compustat 
Database is derived principally from larger issuers, so our estimate 
could understate the actual number of issuers that would be affected 
by the proposals. This sample was taken in September 2005. Assuming 
that this sample is representative of small entities, the 
accelerated filer public float requirement has the effect of 
excluding almost all small entities from the definition.
---------------------------------------------------------------------------

D. Projected Reporting, Recordkeeping, and Other Compliance 
Requirements

    Our amendments to the filing deadlines for the Form 10-K annual 
report and Form 10-Q quarterly reports should not significantly affect 
smaller entities. The amended rules affect the deadlines of only (1) 
large accelerated filers, which includes issuers with $700 million or 
more in public float, as of the last business day of the most recently 
completed second fiscal quarter, and (2) accelerated filers that are 
not large accelerated filers, or those with at least $75 million in 
public float, but less than $700 million, as of the last business day 
of the most recently completed second fiscal quarter.\123\
---------------------------------------------------------------------------

    \123\ We have noted before that the accelerated filer deadlines 
have little, if any, effect on smaller entities. See Release No. 33-
8128.
---------------------------------------------------------------------------

    Our amendments to the exit requirements from accelerated filer 
status could have an impact on a company that becomes a small entity 
after its public float has dropped below $50 million. However, we do 
not expect the impact of the amendments on small entities to be 
significant, because we expect that only a few accelerated filers would 
become small entities each year.\124\ For those that do, the amendments 
streamline their exit from accelerated filer status and make it easier 
for them to begin filing their reports under longer deadlines. 
Specifically, under the amendments, issuers no longer have to wait for 
two years before they could start filing under longer deadlines.
---------------------------------------------------------------------------

    \124\ Based on data from the Thomson Worldscope Global Database, 
we estimate that only 42 companies had a public float of $75 million 
in 2004, but less than $50 million in 2005.
---------------------------------------------------------------------------

E. Agency Action To Minimize Effect on Small Entities

    The Regulatory Flexibility Act directs us to consider significant 
alternatives that would accomplish our stated objectives, while 
minimizing any significant adverse impact on small entities. In 
connection with the amendments, we have considered the following 
alternatives:
    1. Establishing different compliance or reporting requirements for 
smaller entities that take into account the resources available to 
smaller entities;
    2. Setting different thresholds upon which companies can exit 
accelerated filer status; and
    3. Using different standards by which companies are measured to 
determine whether they should be subject to different regulatory 
burdens, taking into account the needs of smaller entities.
    We have considered other changes to our rules and forms to achieve 
our regulatory objectives, and where possible, have taken steps to 
minimize the effect of the rules on smaller entities. The amendments 
likely will have a favorable impact on smaller entities as they permit 
more companies to exit from accelerated status and permit companies to 
exit from accelerated status without the two-year delay that the 
current rules require. We have stated that the accelerated deadlines 
will have little, if any, effect on smaller entities.\125\ As a result 
of our amendments, the effect on smaller entities will likely be even 
further reduced.
---------------------------------------------------------------------------

    \125\ See Release No. 33-8128.
---------------------------------------------------------------------------

VIII. 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 60 
days for large accelerated filers (75 days for fiscal years ending 
before December 15, 2006), 75 days for accelerated filers, 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 40 days for 
large accelerated filers and accelerated filers or 45 days for other 
issuers after the later of these two events.
    2. By amending Section 102.05. to revise the preliminary note to 
the ``Appendix'' to Section 102.05. to read as follows:
    Preliminary Note: The following examples are applicable if the 
issuer is neither a large accelerated filer nor an accelerated filer. 
If the issuer is a large accelerated filer, substitute 60 days (75 days 
for fiscal years ending before December 15, 2006) for 90 days in the 
examples for transition reports on Form 10-K, and substitute 40 days 
for 45 days in the examples for transition reports on Form 10-Q. If the 
issuer is an accelerated filer, substitute 75 days for 90 days in the 
examples for transition reports on Form 10-K, and substitute 40 days 
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, 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)'' with the phrase ``after 45 days but within 60 days of 
the end of the registrant's fiscal year (75 days for fiscal years 
ending before December 15, 2006) for large accelerated filers or after 
45 days but within 75 days of the end of the registrant's fiscal year 
for accelerated filers (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, 75 or 60 days 
of the end of its fiscal year if the registrant is an accelerated 
filer, as applicable depending on the registrant'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))'' with the phrase ``after 45 days but within 60 days (75 
days for fiscal years ending before December 15, 2006) of the end of 
its fiscal year if the registrant is a large accelerated filer (i.e., 
February 16 to March 1 (or March 15 for fiscal years ending before 
December 15, 2006) for calendar year companies), after 45 days but 
within 75 days of the end of its fiscal year if the registrant is an 
accelerated filer (i.e., February 16 to March 15 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:

[[Page 76640]]

    a. Replace 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)'' with the phrase ``129 days subsequent to the end of a 
registrant's fiscal year if the registrant is a large accelerated filer 
or an accelerated filer (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.; and
    b. Replace 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)'' with the phrase ``130 days of the 
date of the filing if the registrant is a large accelerated filer or an 
accelerated filer (or 135 days of the date of the filing for other 
registrants)'' in the second sentence of Section 302.01.b.
    5. By amending Section 302.01.c. to:
    a. Replace 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)'' 
with the phrase ``130 days or more, if the registrant is a large 
accelerated filer or an accelerated filer (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, 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)'' with the phrase ``as of an interim date within 130 days, 
if the registrant is a large accelerated filer or an accelerated filer 
(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, 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)'' with the phrase ``after 45 days but within 60 days 
(75 days for fiscal years ending before December 15, 2006) of the end 
of the fiscal year if the registrant is a large accelerated filer, 
after 45 days but within 75 days if the registrant is an accelerated 
filer (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.


    Note: The Codification is a separate publication of the 
Commission. It will not appear in the Code of Federal Regulations.

IX. Statutory Authority and Text of 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 Amendments

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

    Reporting and recordkeeping requirements, Securities.


0
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

0
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-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, unless 
otherwise noted.


0
2. Section 210.3-01 is amended by revising paragraphs (e) and (i) to 
read as follows:


Sec.  210.3-01  Consolidated balance sheets.

* * * * *
    (e) For filings made after the number of days specified in 
paragraph (i)(2) 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) 130 days for large accelerated filers and accelerated filers 
(as defined in Sec.  240.12b-2 of this chapter); and
    (2) 135 days for all other registrants.
* * * * *
    (i)(1) For purposes of paragraphs (c) and (d) of this section, the 
number of days shall be:
    (i) 60 days (75 days for fiscal years ending before December 15, 
2006) for large accelerated filers (as defined in Sec.  240.12b-2 of 
this chapter);
    (ii) 75 days for accelerated filers (as defined in Sec.  240.12b-2 
of this chapter); and
    (iii) 90 days for all other registrants.
    (2) For purposes of paragraph (e) of this section, the number of 
days shall be:
    (i) 129 days subsequent to the end of the registrant's most recent 
fiscal year for large accelerated filers and accelerated filers (as 
defined in Sec.  240.12b-2 of this chapter); and
    (ii) 134 days subsequent to the end of the registrant's most recent 
fiscal year for all other registrants.

0
3. Section 210.3-09 is amended by revising paragraphs (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) * * *
    (3) The term registrant's number of filing days means:
    (i) 60 days (75 days for fiscal years ending before December 15, 
2006) if the registrant is a large accelerated filer;
    (ii) 75 days if the registrant is an accelerated filer; and
    (iii) 90 days for all other registrants.
    (4) The term subsidiary's number of filing days means:
    (i) 60 days (75 days for fiscal years ending before December 15, 
2006) if the 50 percent or less owned person is a large accelerated 
filer;
    (ii) 75 days if the 50 percent or less owned person is an 
accelerated filer; and
    (iii) 90 days for all other 50 percent or less owned persons.
* * * * *

0
4. Section 210.3-12 is amended by revising 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) 130 days for large accelerated filers and accelerated filers 
(as defined in Sec.  240.12b-2 of this chapter); and
    (ii) 135 days for all other registrants.
    (2) For purposes of paragraph (b) of this section, the number of 
days shall be:
    (i) 60 days (75 days for fiscal years ending before December 15, 
2006) for large accelerated filers (as defined in Sec.  240.12b-2 of 
this chapter);
    (ii) 75 days for accelerated filers (as defined in Sec.  240.12b-2 
of this chapter); and
    (iii) 90 days for all other registrants.

[[Page 76641]]

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

0
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, 
78mm, 79e, 79j, 79n, 79t, 80a-8, 80a-9, 80a-20, 80a-29, 80a-30, 80a-
31(c), 80a-37, 80a-38(a), 80a-39, 80b-11, and 7201 et seq.; and 18 
U.S.C. 1350, unless otherwise noted.
* * * * *


Sec.  229.101  [Amended]

0
6. Section 229.101 is amended by:
0
a. Revising the phrase ``an accelerated filer'' in the introductory 
text of paragraph (e) and in paragraph (e)(3) to read ``an accelerated 
filer or a large accelerated filer''; and
0
b. Revising the phrase ``450 Fifth Street, NW'' in paragraph (e)(2) to 
read ``100 F Street, NE''.

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

0
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, 80b-11, and 7201 et seq.; and 18 U.S.C. 1350, unless 
otherwise noted.
* * * * *

0
8. Section 240.12b-2 is amended by revising the definition of 
``Accelerated filer'' to read as follows:


Sec.  240.12b-2  Definitions.

* * * * *
    Accelerated filer and large accelerated filer. (1) Accelerated 
filer. The term accelerated filer means an issuer after it first meets 
the following conditions as of the end of its fiscal year:
    (i) The issuer had an aggregate worldwide market value of the 
voting and non-voting common equity held by its non-affiliates of $75 
million or more, but less than $700 million, as of the last business 
day of the issuer's most recently completed second fiscal quarter;
    (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 of this chapter) for its annual and 
quarterly reports.
    (2) Large accelerated filer. The term large accelerated filer means 
an issuer after it first meets the following conditions as of the end 
of its fiscal year:
    (i) The issuer had an aggregate worldwide market value of the 
voting and non-voting common equity held by its non-affiliates of $700 
million or more, as of the last business day of the issuer's most 
recently completed second fiscal quarter;
    (ii) The issuer has been subject to the requirements of section 
13(a) or 15(d) of the Act 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 for 
its annual and quarterly reports.
    (3) Entering and exiting accelerated filer and large accelerated 
filer status.
    (i) The determination at the end of the issuer's fiscal year for 
whether a non-accelerated filer becomes an accelerated filer, or 
whether a non-accelerated filer or accelerated filer becomes a large 
accelerated filer, governs the deadlines for 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 or large accelerated filer.
    (ii) Once an issuer becomes an accelerated filer, it will remain an 
accelerated filer unless the issuer determines at the end of a fiscal 
year that the aggregate worldwide market value of the voting and non-
voting common equity held by non-affiliates of the issuer was less than 
$50 million, as of the last business day of the issuer's most recently 
completed second fiscal quarter. An issuer making this determination 
becomes a non-accelerated filer. The issuer will not become an 
accelerated filer again unless it subsequently meets the conditions in 
paragraph (1) of this definition.
    (iii) Once an issuer becomes a large accelerated filer, it will 
remain a large accelerated filer unless the issuer determines at the 
end of a fiscal year that the aggregate worldwide market value of the 
voting and non-voting common equity held by non-affiliates of the 
issuer was less than $500 million, as of the last business day of the 
issuer's most recently completed second fiscal quarter. If the issuer's 
aggregate worldwide market value was $50 million or more, but less than 
$500 million, as of the last business day of the issuer's most recently 
completed second fiscal quarter, the issuer becomes an accelerated 
filer. If the issuer's aggregate worldwide market value was less than 
$50 million, as of the last business day of the issuer's most recently 
completed second fiscal quarter, the issuer becomes a non-accelerated 
filer. An issuer will not become a large accelerated filer again unless 
it subsequently meets the conditions in paragraph (2) of this 
definition.
    (iv) The determination at the end of the issuer's fiscal year for 
whether an accelerated filer becomes a non-accelerated filer, or a 
large accelerated filer becomes an accelerated filer or a non-
accelerated filer, governs the deadlines for 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 or non-accelerated filer.

    Note to paragraphs (1), (2) and (3): The aggregate worldwide 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.
* * * * *

0
9. Section 240.13a-10 is amended by revising paragraph (j) 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) 60 days (75 days for fiscal years ending before December 15, 
2006) for large accelerated filers (as defined in Sec.  240.12b-2);
    (ii) 75 days for accelerated filers (as defined in Sec.  240.12b-
2); and
    (iii) 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) 40 days for large accelerated filers and accelerated filers (as 
defined in Sec.  240.12b-2); and
    (ii) 45 days for all other issuers.
* * * * *

[[Page 76642]]


0
10. Section 240.15d-10 is amended by revising paragraph (j) 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) 60 days (75 days for fiscal years ending before December 15, 
2006) for large accelerated filers (as defined in Sec.  240.12b-2);
    (ii) 75 days for accelerated filers (as defined in Sec.  240.12b-
2); and
    (iii) 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) 40 days for large accelerated filers and accelerated filers (as 
defined in Sec.  240.12b-2); and
    (ii) 45 days for all other issuers.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
11. The authority citation for part 249 continues to read, in part, as 
follows:

    Authority: 15 U.S.C. 78a et seq. and 7201 et seq.; and 18 U.S.C. 
1350, unless otherwise noted.
* * * * *

0
12. Section 249.308a is amended by revising paragraph (a) 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) 40 days after the end of the fiscal quarter for large 
accelerated filers and accelerated filers (as defined in Sec.  240.12b-
2 of this chapter); and
    (2) 45 days after the end of the fiscal quarter for all other 
registrants.
* * * * *

0
13. Form 10-Q (referenced in Sec.  249.308a) is amended by:
0
a. Revising General Instruction A.1.; and
0
b. Revising the check box on the cover page that starts ``Indicate by 
check mark whether the registrant is an accelerated filer (as defined 
in Rule 12b-2 of the Exchange Act.) * * * .''
    The revisions read as follows:

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


United States

Securities and Exchange Commission

Washington, D.C. 20549

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. 40 days after the end of the fiscal quarter for large 
accelerated filers and accelerated filers (as defined in 17 CFR 
240.12b-2); and
    b. 45 days after the end of the fiscal quarter for all other 
registrants.
* * * * *

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

* * * * *
    Indicate by check mark whether the registrant is a large 
accelerated filer, an accelerated filer, or a non-accelerated filer. 
See definition of ``accelerated filer and large accelerated filer'' 
in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated file . . . . Accelerated filer . . . . Non-
accelerated filer . . . .
* * * * *

0
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) 60 days after the end of the fiscal year covered by the report 
(75 days for fiscal years ending before December 15, 2006) for large 
accelerated filers (as defined in Sec.  240.12b-2 of this chapter);
    (2) 75 days after the end of the fiscal year covered by the report 
for accelerated filers (as defined in Sec.  240.12b-2 of this chapter); 
and
    (3) 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.

0
15. Form 10-K (referenced in Sec.  249.310) is amended by:
0
a. Revising General Instruction A.;
0
b. Revising the check box on the cover page that starts ``Indicate by 
check mark whether the registrant is an accelerated filer (as defined 
in Rule 12b-2 of the Act). * * *.;'' and
0
c. Revising Item 1B. of Part I.
    The revisions read as follows:


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

United States

Securities and Exchange Commission

Washington, D.C. 20549

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.
    (2) Annual reports on this Form shall be filed within the 
following period:
    (a) 60 days after the end of the fiscal year covered by the 
report (75 days for fiscal years ending before December 15, 2006) 
for large accelerated filers (as defined in 17 CFR 240.12b-2):
    (b) 75 days after the end of the fiscal year covered by the 
report for accelerated filers (as defined in 17 CFR 240.12b-2); and
    (c) 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

[[Page 76643]]

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.
* * * * *

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 10-K

* * * * *
    Indicate by check mark whether the registrant is a large 
accelerated filer, an accelerated filer, or a non-accelerated filer. 
See definition of ``accelerated filer and large accelerated filer'' 
in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer . . . . Accelerated filer . . . . Non-
accelerated filer . . . .
* * * * *

Part I

* * * * *
    Item 1. * * *
    Item 1B. Unresolved Staff Comments.
    If the registrant is an accelerated filer or a large accelerated 
filer, as defined in Rule 12b-2 of the Exchange Act (Sec.  240.12b-2 
of this chapter), or is a well-known seasoned issuer as defined in 
Rule 405 of the Securities Act (Sec.  230.405 of this chapter) and 
has received written comments from the Commission staff regarding 
its periodic or current reports under the Act not less than 180 days 
before the end of its fiscal year to which the annual report 
relates, and such comments remain unresolved, disclose the substance 
of any such unresolved comments that the registrant believes are 
material. Such disclosure may provide other information including 
the position of the registrant with respect to any such comment.

* * * * *


Sec.  249.220f  [Amended]

0
16. Form 20-F (referenced in Sec.  249.220f) is amended by:
0
a. Adding a check box to the cover page before the paragraph that 
starts ``Indicate by check mark which financial statement item the 
registrant has elected to follow * * *.;'' and
0
b. Revising Item 4A. to Part I.
    The addition and revision read as follows:

    Note: The text of Form 20-F does not, and this amendment will 
not, appear in the Code of Federal Regulations.

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 20-F

* * * * *
    Indicate by check mark whether the registrant is a large 
accelerated filer, an accelerated filer, or a non-accelerated filer. 
See definition of ``accelerated filer and large accelerated filer'' 
in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer . . . . Accelerated filer . . . . Non-
accelerated filer . . . .
* * * * *

Part 1

* * * * *
    Item 4. * * *
    Item 4A. Unresolved Staff Comments.
    If the registrant is an accelerated filer or a large accelerated 
filer, as defined in Rule 12b-2 of the Exchange Act (Sec.  240.12b-2 
of this chapter), or is a well-known seasoned issuer as defined in 
Rule 405 of the Securities Act (Sec.  230.405 of this chapter) and 
has received written comments from the Commission staff regarding 
its periodic reports under the Exchange Act not less than 180 days 
before the end of its fiscal year to which the annual report 
relates, and such comments remain unresolved, disclose the substance 
of any such unresolved comments that the registrant believes are 
material. Such disclosure may provide other information including 
the position of the registrant with respect to any such comment.

* * * * *

    Dated: December 21, 2005.

    By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 05-24479 Filed 12-23-05; 8:45 am]
BILLING CODE 8010-01-P