7246 Federal Register / Vol. 60, No. 25 / Tuesday, February 7, 1995 / Notices

or

Demonstrated earning

power—income before federal income taxes and under

competitive conditions:

Aggregate for last three fiscal years together with ..... $6,500,000

A minimum in most recent

fiscal year (All three years

must be profitable) ........... $4,500,000

The NYSE believes that there are

substantial companies, in some cases

multi-billion dollar enterprises, that do

not manage their business on the basis

of reported income. In order to provide

an opportunity for these companies to

list, the Exchange is proposing an

alternate demonstrated earning power

test for companies with a market

capitalization of not less than $500

million and revenues of not less than

$200 million in the most recent fiscal

year. These companies would be in a

position to qualify for listing under an

alternate listing standard based on net

income adjusted for the cash effects of

investing or financing cash flows.

The proposed standard would call for

aggregate adjusted net income of not

less than $25 million for the last three

years, with each year showing a positive

amount. Reported net income (before

preferred dividends) would be adjusted,

under the new standard, to remove the

effects of all items whose cash effects

are ‘‘investing’’ or ‘‘financing’’ cash

flows as determined pursuant to

Paragraph 28(b) of the Financial

Accounting Standards Board’s

Statement of Financial Accounting

Standards No. 95, ‘‘Statement of Cash

Flows’’ (depreciation, amortization of

good will and gains or losses on sales of

property, plant and equipment are

examples of such items). The

adjustment to net income with respect

to the cash effects of (1) discontinued

operations, (2) the cumulative effect of

an accounting change, (3) an

extraordinary item or (4) the gain or loss

on extinguishment of debt would be

limited to the amount charged or

credited in determining net income for

the period.

Shareholder Distribution

The Exchange’s current shareholder

distribution requirement calls for a

minimum of:

Number of holders of 100

shares or more or of a unit

of trading if less than 100

shares .................................... 2,000

or

Total stockholders together

with ....................................... 2,200

Average monthly trading volume (For most recent six

months) ................................. 100,000

The proposed rule change would add

a distribution standard for companies

whose shares are very actively traded as

an alternative to the existing

shareholder distribution tests. Under the

new alternative standard, a company

with average monthly share trading

volume of 1 million shares (for the most

recent 12 months) could qualify for

listing with 500 total shareholders. The

Exchange believes that a company with

this demonstrated level of trading

activity would be appropriate for

trading in the Exchange’s agencyauction market as long as there are at

least 500 shareholders.

Market Value and Net Tangible Assets

In addition to the two alternate

standards proposed above, the Exchange

is proposing to increase the existing

requirements for both aggregate market

value of publicly-held shares and net

tangible assets from the current $18

million to $40 million. These

requirements previously were adjusted

in 1984. The NYSE views the increase

in these standards as appropriately

reflecting the attributes of the kinds of

companies that the Exchange wants to

attract, and expects that such standards

would help to maintain the quality of

the NYSE list.

2. Statutory Basis

The basis under the Act for this

proposed rule change is the requirement

under Section 6(b)(5) that an exchange

have rules that are designed to prevent

fraudulent and manipulative acts and

practices, to promote just and equitable

principles of trade, to remove

impediments to and perfect the

mechanism of a free and open market

and a national market system and, in

general, to protect investors and the

public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The proposed rule change does not

impose any burden on competition that

is not necessary or appropriate in

furtherance of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

The Exchange has not solicited, and

does not intend to solicit, comments on

the proposed rule change. The Exchange

has not received any unsolicited written

comments from members or other

interested parties.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the publication of

this notice in the Federal Register or

within such other period (i) as the

Commission may designate up to 90

days of such date if it finds such longer

period to be appropriate and publishes

its reasons for so finding or (ii) as to

which the self-regulatory organization

consents, the Commission will:

(A) by order approve the proposed

rule change, or

(B) institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of the

submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Section, 450 Fifth Street, NW.,

Washington, DC 20549. Copies of such

filing will also be available for

inspection and copying at the principal

office of the NYSE. All submissions

should refer to File No. SR–NYSE 95–

01 and should be submitted by February

28, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–2906 Filed 2–6–95; 8:45 am]

BILLING CODE 8010–01–M