Federal Register / Vol. 73, No. 151 / Tuesday, August 5, 2008 / Notices 45511 

7 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 

3See Exchange Act Release No. 55974 (July 6, 

2007), 72 FR 37067 (June 28, 2007) (SR–NYSE–

2007–52). [sic] 4See Exchange Act Release No. 57903 (June 2, 

2008), 73 FR 32610 (June 9, 2008) (SR–NYSE–2008–

43). 

All submissions should refer to File 

Number SR–NYSE–2008–57. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing also will be available 

for inspection and copying at the 

principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2008–57 and should 

be submitted on or before August 26, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–17891 Filed 8–4–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58254; File No. SR–NYSE–

2008–58] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Make Permanent a Pilot Program 

Under Which the Exchange Excludes 

From Its Earnings Standard Gains or 

Losses From Extinguishment of Debt 

Prior to Maturity 

July 30, 2008. 

Pursuant to section 19(b)(1) of the 

Securities Exchange Act of 1934 (the 

‘‘Exchange Act’’),1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on July 22, 2008, New York Stock 

Exchange LLC (the ‘‘NYSE’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

changes as described in Items I, II, and 

III below, which items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

changes from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to adopt on a 

permanent basis an amendment to the 

earnings standard of section 102.01C(I) 

of the Exchange’s Listed Company 

Manual (the ‘‘Manual’’) which is 

currently in force pursuant to a pilot 

program (the ‘‘Pilot Program’’). The 

amendment will enable the Exchange to 

adjust the earnings of companies listing 

in conjunction with an IPO by reversing 

the income statement effects for all 

periods of changes in fair value of 

financial instruments classified as a 

liability recorded by the company in 

earnings, provided such financial 

instrument is either being redeemed 

with the proceeds of an offering 

occurring in conjunction with the listing 

or converted into or exercised for 

common stock of the company at the 

time of listing. 

The text of the proposed rule change 

is available at http://www.nyse.com, the 

NYSE, and the Commission’s Public 

Reference Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of 

and basis for the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The NYSE has prepared summaries, set 

forth in sections A, B and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend the 

earnings standard of section 102.01C(I) 

of the Manual. The amendment will 

enable the Exchange to adjust the 

earnings of companies for purposes of 

its pre-tax earnings standard by 

excluding gains or losses recognized in 

connection with the extinguishment of 

debt prior to its maturity. The 

adjustment will relate only to gains or 

losses incurred in the three-year period 

under examination for purposes of the 

earnings standard. The proposed 

amendment was originally implemented 

for a six-month period as a Pilot 

Program.3 The Pilot Program expired 

and was subsequently renewed for an 

additional three months, expiring on 

September 2, 2008.4

Prior to the promulgation of 

Statement of Financial Accounting 

Standards No. 145 (‘‘SFAS No. 145’’) in 

2002, Financial Accounting Standards 

Board Statement No. 4 (‘‘FASB No. 4’’) 

required that gains and losses from the 

extinguishment of debt prior to its 

maturity that were included in the 

determination of net income be 

aggregated and, if material, classified as 

an extraordinary item, net of related 

income tax effect. SFAS No. 145 

rescinded FASB No. 4 and, as a result, 

gains or losses in connection with the 

extinguishment of debt prior to its 

maturity are now generally included in 

the calculation of operating earnings 

under generally accepted accounting 

principles (‘‘GAAP’’). As a result, some 

companies that would not otherwise be 

qualified to list may qualify as a result 

of the inclusion in pre-tax income of 

gains from the extinguishment of debt 

prior to its maturity. In addition, some 

prospective listed companies whose 

operating earnings would have met the 

requirements of the Exchange’s pre-tax 

earnings test prior to 2002 are now not 

qualified to list as they are required to 

include losses from the extinguishment 

of debt prior to its maturity in pre-tax 

income. In the Exchange’s experience, 

these gains and losses are primarily 

noncash in nature. The gains generally 

represent the accelerated accrual of 

original issue discount, while the losses 

generally represent the remaining 

unamortized portion of costs incurred at 

the time of initial borrowing. 

The Exchange believes that it is 

appropriate to return to its pre-2002 

approach of excluding gains and losses 

from debt extinguishment from pre-tax 

earnings as calculated for purposes of its 

earnings standard. The purpose of the 

earnings standard is to determine the 

suitability for listing of companies on a 


dwashington3 on PRODPC61 with NOTICES
45512 Federal Register / Vol. 73, No. 151 / Tuesday, August 5, 2008 / Notices 

5 15 U.S.C. 78f(b). 

6 15 U.S.C. 78f(b)(5). 7 17 CFR 200.30–3(a)(12). 

forward-looking basis in light of a 

sustained demonstration of strong 

earnings. As such, the Exchange does 

not believe that it is relevant to include 

in pre-tax earnings gains and losses 

from the extinguishment of debt prior to 

its maturity that are principally 

nonrecurring in nature. Additionally, 

we note that the analyst community also 

routinely exclude these gains and losses 

from their analyses in making 

recommendations as to the desirability 

of investing in companies’ publiclytraded equity securities. The Exchange 

believes that adjusting company 

earnings for gains and losses from the 

extinguishment of debt prior to its 

maturity is consistent with the 

adjustments that are currently permitted 

under Section 102.01C for a number of 

other nonrecurring charges to earnings 

that are included in net income as 

recorded under GAAP, such as the 

exclusion of impairment charges on 

long-lived assets, the exclusion of gains 

and losses on sales of a subsidiary’s or 

investee’s stock and the exclusion of inprocess purchased research and 

development charges. The Exchange 

also believes that this adjustment is 

reasonable given the purpose of the 

earnings standard, which is to 

determine the suitability for listing of 

companies on a forward-looking basis. 

As with all companies listed on the 

Exchange, the Financial Compliance 

staff of NYSE Regulation, Inc. will 

monitor on an ongoing basis the 

compliance with the Exchange’s 

continued listing standards of any 

companies listed in reliance upon the 

proposed amendment. Such companies 

will be subject to delisting if they are 

found at any time to be below the 

Exchange’s continued listing standards. 

As the Exchange gains experience in 

listing companies in reliance upon the 

proposed amendment, we will continue 

to carefully reevaluate its 

appropriateness. If we become aware 

that companies listed pursuant to the 

proposed amendment have difficulty 

complying with our continued listing 

standards, we will inform the 

Commission and discuss with the 

Commission the desirability of the 

continued use of the provision. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

section 6(b) 5 of the Exchange Act, in 

general, and furthers the objectives of 

section 6(b)(5) of the Exchange Act,6 in 

particular, in that it is designed to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, 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. The Exchange believes 

that the proposed amendment is 

consistent with the investor protection 

objectives of the Exchange Act in that it 

provides for an adjustment to listing 

applicants’ historical financial results 

that is consistent with other adjustments 

already permitted under the Exchange’s 

earnings standard and is reasonable 

given the purpose of the earnings 

standard, which is to determine the 

suitability for listing of companies on a 

forward-looking basis. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Exchange Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization consents, the Commission 

will: 

(A) By order approve the proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Exchange 

Act. Comments may be submitted by 

any of the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSE–2008–58 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–NYSE–2008–58. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). 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 in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of the filing also will be available 

for inspection and copying at the 

principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NYSE–2008–58 and should 

be submitted on or before August 26, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.7

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–17892 Filed 8–4–08; 8:45 am] 

BILLING CODE 8010–01–P 


dwashington3 on PRODPC61 with NOTICES