Document ID: SEC-2005-0443-0001
Agency: sec
Document Type: Rule
Title: Revisions to Accelerated Filer Definition and Accelerated Deadlines for Filing Periodic Reports
Posted Date: 2005-12-27T05:00Z

[Federal Register: December 27, 2005 (Volume 70, Number 247)]
[Rules and Regulations]
[Page 76625-76643]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27de05-19]

[[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

[[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.
---------------------------------------------------------------------------

    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.
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    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    \96\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    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:
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

     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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

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