Accelerated SEC Periodic Reporting Requirements

Originally published on September 12, 2002

On August 27, 2002, the Securities and Exchange Commission adopted rules that shorten the time periods within which registrants with a specified public float and reporting history must file their annual reports on Form 10-K and quarterly reports on Form 10-Q (SEC Release No. 33-8128; 34-46464; FR-63). The new accelerated filing periods are being phased in over a four-year period. The SEC has adopted the accelerated filing schedule in order to improve the usefulness of periodic reports to investors by providing more timely disclosure. The new rules also require disclosures concerning a registrant's website and the ability to timely access filings on a website or otherwise obtain copies of those filings.

The new requirements apply to every "accelerated filer" which the SEC has defined as a domestic registrant that:

• has an aggregate market value of outstanding voting and non-voting common equity not held by affiliates, or public float, of at least $75 million determined as of the last business day of the most recently completed second fiscal quarter (intended to give a registrant sufficient warning that it will become subject to the accelerated filing requirements);
• has been subject to the reporting requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 for at least 12 calendar months preceding the filing of the report;
• has filed at least one annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act; and
• is not eligible to use Form 10-KSB and 10-QSB (the small business issuer forms).

Once a registrant is an accelerated filer, it will there-after remain subject to the shortened filing periods, irrespective of the market value of its public float, unless it subsequently becomes a small business issuer that is eligible to use Form 10-KSB and Form 10-QSB.

Because accelerated filer status is determined by reference to the public float of a registrant's common stock, registrants that do not have publicly-traded common stock, such as registrants that are reporting companies solely because they have publicly offered debt securities or issuers of asset backed securities, are not accelerated filers and therefore do not need to comply with the new accelerated filing requirements.

Ultimately, the due date for each Form 10-K filed by an accelerated filer will be 60 calendar days after the end of the fiscal year and for each Form 10-Q filed by an accelerated filer will be 35 calendar days after the end after the end of each fiscal quarter, other than the fourth quarter. The first accelerated filing for any accelerated filer will be a Form 10-K. The time periods for filing proxy statements that are incorporated by reference into an annual report on Form 10-K have not changed. The new filing time periods will be phased in as follows:

If filings are not made within these shortened time periods, within the additional time allowed pursuant to Rule 12b-25 under the Exchange Act, a registrant would lose the ability to use Form S-3 for one year and would lose the ability to use registration statements on Form S-8 during the pendency of the delinquency. Also, the registrant's security holders would lose the ability to rely on Rule 144 during the pendency of the delinquency.

The SEC has made no change to the filing deadlines for foreign private issuers, but is continuing to consider this issue and may propose filing deadline changes in the future.

Conforming changes to Regulation S-X have been made to the timeliness requirements for the inclusion of financial information in other SEC filings, such as registration statements and proxy statements. As a result, financial information contained in these filings pursuant to Rules 3-01 and Rule 3-12 of Regulation S-X filed by accelerated filers will continue to be required to be as current as the financial information included in their reports on Form 10-K and Form 10- Q. However, the time period for filing separate financial statements of subsidiaries not consolidated and 50% or less owned persons pursuant to Rule 3-09 of Regulation S-X is not accelerated if the subsidiary or other person is not itself an accelerated filer. These financial statements of subsidiaries not consolidated and 50% or less owned persons may still be filed with-in the existing time periods by an amendment to the original filing. In addition, schedules to the financial statements may still be filed 30 days after the due date of the report by an amendment to the original filing. No change has been made to the financial statement filing requirements of Item 7 of Form 8-K or Rule 3-05 of Regulation S-X for businesses acquired and related pro forma information.

All filers will be required to disclose on the front cover page of their Form 10-K their public float as computed on the last business day of their most recently completed second fiscal quarter, rather than a date within 60 days of the date of filing as is presently the case. Each filer will also be required to check a box that will appear on the front cover page of each Form 10-K and Form 10-Q to indicate whether or not it is an accelerated filer.

Accelerated filers also are required to disclose in their annual reports on Form 10-K beginning with reports filed for fiscal years ending after December 15, 2002:

• the registrant's website address if it has one; 3 Securities Update
• whether annual reports on Form 10-K, quarterly reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports are available free of charge on or through its website as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC (generally the same day as filing with the SEC);
• if it does not make its filings available on or through its website free of charge as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC, the reasons why it does not do so (such as that it does not maintain a website); and
• whether the registrant voluntarily will provide electronic or paper copies of its filings free of charge upon request.

The SEC recommends that website access to filings should remain available for at least 12 months after their filing. In addition, the SEC believes it desirable for registrants to provide access for even longer time periods on appropriately archived portions of their websites.

Website access should include access to all exhibits and supplemental schedules electronically filed with the periodic reports. In addition, the SEC is also encouraging registrants to provide website access to all of their SEC filings, including proxy statements.

If website access is provided by a hyperlink to a third-party service, such as the SEC's website, the registrant should hyperlink directly to its reports (or to a list of reports) instead of the homepage or general search page. A registrant using a link to a third-party website may provide an intermediate screen stating that the visitor is leaving the registrant's website. Also, a disclaimer of responsibility for the accuracy of the third-party service is permitted.

When including a website address in SEC filed documents, we recommend that registrants take reasonable steps to make sure that the website reference is inactive and therefore cannot be used as a hyperlink to the website. This will help ensure that the material on the website is not unintentionally incorporated into filings made with the SEC. In addition, a registrant should include a statement to clarify that the website address is an inactive textual reference only.

The shortened filing periods for accelerated filers should cause these registrants to review their internal timetable and processes for preparing and finalizing their annual and quarterly reports and related earnings press releases. This would include a consideration of how the procedures put in place in connection with the new CEO and CFO certification requirements imposed by the Sarbanes-Oxley Act of 2002 and in response to the corporate governance standards proposed by the New York Stock Exchange affect the ability to timely file periodic reports. Particular attention should be paid to the procedures implemented with respect to disclosure committees and the necessary time periods for reviews by independent auditors or audit commit-tees. Coordinating these related reviews and meetings, while preparing the periodic reports within the shortened filing periods, will impose a more rigorous orchestration of the early preparation, review and finalization of periodic reports.

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