On August 27, 2002, the Securities & Exchange Commission (the "SEC") approved rule changes that will require, after a three year phase-in period, certain registered companies to file annual reports on Form 10-K within 60 days after their fiscal year end dates and quarterly reports on Form 10-Q within 35 days after the end of each fiscal quarter. The rule change applies to all registered companies meeting the definition of an "accelerated filer." Companies registered under the Securities Exchange Act of 1934 (the "Exchange Act") have been required to file annual reports on Form 10-K within 90 days after their fiscal year end dates and 45 days after the end of each quarter.

The rule was proposed to address what the SEC perceives as a widening gap between the time information is available to registered companies and the time those companies make the information available to the public. With the proliferation of the Internet, the SEC believes that investors have come to expect more immediate access to the financial and business information of registered companies. Additionally, advances in information technology have significantly reduced the costs and administrative burden to most registered companies of capturing and processing financial and other information material to investors. As a result, the SEC now believes that it is appropriate to accelerate the filing deadlines for the periodic reports of about one-half of all registered companies.

Accelerated Filing Deadlines

Which registered companies will have to file their annual and quarterly reports on an accelerated basis?

As approved, the rule change only requires that widely-held, seasoned reporting companies file their Forms 10-K and Forms 10-Q on an accelerated basis. The following criteria will determine whether a company is an "accelerated filer":

1. a company with a public float of $75 million or more as of the last business day of its most recently completed second fiscal quarter;
2. a company that has been subject to the periodic reporting requirements of the Securities Exchange Act of 1934 for at least 12 calendar months preceding the filing of the report;
3. a company that has filed at least one Form 10-K; and
4. a company that is not eligible to file Forms 10-KSB and 10-QSB.

The foregoing criteria are similar to the requirements permitting a company to use the short form registration statement on Form S-3 for primary offerings. It is important to bear in mind, however, that the calculation of public float is slightly different from the Form S-3 calculation. In the context of determining Form S-3 eligibility, the market value of a company's common stock may be calculated as of any date within 60 days from the date of filing.

A company's public float, for purposes of determining whether a company is an "accelerated filer," is measured as of the end of a company's most recently completed second fiscal quarter. If a company does not meet the above criteria after December 15, 2002, it should re-examine its status as of the last business day of its second fiscal quarter following December 15, 2002 to allow sufficient time to prepare its next Form 10-K and to file timely as an "accelerated filer" if it satisfies the "accelerated filer" criteria. When a company first qualifies as an "accelerated filer," its first filing with an accelerated deadline will always be its next Form 10-K.

When will accelerated filing be required?

In view of the extraordinary number of comments received by the Staff, the SEC is phasing in the rule change over a three year period with a less extensive acceleration of the Form 10-Q deadline. An earlier Form 10-K and Form 10-Q deadline will apply first to all registered companies that trigger the public float and reporting history requirements as of the end of their first fiscal year ending after December 15, 2003. Therefore, for calendar-year end companies, there will be no accelerated filing deadlines for their Forms 10-K for the year ended December 31, 2002 nor for their Forms 10-Q required to be filed during 2003. The deadlines will be phased-in as follows:

Phase-in Requirements for the Form 10-K Deadline.

1. For the next fiscal year ending after December 15, 2002, no change in the Form 10-K filing deadline;
2. For the next fiscal year ending after December 15, 2003, the Form 10-K must be filed within 75 days after the company's fiscal year end;
3. For all fiscal years ending after December 15, 2004, the Form 10-K must be filed within 60 days after the company's fiscal year end.

Phase-in Requirements for the Form 10-Q Filing Deadline.

1. For the next three quarterly fiscal periods ending after December 15, 2002, no change in the Form 10-Q filing deadline;
2. For the next three quarterly fiscal periods ending after December 15, 2003, Forms 10-Q must be filed within 40 days after the company's fiscal quarter end; and
3. For all fiscal quarters ending after December 15, 2004, Forms 10-Q must be filed within 35 days after the company's fiscal quarter end.

For each year during the transition period, the first filing with the new accelerated deadline always will be a company's Form 10-K.

Which periodic report will need to be filed on an accelerated basis?

Only the filing deadlines for Forms 10-K and 10-Q will be accelerated.

• Foreign filers and small business issuers are not affected by this rule change.
• The filing deadlines for Forms 20-F, 40-F, 6-K, 10-KSB, and 10-QSB remain unchanged.
• The due dates for other periodic reports, including Forms 8-K and Schedules 13D and 13G, are not affected by this rule change.

An accelerated filer will continue to be permitted to incorporate by reference its executive compensation disclosure into its Form 10-K if the accelerated filer includes the information in its annual meeting proxy statement within 120 days of its fiscal year end, even though the Form 10-K could be filed 60 days (as opposed to 30 days currently) before the proxy statement. However, the SEC recently adopted final rules for accelerated reporting under Section 16. Also, it is considering a separate rule change requiring disclosures of additional information on Form 8-K and shortening the Form 8-K filing deadlines to two business days following the occurrence of most of the reportable event. More detailed information about this rule proposal is available in our July 2002 update, SEC Proposes Additional Current Disclosures and Shortens Filing Deadline for Form 8-Ks In response to comments, though, the SEC did not shorten the filing deadline for filing financial statements of business acquired under Item 7 of Form 8-K.

When will an accelerated filer be required to file?

An accelerated filer will be required to file its Form 10-K within 60 days of the end of its fiscal year (as opposed to the current 90 day time frame) and its Form 10-Q within 35 days of the end of each quarter (as opposed to the current 45 day time frame). The due dates for transition reports that an accelerated filer must make when it changes its fiscal year will also be shortened. A conforming change has also been adopted that will shorten the due date for all schedules required by Article 12 of Regulation S-X that may be filed as an amendment to the annual report. The due date for these schedules will be shortened from 120 calendar days to 90 calendar days to maintain the current 30 day period after the due date of the annual report to file the amendment.

What information must an accelerated filer disclose about website access to its periodic reports?

Accelerated filers must now include in their Forms 10-K the following information:

1. The company's website address, if it has one;
2. Whether the company makes available free of charge on or through its website, if it has one, its periodic reports on Forms 10-K and 10-Q, current reports on Form 8-K, and all amendments to those reports as soon as practicable after those reports are filed with the SEC;
3. If the company does not make those filings available, the reasons it does not do so; and
4. If the company does not make those filings available, whether it will voluntarily provide electronic or paper copies of those filings free of charge upon request.

An accelerated filers must begin reporting this information in their Forms 10-K to be filed for the fiscal years ending on or after December 15, 2002.

Conclusion - What should registered companies prepare for as the accelerated filing deadlines are phased in?

The Staff explained that the rule change is being phased-in over a three-year time period in order to allow accelerated filers sufficient time to prepare their internal data capturing and reporting processes for the new accelerated filing deadlines, expressing a concern for maintaining the quality and integrity of the reported information.

Also, because the first year of the phase-in period keeps the current filing deadlines as they are, registered companies are better able to revise their disclosure procedures to conform to the additional reporting requirements regarding disclosure controls and procedures and internal controls that have been mandated through the Sarbanes-Oxley Act of 2002. In particular, registered companies should coordinate their certification processes, required by Section 302 of the Sarbanes-Oxley Act of 2002, within the new accelerated filing deadlines for Forms 10-K and 10-Q. As more fully described in our September 2002 update, SEC Requires CEO and CFO Certification of Quarterly and Annual Reports, Section 302 requires registered companies to include certifications by their CEOs and CFOs regarding: (1) accuracy and fair presentation of the disclosures in the reports, (2) establishment and maintenance of the company's disclosure controls and procedures, and (3) reporting of deficiencies in, and changes to, the company's internal accounting controls. Registered companies will need to plan ahead to integrate these additional compliance obligations into the new accelerated reporting deadlines.

Until the rule change is fully phased-in, registered companies that meet the accelerated filer criteria might consider adjusting their periodic reporting calendars to satisfy the 60-day and 35-day deadlines on a voluntary basis. Accelerated filers that take early steps to address their internal data capture and reporting processes in view of these shortened deadlines may be less likely to face unexpected problems when the deadlines are fully in effect. The failure to make timely periodic report filings after that date would make Rule 144 unavailable for resales of restricted securities and would result in the loss of eligibility to use Form S-3 thereby limiting a company's ability to raise capital through this accelerated registration process.