Release No. 33-8145

Release No. 34-46788

67 Fed. Reg. 68790 - Nov. 13, 2002

Conditions for Use of Non-GAAP Financial Measures

ACTION: Proposed rule.

SUMMARY: As directed by the Sarbanes-Oxley Act of 2002, we are  proposing new rules and amendments to address public companies'  disclosure or release of certain financial information that is derived  on the basis of methodologies other than in accordance with Generally  Accepted Accounting Principles (GAAP). We are proposing a new  disclosure regulation, Regulation G, which would require public  companies that disclose or release these non-GAAP financial measures to  include, in that disclosure or release, a presentation of the most  comparable GAAP financial measure and a reconciliation of the disclosed  non-GAAP financial measure to the most comparable GAAP financial  measure. We also are proposing to amend Item 10 of Regulation S-K and  Item 10 of Regulation S-B to provide additional guidance to those  registrants that include non-GAAP financial measures in Commission  filings. Additionally, we are proposing to amend Form 20-F to  incorporate the proposed amendments to Item 10 of Regulation S-K.  Finally, we are proposing to require registrants to file on Form 8-K  earnings releases or similar announcements, with those filings subject  to the guidance in amended Item 10 of Regulation S-K and Item 10 of  Regulation S-B.

DATES: Comments should be received on or before December 13, 2002.

ADDRESSES: To help us process and review your comments more  efficiently, please send comments by one method only. Comments should  be submitted in triplicate to Jonathan G. Katz, Secretary, U.S.  Securities and Exchange Commission, 450 Fifth Street, NW., Washington,  DC 20549-0609. Comments also may be submitted electronically at the  following e-mail address: rule-comments@sec.gov. All comment letters  should refer to File No. S7-43-02. This number should be included in  the subject line if sent via electronic mail. Electronically submitted  comment letters will be posted on the Commission's Internet Web Site  (http://www.sec.gov). We do not edit personal information, such as  names or electronic mail addresses, from electronic submissions. You  should submit only information that you wish to make available  publicly.

FOR FURTHER INFORMATION CONTACT: Joseph P. Babits, Craig Olinger, or  Jennifer Minke-Girard at (202) 942-2910, Division of Corporation  Finance, U.S. Securities and Exchange Commission, 450 Fifth Street,  NW., Washington, DC 20549-0402.

SUPPLEMENTARY INFORMATION: We are proposing new Regulation G.¹

We also are proposing amendments to Item 10 of Regulation S-K,²  Item 10 of Regulation S-B,³ and Securities Exchange Act of 1934⁴  Forms 8-K ⁵ and 20-F.⁶

Table of Contents

I. Background

On July 30, 2002, President Bush signed into law the Sarbanes-Oxley  Act of 2002 (''Sarbanes-Oxley Act'').⁷ Among its many goals, the  Sarbanes-Oxley Act seeks to enhance the financial disclosures of public  companies. As part of this effort to enhance disclosure to investors,  Congress and the President recognized the immediate need to address  issues relating to public companies' use of so-called ''pro forma  financial information.''

Like Congress, the Commission also has been concerned with the use  of ''pro forma financial information.'' In 1973, the Commission issued  Accounting Series Release No. 142, warning of possible investor  confusion from the use of financial measures outside of GAAP:

[T]he unilateral development and presentation on an unaudited  basis of various measures of performance by different companies  which constitute departures from the generally understood accounting  model has led to conflicting results and confusion for investors.  Additionally, it is not clear that simple omission of depreciation  and other non-cash charges deducted in the computation of net income  provides an appropriate alternative measure of performance for any  industry either in theory or in practice. * * * If accounting net  income computed in conformity with generally accepted accounting  principles is not an accurate reflection of economic performance for  a company or an industry, it is not an appropriate solution to have  each company independently decide what the best measure of its  performance should be and present that figure to its shareholders as  Truth.⁸

More recently, in December 2001, we issued cautionary advice  regarding the use of ''pro forma financial information'' in earnings   releases:

[W]e are concerned that ''pro forma'' financial information,  under certain circumstances, can mislead investors if it obscures  GAAP results. Because this ''pro forma'' financial information by  its very nature departs from traditional accounting conventions, its  use can make it hard for investors to compare an issuer's financial  information with other reporting periods and with other  companies.⁹

Additionally, earlier this year, we brought an enforcement action  against Trump Hotels & Casino Resorts, Inc., where we found the use of  pro forma

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financial information to be materially misleading.¹⁰

Like the Commission, Congress also was specifically concerned with  pro forma results that are prepared or derived on a basis other than  GAAP when it included Section 401(b) in the Sarbanes-Oxley Act. Because  the Commission's rules and regulations address the use of ''pro forma  financial information'' in other contexts, particularly in Regulation  S-X,¹¹ and use that term differently from its use in the Sarbanes- Oxley Act,¹² we are adopting the term ''non-GAAP financial measures''  to identify the types of information targeted by Section 401(b) of the  Sarbanes-Oxley Act. The Sarbanes-Oxley Act sought to eliminate the  manipulative or misleading use of non-GAAP financial measures and, at  the same time, enhance the comparability associated with the use of  that information. As the Senate Committee on Banking, Housing, and  Urban Affairs noted in their Committee Report:

The Committee seeks to address problems attendant to pro forma  financial disclosures by requiring the SEC to promulgate rules  requiring that issuers publish pro forma data with a reconciliation  to comparable financial data calculated according to GAAP and in a  way that is not misleading and does not contain untrue statements.  The reconciliation presumes, and would require, the issuer to  publish financial data calculated according to GAAP at the same time  as it publishes pro forma data. This should enable investors to, at  the least, simultaneously compare the pro forma financial data with  the same types of financial disclosures (e.g., earnings) calculated   according to GAAP for the comparable reporting period.¹³

Accordingly, Section 401(b) of the Sarbanes-Oxley Act directs the  Commission to adopt rules requiring that any public disclosure or  release of non-GAAP financial measures by a company filing reports  under Section 13(a) ¹⁴ or 15(d) ¹⁵ of the Exchange Act be presented  in a manner that:

Does not contain an untrue statement of a material fact or  omit to state a material fact necessary in order to make the non-GAAP  financial measure, in light of the circumstances under which it is  presented, not misleading; and

Reconciles the non-GAAP financial measure presented with  the financial condition and results of operations of the registrant  under GAAP. These rules would address the use of non-GAAP financial measures,  regardless of whether that use would violate current Commission  disclosure or antifraud rules.

As used in this release, a ''non-GAAP financial measure'' is a  numerical measure of an issuer's historical or future financial  performance, financial position or cash flows that:

Excludes amounts, or is subject to adjustments that have  the effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

Includes amounts, or is subject to adjustments that have  the effect of including amounts, that are excluded from the comparable  measure so calculated and presented.

In their efforts to enhance financial disclosure, Congress and the  President recognized the importance of timely information to investors  and our markets. Section 409 of the Sarbanes-Oxley Act added to the  Exchange Act new Section 13(l), which obligates public companies to  ''disclose to the public on a rapid and current basis such additional  information concerning material changes in the financial condition or  operations of the issuer, in plain English, which may include trend and  qualitative information and graphic presentations, as the Commission  determines, by rule, is necessary or useful for the protection of  investors and in the public interest.''¹⁶ Before the adoption of the  Sarbanes-Oxley Act, we had taken important steps in this regard by  proposing accelerated deadlines by which companies would be required to  disclose significantly expanded categories of material information.¹⁷  Comments regarding our proposed accelerated deadlines for periodic  reports of registrants, while not fully supporting that proposal,  recognized the need for more current information.¹⁸ In fact, the  comments of the American Bar Association's Subcommittee on Disclosure  and Continuous Reporting of the Committee on Federal Regulation of  Securities, Section of Business Law, proposed alternatively that we  require companies to file their earnings reports on Form 8-K. The ABA  Subcommittee expressed the view that such a requirement:

Would enhance the attention and level of care companies  bring to those disclosures because companies would be aware that the  disclosures will become part of the formal reporting system; and

Would bring those disclosures into the formal disclosure  system where they would be available electronically on a widespread  basis.¹⁹

Today, to implement the Sarbanes-Oxley Act's directives regarding  the use of non-GAAP financial measures and further the statutory  objective of increased real-time issuer disclosures, we are proposing  new Regulation G, amendments to Item 10 of Regulation S-K, amendments  to Item 10 of Regulation S-B and amendments to Exchange Act Forms 8-K  and 20-F.

II. Discussion of Proposals

We intend the proposed rules and amendments to implement the  requirements of the Sarbanes-Oxley Act, improve the transparency and  quality of disclosure of non-GAAP financial measures and related  information and enhance the current reporting of earnings information.  We are taking a two-part approach to the disclosure of non-GAAP  financial measures. First, we are proposing new Regulation G, which  would apply whenever a company publicly discloses or releases material  information that includes a non-GAAP financial measure. While Section  401(b) of the Sarbanes-Oxley Act refers to any communication of ''pro  forma financial information,'' we believe that proposing to make  Regulation G applicable to public disclosures of material information  containing or accompanied by non-GAAP financial measures delineates  appropriately the scope of the rules required by Section 401(b). This  regulation would impose specific requirements in connection with the

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public communication of non-GAAP financial measures and, without  affecting the existing antifraud regime, would prohibit material  misstatements or omissions that would make the presentation of the  material non-GAAP financial measure, under the circumstances in which  it is made, misleading. Regulation G provides a limited exception for  foreign private issuers based on what we believe to be an appropriate  territorial approach. This limited exception applies the principles of  territoriality based on where the disclosure is initially made and is  similar to that provided by Rule 135e ²⁰ under the Securities Act of  1933²¹ for offshore press and related activities.

Second, pursuant to the Sarbanes-Oxley Act and our existing  authority under the Securities Act and Exchange Act, we are proposing  to amend Item 10 of Regulation S-K and Item 10 of Regulation S-B to  address specifically the use of non-GAAP financial measures in filings  with the Commission.²² These proposed amendments would apply to the  same categories of non-GAAP financial measures as are covered by  proposed Regulation G, but contain somewhat more detailed requirements  than proposed Regulation G.²³

In addition to these proposals, in order to bring earnings  information within our current reporting system, we are proposing an  amendment to Form 8-K that would require the filing with the Commission  of releases or announcements disclosing material non-public financial  information about completed annual or quarterly fiscal periods. Our  proposal would not require the issuance of earnings releases or similar  announcements. However, such releases and announcements would trigger  the new proposed filing requirement. The proposed filing requirement  would apply regardless of whether the release or announcement included  disclosure of a non-GAAP financial measure. Public disclosure of  financial information for a completed fiscal period in a presentation  that is made orally, telephonically, by webcast, broadcast or similar  means would not be required to be filed, if the presentation:

Occurs within 48 hours of a related release or announcement  that is filed under proposed Item 1.04 of Form 8-K; and

Is accessible to the public.

A. Proposed Regulation G

Proposed Regulation G would apply to any entity that is required to  file reports pursuant to Sections 13(a) or 15(d) of the Exchange Act,  other than a registered investment company.²⁴ Regulation G would  apply whenever such a registrant, or a person acting on its behalf,  discloses or releases publicly any material information that includes a  non-GAAP financial measure. Regulation G would require the registrant  to provide the following information as part of the disclosure or  release of the non-GAAP financial measure:

A presentation of the most comparable financial measure  calculated and presented in accordance with GAAP; ²⁵ and

A reconciliation (by schedule or other clearly  understandable method), which shall be quantitative for historic  measures and quantitative, to the extent available without unreasonable  efforts, for prospective measures, of the differences between the non- GAAP financial measure presented and the comparable financial measure  or measures calculated and presented in accordance with GAAP.

If a non-GAAP financial measure is released orally, telephonically,  in a webcast or broadcast or by similar means, proposed Regulation G  would permit a registrant to provide the required accompanying  information by posting it on the registrant's website. The registrant  would be required to disclose the location and availability of the  required accompanying information during its presentation.

With regard to the quantitative reconciliation of non-GAAP  financial measures that are forward-looking, a schedule or other  presentation detailing the differences between the forward-looking non- GAAP financial measure and the appropriate forward-looking GAAP  financial measure would be required. If the GAAP financial measure is  not accessible on a forward-looking basis, the registrant must disclose  that fact, explain why it is not accessible on a forward-looking basis  and provide any reconciling information that is available without an  unreasonable effort. Furthermore, the registrant must identify any  information that is unavailable and disclose its probable significance.

Proposed Regulation G also provides that a non-GAAP financial  measure, taken together with the accompanying information, may not  misstate a material fact or omit to state a material fact necessary to  make the presentation of the non-GAAP financial measure not misleading,  in light of the circumstances under which it is presented.²⁶

For purposes of Regulation G, a non-GAAP financial measure would be  a numerical measure of a registrant's historical or future financial  performance, financial position or cash flows that:

Excludes amounts, or is subject to adjustments that have  the effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

Includes amounts, or is subject to adjustments that have  the effect of including amounts, that are excluded from the comparable  measure so calculated and presented.

In this regard, ''GAAP'' refers to generally accepted accounting  principles in the United States, except that in the case of foreign  private issuers whose primary financial statements are prepared in  accordance with other generally accepted accounting principles,  references to GAAP also include the principles under which those  primary financial statements are prepared. We do not intend today's  proposals to capture measures of operating performance or financial  measures that fall outside the scope of the definition set forth above.

Non-GAAP financial measures would not include:

Operating and other statistical measures (such as unit  sales, numbers of employees, numbers of subscribers, or numbers of  advertisers); and

Ratios or measures that are calculated using only:

Financial measures calculated in accordance with GAAP; and

Operating measures or other measures that are not non-GAAP  financial measures.

Non-GAAP financial measures would not include financial information  that does not have the effect of providing

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numerical measures that are different from the comparable GAAP measure.  Examples of measures to which Regulation G would not apply would  include the following:

Disclosure of amounts of expected indebtedness, including  contracted and anticipated amounts;

Disclosures or amounts of repayments that have been planned  or decided upon but not yet made;

Disclosures of estimated revenues or expenses of a new  product line, so long as such amounts were estimated as GAAP figures;  and

Measures of profit or loss and total assets for each  segment required to be disclosed in accordance with GAAP.²⁷

We do intend that the definition of non-GAAP financial measure  capture all measures that have the effect of depicting either:

A measure of performance that is different from that  presented in the financial statements, such as income or loss before  taxes, or net income or loss as calculated in accordance with GAAP; or

A measure of liquidity that is different from cash flow or  cash flow from operations computed in accordance with GAAP.

An example of a non-GAAP financial measure would be a measure of  operating income that excludes one or more expense or revenue items  that are identified as ''non-recurring.'' Another example would be  EBITDA (earnings before interest, taxes, depreciation and  amortization), which could be calculated using elements derived from  GAAP financial presentations but, in any event, is not presented in  accordance with GAAP. Examples of ratios and measures that would not be  non-GAAP financial measures would include sales per square foot  (assuming that the sales figure was calculated in accordance with GAAP)  or same store sales (again assuming the sales figures for the stores  were calculated in accordance with GAAP). An example of a ratio that  would be a non-GAAP financial measure would be a measure of operating  margin where either the revenue component or the operating income  component of the calculation, or both, were not calculated in  accordance with GAAP.

The proposed regulation would apply to registrants that are foreign  private issuers,²⁸ subject to a limited exception. Specifically,  Regulation G would not apply to public disclosure of a non-GAAP  financial measure by or on behalf of a registrant that is a foreign  private issuer if the following conditions were satisfied:

The securities of the issuer are listed or quoted on a  securities exchange or inter-dealer quotation system outside the United  States;

The non-GAAP financial measure and the most comparable GAAP  financial measure are not calculated and presented in accordance with  generally accepted accounting principles in the United States; and

The disclosure is made by or on behalf of the registrant  outside the United States, or is included in a written communication  that is released by or on behalf of the registrant only outside the  United States.

We believe that these conditions, by focusing on whether the  financial measure relates to U.S. GAAP and on the territorial principle  of where the disclosure is made by or on behalf of the foreign private  issuer, appropriately balance the interests of U.S. investors,  including those interests as provided by the Sarbanes-Oxley Act, with  the interests of foreign private issuers in communicating in their home  markets. The Commission has not historically applied specific  disclosure requirements to communications by foreign private issuers  other than in their annual reports on Form 20-F. We believe that it is  appropriate to take the Sarbanes-Oxley Act as a direction to apply  Regulation G to foreign private issuers, subject to the exception we  have proposed.

In addition, we believe that the worldwide availability of  information properly disclosed outside the United States and the  interests of U.S. investors in information communicated by or on behalf  of the issuer outside the United States dictate that the exception for  foreign private issuers should continue to apply where:

Foreign or U.S. journalists or other third parties have  access to the information, so long as the information is disclosed or  released by or on behalf of the registrant only outside the United  States;

Following its release or disclosure, the information  appears on one or more web sites maintained by the registrant, so long  as the web sites, taken together, are not available exclusively to, or  targeted at, persons located in the United States; and/or

Following the disclosure or release of the information  outside the United States, the information is included in a submission  to the Commission made under cover of a Form 6-K.²⁹

Indeed, regulators worldwide have been addressing this issue within  their own jurisdictions. In May 2002, the Technical Committee of the  International Organization of Securities Commissions (IOSCO) published  a Cautionary Statement Regarding Non-GAAP Results Measures that urged  issuers, investors and other users of financial information to use care  when presenting and interpreting such information.³⁰ This IOSCO  Cautionary Statement notes the universal concerns that regulators have  about the potential misuse of non-GAAP earnings measures and provides  examples of statements of cautionary advice regarding the appropriate  use of non-GAAP information that have been issued in various countries.

Proposed Regulation G would be a disclosure provision applicable to  entities that are required to file reports under Section 13(a) or  Section 15(d) of the Exchange Act, other than registered investment  companies.³¹ Proposed Rule 102 of Regulation G ³² expressly  provides that nothing in Regulation G shall affect any person's  liability under Exchange Act Section 10(b)³³ or Rule 10b-5  thereunder.³⁴ Proposed Rule 102 also states that a person's  compliance or non-compliance with the requirements of Regulation G  would not affect that person's liability under Section 10(b) or Rule  10b-5. The facts and circumstances surrounding a violation of  Regulation G, however, may give rise to a Rule 10b-5 violation if all  the elements for such a violation are present. In this regard, we  reminded companies in December 2001 that, under certain circumstances,  non-GAAP financial measures could mislead investors if they obscure the  company's

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GAAP results.³⁵ We continue to be of the view that some disclosures  of non-GAAP financial measures could give rise to actions under Rule  10b-5.³⁶

Section 3(b) of the Sarbanes-Oxley Act provides that a violation of  that Act or the Commission's rules thereunder shall be treated for all  purposes as a violation of the Exchange Act. Therefore, if an issuer,  or any person acting on its behalf, fails to comply with Regulation G,  the issuer and/or the person acting on its behalf could be subject to a  Commission enforcement action alleging violations of Regulation G.  Additionally, if the facts and circumstances warrant, we could bring an  action under both Regulation G and Rule 10b-5. Questions Regarding Proposed Regulation G

As proposed, Regulation G would apply only to companies  that are required to file reports pursuant to Section 13(a) or 15(d) of  the Exchange Act. Should we expand the scope of the regulation to apply  to all companies that publicly disclose non-GAAP financial measures,  excluding registered investment companies?

As an alternative to requiring reconciliation to the most  directly comparable financial measure calculated and presented in  accordance with GAAP, should we require reconciliation to specific GAAP  financial measures in all cases, such as net income and cash flow from  operating activities? If yes, to which GAAP financial measures should  we require reconciliation?

Should the presentation of certain non-GAAP financial  measures require the presentation of a reconciled (full or summary)  consolidated balance sheet, income statement and cash flow statement?  If so, which non-GAAP financial measure(s) should trigger this  requirement?

Should the requirement of a quantitative reconciliation  include an exception for prospective measures where the necessary  information cannot be obtained without unreasonable effort?

Should we limit the definition of non-GAAP financial  measures to historical financial measures?

Does the proposed definition of ''non-GAAP financial  measure'' capture non-GAAP information where enhanced disclosure is  appropriate? Does the proposed definition capture the pro forma  financial information that the Sarbanes-Oxley Act targets? Should  Regulation G apply to disclosures of material information including any  financial measure calculated and presented otherwise than in accordance  with GAAP? Is the proposed definition otherwise too narrow or too  broad? If so, how should it be changed?

Should we exclude non-GAAP financial measures communicated  orally from the proposed regulation? Would such an exclusion be  consistent with the terms of the Sarbanes-Oxley Act?

Is there a danger that investors would consider the  reconciliation to have been audited or reviewed by the issuer's  independent auditors? Should Regulation G require companies to disclose  whether the reconciliation has been reviewed or audited by their  independent accountants in order to avoid investor confusion?

In this release, we propose to require companies that  include non-GAAP financial measures in filings to also include a  discussion of the purposes for which the company's management uses the  non-GAAP financial measure and why management believes the presentation  of the non-GAAP financial measure provides useful information to  investors.³⁷ Should we require that information in all communications  that are subject to Regulation G? If so, why? If not, why not?

Should we allow registrants greater latitude to satisfy the  requirements of proposed Regulation G by posting the non-GAAP financial  measure's components and the comparative GAAP financial measure on  their website or in their Commission filings?

As proposed below, and consistent with staff practice, the  Commission generally has more detailed disclosure requirements where  non-GAAP financial measures are included in Commission filings. Should  we require these additional disclosure requirements in all cases, even  in documents not filed with the Commission?

Should we prohibit the presentation, whether or not  included in filings with the Commission, of certain non-GAAP financial  measures (for example, certain per-share measures or liquidity measures  that exclude cash items)? If so, which measures?

Will proposed Regulation G limit the use of non-GAAP  financial measures? Please explain.

Is the limited exception from Regulation G for foreign  private issuers appropriate in furtherance of the purposes of the  Sarbanes-Oxley Act? Should the exception be broader or more limited? If  so, how?

Does the limited exception from Regulation G for foreign  private issuers deprive U.S. investors of material information?  Alternatively, would eliminating the limited exception for foreign  private issuers deprive U.S. investors of non-GAAP financial measures?  Furthermore, would eliminating the limited exception from Regulation G  for foreign private issuers result in foreign private issuers de- registering and exiting the U.S. capital markets?

Proposed Regulation G would apply to disclosures of non- GAAP financial measures that represent projections or forecasts of  results of business combination transactions (''post-transaction  measures'') and that are filed with the Commission as information  pursuant to the communications rules applicable to business combination  transactions,³⁸ as well as non-GAAP financial measures of each  registrant that are used to calculate post-transaction measures. Should  there be an exception from certain requirements of Regulation G for  post-transaction measures or other measures filed as information under  the business combination rules? Should such measures be treated  differently under Regulation G? If so, how? Business combination  communications often include brief statements regarding the potential  benefits to be achieved by the business combination (e.g., synergies,  valuations, dividend amounts, etc.). Either instead of or in addition  to the requirements of proposed Regulation G, should the rules  specifically require the disclosure of any assumptions or bases  underlying these measures?

Should Regulation G be enforceable by the Commission only  or also by private plaintiffs? Should language be included in  Regulation G that makes explicit the manner in which it is to be  enforced?

Will proposed Regulation G meet the goals of Section 401(b)  of the Sarbanes-Oxley Act? Does proposed Regulation G meet those goals  in the most appropriate manner? Is there a way to achieve those goals  that is less burdensome than that in proposed Regulation G? If so, what  is it?

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B. Proposed Amendments to Item 10 of Regulation S-K, Item 10 of  Regulation S-B and Form 20-F

We are proposing to amend Item 10 of Regulation S-K and Item 10 of  Regulation S-B to add a statement concerning the use of non-GAAP  financial measures in filings made with the Commission.³⁹ In  addition, we are proposing to amend Exchange Act Form 20-F to  incorporate Item 10 of Regulation S-K (as proposed to be amended). The  proposed amendments to Item 10 of Regulation S-K and Item 10 of  Regulation S-B would make clear that registrants using non-GAAP  financial measures in filings with the Commission would have to  provide:

A presentation, with equal or greater prominence, of the  most directly comparable financial measure calculated and presented in  accordance with GAAP;

A quantitative reconciliation (by schedule or other clearly  understandable method) of the differences between the non-GAAP  financial measure disclosed with the most directly comparable measure  or measures calculated and presented in accordance with GAAP;

A statement disclosing the purposes for which the  registrant's management uses the non-GAAP financial measure presented;  and

A statement describing the reasons why the registrant's  management believes such non-GAAP financial measures provide useful  information to investors.

In addition to these mandated disclosure requirements, we propose  to amend Item 10 of Regulation S-K and Item 10 of Regulation S-B to  prohibit the following:

Presenting a non-GAAP financial measure in a manner that  would give it greater authority or prominence than the comparable GAAP  financial measure or measures;

Excluding charges or liabilities that required, or will  require, cash settlement, or would have required cash settlement absent  an ability to settle in another manner, from non-GAAP liquidity  measures;

Adjusting a non-GAAP performance measure to eliminate or  smooth items identified as non-recurring, infrequent or unusual, when  the nature of the charge or gain is such that it is reasonably likely  to recur;

Presenting non-GAAP financial measures on the face of the  registrant's financial statements prepared in accordance with GAAP or  in the accompanying notes;

Presenting non-GAAP financial measures on the face of any  pro forma financial information required to be disclosed by Article 11  of Regulation S-X;

Using titles or descriptions of non-GAAP financial measures  that are the same as, or confusingly similar to, titles or descriptions  used for GAAP financial measures; and

Presenting a non-GAAP per-share measure.

The requirement of Regulation G that the presentation of a non-GAAP  financial measure, taken together with the information accompanying the  measure and any other accompanying discussion, not contain a material  misstatement or material omission necessary in order to make the  presentation not misleading, in light of the circumstances in which the  presentation is made, would also apply to disclosures in documents  filed with the Commission.

The requirements for filed information are proposed to be more  extensive and detailed than those of proposed Regulation G. The  additional requirements would be generally consistent with the staff's  historical practice in situations where it has reviewed filings  containing non-GAAP financial measures. In addition, the requirements  for a GAAP presentation and for a reconciliation would be slightly more  stringent than those set forth under Regulation G. In particular, in  filings with the Commission, the presentation of the comparable GAAP  financial measure must have equal or greater prominence, and there  would not be an ''unreasonable effort'' exception for forward-looking  information to the requirement for a quantitative reconciliation  between the non-GAAP financial measure and the comparable GAAP  financial measure. Additionally, any non-GAAP financial measure  presented must be accompanied by statements disclosing the purposes for  which the registrant's management uses the non-GAAP financial measure  and why the registrant believes the non-GAAP financial measure would be  useful to investors. This requirement is designed to ensure that  companies are using non-GAAP financial measures that provide  information that is important in analyzing and understanding the  registrant. We believe that these more stringent requirements are  appropriate for filings with the Commission.

The requirements that a statement regarding the purposes for which  management uses the non-GAAP financial measure and the utility of the  non-GAAP financial measure to investors could be satisfied by including  the statements in the most recent annual report filed with the  Commission (or a more recent filing) and by updating those statements,  as necessary, no later than the time of the filing.⁴⁰

The definition of ''non-GAAP financial measure'' would be the same  for purposes of these proposals as for Regulation G. Unlike under  Regulation G, however, there is no limited exception for foreign  private issuers and, therefore, the proposed requirements would apply  to filings on Form 20-F. However, a non-GAAP financial measure that  would otherwise be prohibited would be permitted in a Form 20-F filing  of a foreign private issuer if the measure was expressly permitted  under the generally accepted accounting principles used in the issuer's  primary financial statements and was included in the issuer's annual  report or financial statements used in its home country jurisdiction or  market.

We are not proposing to subject filers on Form 40-F under the  Multi-Jurisdictional Disclosure System (MJDS) to the proposed  requirements because, under the philosophy of MJDS, which is currently  applicable to certain Canadian issuers, the Canadian disclosure form  requirements dictate required disclosure in filings with the  Commission. Public disclosures in the United States by these issuers,  including filings with the Commission on Form 40-F, would be subject to  proposed Regulation G. Questions Regarding Amendments to Item 10 of Regulation S-K, Item 10 of  Regulation S-B and Form 20-F

Are the proposed additional disclosures required in filings  necessary in light of proposed Regulation G?

Consistent with current staff policy, our proposal would  prohibit the use of non-GAAP per-share measures. Is such a prohibition  necessary, or would it suffice to reconcile both the numerator and  denominator of the non-GAAP per-share measure with comparable GAAP  measures, respectively?

Should the non-GAAP financial measures be presented in a  separate section of a Commission filing?

Should the requirements for filings and those required in  Regulation G be

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different? For example, should the requirement that the GAAP measure in  a filing be presented with equal or greater prominence be included in  Regulation G or not included in Item 10 of Regulation S-K and Item 10  of Regulation S-B?

Should the requirement that a quantitative reconciliation  of prospective measures be included in the filing have an exception  similar to that proposed in Regulation G where the necessary  information cannot be obtained without unreasonable effort?

Are there additional disclosures that should be required in  filings? If so, what disclosure items would be beneficial to investors?

Consistent with current staff policy, our proposals would  prohibit specified types of disclosures. Is such a prohibition  necessary and appropriate?

Should the proposed requirements apply to foreign private  issuers' reports on Form 20-F?

Should the proposed requirements apply to filings by  Canadian issuers under the MJDS on Form 40-F?

As with Regulation G, in the case of business combinations,  the proposed requirements would apply to ''post-transaction measures''  filed as information under the communication rules applicable to  business combination transactions.⁴¹ Is an exception from certain of  the requirements for post-transaction measures or other measures filed  as information under the business combination rules appropriate? Should  such measures be treated differently? If so, how? Either instead of or  in addition to the requirements of proposed Regulation G, should the  rules specifically require the disclosure of assumptions or bases  underlying announcements of potential benefits to be achieved by the  business combination (e.g., synergies, valuations, dividend amounts,  etc.)?

If a company presents a non-GAAP measurement for a previous  completed fiscal period, should it be required to present that same  non-GAAP measurement in future filings where the previous period is  compared to a recent completed fiscal period? For example, if a company  presents a non-GAAP financial measurement that for the first fiscal  quarter of 2002, should it be required to present the same non-GAAP  measurement for the first fiscal quarter of 2003?

C. Proposed New Item 1.04 of Form 8-K

We propose to amend Form 8-K to add new Item 1.04 ''Disclosure of  Results of Operations and Financial Condition.''⁴² New Item 1.04  would require registrants to file a Form 8-K within two business days  of any public announcement or release disclosing material non-public  information regarding a registrant's results of operations or financial  condition for an annual or quarterly fiscal period that has ended.

Today, these types of announcements and releases are subject to  Regulation FD.⁴³ Unlike disclosure made to satisfy Regulation FD,  however, historical information filed under proposed Item 1.04 of Form  8-K always would be considered filed with the Commission for liability  purposes.⁴⁴ Further, a Form 8-K filed pursuant to Item 1.04 would  satisfy an issuer's obligation under Regulation FD only if the Form 8-K  were filed within the time frame required by Regulation FD. Regulation  FD could, of course, be satisfied by public disclosure other than  through the filing of a Form 8-K meeting Regulation FD's requirements;  in that case, a Form 8-K filed pursuant to Item 1.04 would be required  to be filed within the two-business day timeframe.

Proposed Item 1.04 would require the registrant to identify briefly  the announcement or release and file the announcement or release as an  exhibit to the Form 8-K. Further, the requirements of proposed Item  10(e) of Regulation S-K or Item 10(h) of Regulation S-B would apply to  a Form 8-K filed under proposed Item 1.04.

If non-public information is disclosed orally, telephonically, by  webcast, broadcast, or similar means, Item 1.04 would not require the  registrant to file a Form 8-K if:

The disclosure initially occurs within 48 hours of a  written release or announcement filed on Form 8-K pursuant to Item  1.04;

The presentation is accessible to the public by dial-in  conference call, webcast or similar technology;

The financial and statistical information contained in the  presentation is provided on the registrant's Web site, together with  any information that would be required under proposed Regulation G; and

The presentation was announced by a widely disseminated  press release that included instructions as to when and how to access  the presentation and the location on the registrant's Web site where  the information would be available.

As noted above, our proposal would not require any registrant to  issue an earnings release or similar announcement. However, if a  registrant issues such a release or announcement containing material  non-public information regarding the registrant's results of operations  or financial condition for an annual or quarterly fiscal period that  has ended, it would trigger the new proposed filing requirement.

The filing requirement under proposed Item 1.04 of Form 8-K would  be triggered by the disclosure of material non-public information  regarding a completed fiscal year or quarter. Repetition of previously  publicly disclosed information or release of the same information in a  different form, for example in an interim or annual report to  shareholders, would not trigger the proposed Item 1.04 requirement.  This result would not change if the repeated information were  accompanied by information that was not material, whether or not  already public. However, release of additional or updated material non- public information regarding the registrant's results of operation or  financial condition for a completed fiscal year or quarter would  trigger an additional Item 1.04 filing requirement. Issuers that make  earnings announcements or other disclosures of material non-public  information regarding a completed fiscal year or quarter in an interim  or annual report to shareholders would be permitted to specify which  portion of the report contains the information required to be filed  under Item 1.04. In addition, the requirement to file under Item 1.04  of Form 8-K would not apply to issuers that make these announcements  and disclosures only in their quarterly reports filed with the  Commission on Form 10-Q ⁴⁵ (or 10-QSB ⁴⁶) or their annual reports  filed

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with the Commission on Form 10-K ⁴⁷ (or 10-KSB ⁴⁸).

Proposed Item 1.04 of Form 8-K would apply only to publicly  disclosed or released material non-public information concerning an  annual or quarterly fiscal period that has ended. While such disclosure  may also include forward-looking information, it is the material  information about the completed fiscal period that triggers proposed  Item 1.04. Accordingly, proposed Item 1.04 would not apply to public  disclosure of earnings estimates for future or ongoing fiscal periods,  unless those estimates are included in the public announcement or  release of material non-public information regarding an annual or  quarterly fiscal period that has ended.⁴⁹ In such a case,  specifically identified forward-looking information could be furnished  under Item 6.01 ⁵⁰ rather than filed under proposed Item 1.04.  Information furnished under Item 6.01 should be included in the same  Form 8-K that contains the historical material information filed  pursuant to Item 1.04.

Information furnished under Item 6.01 would not be subject to  Section 18 ⁵¹ of the Exchange Act, nor would it be incorporated by  reference into a registration statement, proxy statement or other  report. The registrant would be required to identify the specific  forward-looking statements it did not want to be considered filed.⁵²

Questions Regarding Proposed Item 1.04 of Form 8-K

Is proposed Item 1.04 necessary given Regulation FD and  proposed Regulation G?

Should the Commission define ''public disclosure'' for  purposes of proposed Item 1.04?

Proposed Item 1.04 would apply only to disclosures  regarding completed annual or quarterly fiscal periods. Should we  expand the scope of proposed Item 1.04 to require the filing of all  material updates to estimates for current or future fiscal periods?

Will proposed Item 1.04 have the effect of decreasing the  extent to which public companies make public announcements or releases  of material non-public information regarding completed fiscal periods?  If so, what are the specific factors that would result in that  decrease? Why would those factors result in that decrease?

Is the posting of the complementary information on a Web  site sufficient disclosure or should a filing be required for this  information as well?

Regulation G requires that any information provided on a  Web site be available at the time the original public communication is  made. Is it necessary for Item 1.04 to contain the same timing  requirement?

Should we require forward-looking information to be  considered filed for purposes of Section 18 of the Exchange Act? Should  forward-looking information, where appropriate, be incorporated by  reference into a registration statement, proxy statement or other  report?

Should the disclosure requirements of Item 10 of Regulation  S-K and Item 10 of Regulation S-B apply to complementary information  not filed with the Commission?

Would the application of Item 1.04 only to disclosures  regarding completed annual or quarterly periods cause public companies  to increase their disclosure of intra-period information, rather than  disclosure regarding completed periods, in an effort to avoid the  requirements of Item 1.04?

D. General Request for Comment

We request and encourage any interested person to submit comments  regarding:

The proposed rule and amendments that are the subject of  this release;

Additional or different changes; or

Other matters that may have an effect on the proposals  contained in this release.

We request comment from the point of view of registrants, investors  and other market participants. With regard to any comments, we note  that such comments are of great assistance to our rulemaking initiative  if accompanied by supporting data and analysis of the issues addressed  in those comments.

III. Paperwork Reduction Act

Proposed Regulation G and related amendments to Regulations S-K,  Form 8-K and Form 20-F contain ''collections of information''  requirements within the meaning of the Paperwork Reduction Act of 1995  (''PRA''),⁵³ and the Commission has submitted the proposals to the  Office of Management and Budget (''OMB'') for review in accordance with  44 U.S.C. 3507(d) and 5 CFR 1320.11. The titles for the information  collections are: Regulation G, Regulation S-K, Regulation S-B, Form 8-K  and Form 20-F.

The Commission is proposing Regulation G pursuant to Section 401 of  the Sarbanes-Oxley Act. Proposed Regulation G would require registrants  when publicly disclosing material information that include non-GAAP  financial measures to provide a reconciliation to comparable GAAP  figures. Regulation G is intended to implement the requirements of the  Sarbanes-Oxley Act. Specifically, Regulation G is intended to provide  investors with balanced financial disclosure when non-GAAP financial  measures are presented. Regulation G defines a non-GAAP financial  measure as a numerical measure of an issuer's historical or future  financial performance, financial position or cash flow that:

Excludes amounts, or is subject to adjustments that have  the effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

Includes amounts, or is subject to adjustments that have  the effect of including amounts, that are excluded from the comparable  measure calculated and presented in accordance with GAAP.

Accordingly, by definition, a non-GAAP financial measure that  triggers the application of Regulation G would have been derived from a  GAAP measure. For example, generally, EBITDA is net income before  interest, taxes, depreciation and amortization. In order for a company  to present EBITDA it must already know the amount of net income. We  expect the cost of obtaining the additional disclosure required by  Regulation G to be minimal. Moreover, much of the disclosure mandated  by Regulation G, such as the most directly comparable GAAP measure, is  already required to be provided pursuant to other forms and  regulations, such as Form 10-K, Form 10-Q and Regulation S-X.  Therefore, most of the costs associated with collecting such  information are already included in the burden hours associated with  those forms and regulations. Thus, we have estimated for purposes of  the PRA that

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it will take .5 burden hour for compliance with Regulation G. We  anticipate that on average a company will have to comply with  Regulation G roughly six times a year. Since there are approximately  14,000 public companies that would be subject to Regulation G we have  estimated that there will be 84,000 disclosures made in accordance with  Regulation G for a total of 42,000 burden hours. We would expect that  an in house junior accountant would prepare the actual reconciliation.

Regulations S-K (OMB Control No. 3235-0071) and S-B (OMB Control  No. 3235-0417) prescribe disclosure requirements that registrants must  follow when filing registration statements, reports and schedule with  the Commission. Our amendments to Item 10 of Regulation S-K and S-B  incorporate the requirements of Regulation G and codify existing staff  interpretations. Because the collection of information regarding the  reconciliation is already being accounted for in Regulation G, we do  not believe adding the same requirement to Item 10 of Regulation S-K  and Item 10 of Regulation S-B incurs an additional collection of  information within the meaning of the PRA. To account for the proposed  reconciliation in both Regulation G and Item 10 or Regulation S-K and  Item 10 of Regulation S-B would result in double counting.  Additionally, companies already, usually and customarily, disclose the  purposes for which the registrant's management uses the non-GAAP  financial measure and why it believes that its presentation of the non- GAAP financial measure provides useful information to investors.  Accordingly, we do not believe that our amendments to Item 10 of  Regulation S-K and Item 10 of Regulation S-B contain a new ''collection  of information'' or alter the existing burden of these collections of  information within the meaning of the PRA.

Form 8-K (OMB Control No. 3235-0060) prescribes information, such  as material events or corporate changes that a registrant must  disclose. Proposed Item 1.04 of Form 8-K would require a company that  publicly discloses material information regarding its actual or  expected quarterly or annual results of operations or financial  condition for a completed fiscal period to file the text of the public  disclosure and any accompanying analysis. Proposed Item 1.04 of Form 8- K would not require companies to actually issue an earnings  announcement or release but only require that it be filed if they  choose to issue an earnings announcement or release. Proposed Item 1.04  would bring earnings announcements and releases into the formal  disclosure system where they would be available to investors on a  widespread basis.

Proposed Item 1.04 of Form 8-K would impose the obligation to file  a public company's earnings release. We estimate for purposes of the  PRA that the burden associated with actually filing the Form 8-K to be  minimal. We believe that proposed Item 1.04 of Form 8-K would require  approximately .5 of a burden hour. We estimate that approximately  14,000 public companies would make an average of four filings per year.  We believe the total burden hours associated with proposed Item 1.04  would be 28,000 hours. We would expect that companies would use in  house personal to file the Form 8-K.

We have amended Form 20-F (OMB Control Number 3235-0288) to  incorporate our amendment to Item 10 of Regulation S-K. While proposed  Regulation G provides a limited exception for foreign private issuers,  this exception would not apply to their Form 20-F filing or any  disclosure of non-GAAP financial measures made in the United States.  Accordingly, we do not believe our amendment to Form 20-F would result  in an additional collection of information as any burden is already  accounted for in Regulation G.

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. Compliance with the disclosure  requirements is mandatory. There is no mandatory retention period for  the information disclosed, and responses to the disclosure requirements  will not be kept confidential.

Request for Comment

We request comment in order to: (a) Evaluate whether the proposed  collection of information and amendments to existing collections of  information are necessary for the proper performance of the functions  of the Commission, including whether the information will have  practical utility; (b) evaluate the accuracy of our estimate of the  burden of the proposed collection of information and amendments to  existing collection of information; (c) determine whether there are  ways to enhance the quality, utility and clarity of the information to  be collected; and (d) evaluate whether there are ways to minimize the  burden of the proposed collection of information and amendments of  existing collections of information on those who respond, including  through the use of automated collection techniques or other forms of  information technology.⁵⁴

Persons who desire to submit comments on the proposed collections  of information requirements should direct their comments to the OMB,  Attention: Desk Officer for the Securities and Exchange Commission,  Office of Information and Regulatory Affairs, Washington, DC 20503, and  send a copy of the comments to Jonathan G. Katz, Secretary, Securities  and Exchange Commission, 450 Fifth Street NW., Washington, DC 20549- 0609, with reference to File No. S7-XX-02. Requests for materials  submitted to the OMB by us with regard to this collection of  information should be in writing, refer to File No. S7-XX-02 and be  submitted to the Securities and Exchange Commission, Records  Management, Office of Filings and Information Services, 450 Fifth  Street NW., Washington, DC 20549. Because the OMB is required to make a  decision concerning the collections of information between 30 and 60  days after publication, your comments are best assured of having their  full effect if the OMB receives them within 30 days of publication.

IV. Cost and Benefits

The Sarbanes-Oxley Act seeks to enhance the financial disclosure of  public companies. In furtherance of this goal, the Sarbanes-Oxley Act  has required the Commission, among other things, to adopt rules  requiring that if a company publicly discloses non-GAAP financial  measures or includes them in a Commission filing, the company must  reconcile those non-GAAP financial measurements to a company's  financial condition and results of operations under GAAP. Moreover,  Sarbanes-Oxley requires that any public disclosure of non-GAAP  financial measures not contain an untrue statement of a material fact  or omit to state a material fact necessary in order to make the non- GAAP financial measure, in light of circumstances under which it is  presented not misleading. Additionally, the Sarbanes-Oxley Act seeks to  have companies that report under Sections 13(a) and 15(d) of the  Exchange Act disclose to the public on a rapid and current basis such  additional information concerning material changes in its financial  condition or operations.

Proposed Regulation G, amendments to Item 10 of Regulation S-K,  Item 10 of Regulation S-B and Form 20-F, upon

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adoption, would fulfill the statutory directive under Section 401(b) of  the Sarbanes-Oxley Act. We recognize that any implementation of the  Sarbanes-Oxley Act would likely result in costs as well as benefits and  have an effect on the economy. We are sensitive to the costs and  benefits of our proposals. We discuss these costs and benefits below as  well as the costs and benefits associated with our amendments to Form  8-K.

A. Benefits

The proposed rules and amendments are intended to ensure that  investors and others are not misled by the use of non-GAAP financial  measures. Additionally, the proposed amendments to Form 8-K are  intended to create a central depository where investors and other  market participants can look to find the latest earning announcements  and releases by public companies and provide enhanced attention to  those announcements and releases. Furthermore, as the ABA noted in  their comment letter regarding the Commission's recent proposal on  accelerated reporting periods, the filing of the earnings reports would  enhance the attention and level of care companies bring to those  disclosures because they will become part of the formal reporting  system and provide widespread access to investors. Therefore, we would  expect the accuracy and reliability of a company's earnings report to  be enhanced.

Regulation G and amendments to Item 10 of Regulations S-K and S-B  require that any non-GAAP financial measure presented be reconciled  with its most comparable financial measure prepared in accordance with  GAAP. We anticipate that this reconciliation will help investors and  market professionals to better evaluate the non-GAAP financial measures  presented. It is possible that the reconciliation will provide the  securities markets with additional information to more accurately  evaluate companies' securities and in turn result in a more accurate  pricing of securities. We, however, do not currently have sufficient  information to quantify these or other benefits that Regulation G and  our amendments to Item 10 of Regulation S-K, Regulation S-B, and Form  8-K and Form 20-F would provide. We therefore request your comments,  including supporting data, on the benefits of these proposals.

B. Costs

As discussed in the PRA section, we believe that the costs  associated with the proposed Regulation G and amendments will be  minimal. With regard to Regulation G, the costs associated with the  requirement to reconcile the non-GAAP financial measure, should be  minimal since by definition the non-GAAP financial measure would have  been derived from a GAAP financial measure. Accordingly, in most cases,  the registrant already will have available the comparable GAAP  financial measure. Moreover, in cases where the GAAP financial measure  is not available, any costs associated with obtaining the GAAP  financial measure would reduce future costs associated with filing  other forms, such as the Form 10-Q and Form 10-K where the GAAP measure  must be presented.

We have estimated that public companies would have to comply with  Regulation G six times a year. There are roughly 14,000 public  companies. Using our estimates from the PRA section, we would expect  that it would take a junior accountant roughly .5 hours to complete the  required reconciliation and ensure there are no material misstatements.  Accordingly, we have estimated that the total burden hours needed to  comply with Regulation G would be 42,000 hours. Using cost data from  the Securities Industry Association's Report on Management &  Professional Earnings in the Securities Industry 2001 (SIA Report) ⁵⁵  and adding an additional 35% for costs associated with overhead, we  find that, on average, a junior accountant would earn $26 an hour. We  believe the salary of a junior accountant is appropriate for our  estimates since in most cases we would expect the most directly  comparable GAAP measure to be available. Therefore, we have estimated  the total costs associated with complying with Regulation G to be  $1,092,000.

Our amendments to Item 10 of Regulation S-K and Item 10 of  Regulation S-B incorporate the requirements of Regulation G. Because  the costs associated with providing a reconciliation are already being  accounted for in Regulation G, we do not believe adding the same  requirement to Item 10 of Regulation S-K and Item 10 of Regulation S-B  incurs any additional cost to the registrant. To account for the  required reconciliation in both Regulation G and Item 10 or Regulation  S-K and Item 10 of Regulation S-B would result in double counting.  Additionally, because companies currently disclose the purposes for  which the registrant's management uses the non-GAAP financial measure  and why it believes that presentation of the non-GAAP financial measure  provides useful information to investors, this aspect of the proposed  rule would not increase costs already being borne by registrants.  Accordingly, we do not believe our amendments to Item 10 of Regulation  S-K and Item 10 of Regulation S-B would result in any additional costs  not already included in Regulation G or current filing requirements.

Our amendment to Form 8-K, would result in the additional cost of  actually filing the earnings release or earnings announcement. There is  no requirement to actually make an earnings announcement or release.  The only requirement is to file such announcement or release if it is  publicly disclosed. We have not included in our estimates any  additional legal review costs associated with the filing of earnings  releases or announcements, since we do not anticipate any additional  significant review would be needed. In this regard, we note that many  issuers already file their earnings releases and those releases whether  filed or not are subject to Rule 10b-5.

We believe that personnel in finance, investor relations or  corporate communications departments would most likely file the  earnings announcements or releases since most earnings announcements  are disseminated via press release. We have estimated that the actual  time required to file an earnings announcement or release on Form 8-K  to be .5 hour. In estimating this time burden we note that most press  releases are fairly short in length, making the actual process of  filing easier. We also note that the software necessary to file a Form  8-K is available free of charge from the Commission. We have estimated  that public companies would be required to comply with Item 1.04 of  Form 8-K roughly four times a year. Assuming 14,000 public companies  and a total burden of .5 hour for the filing, we estimate that  companies will spend 28,000 hours complying with our proposed Form 8-K  amendment. Again using the SIA Report, and adding an additional 35% for  costs associated with overhead, we find that a Corporate Communications  Manager, on average, earns $56.00 an hour. Accordingly, we have  estimated the total salary cost associated with our amendments to Form  8-K to be $1,568,000.

Finally, our proposed amendments to Form 20-F would incorporate  Item 10 of Regulation S-K. While proposed Regulation G provides a  limited exception for foreign private issuers, this exception would not  apply to their

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Form 20-F filing or any disclosure of non-GAAP financial measures made  in the United States. Accordingly, the costs associated with our  amendment to Form 20-F are already accounted for in our cost estimates  for Regulation G.

We request your comments, including any supporting data, on our  estimates of the costs of the proposals and any alternative options  that may reduce the costs or enhance the benefits of our proposal.

C. Questions

We have assumed that non-GAAP measures are derived and  calculated from the GAAP measures. Accordingly, we do not believe there  would be significant costs associated with the proposed reconciliation.  Is our assumption that the comparable GAAP measure would be available  at the time the non-GAAP measure is presented correct? If not, please  discuss the nature and type of costs that may be incurred as a result  of the reconciliation requirement.

We believe the costs associated with the proposed filing  requirement of Item 1.04 Form 8-K to be mainly administrative in  nature. Are there other additional costs that may be incurred as a  result of the proposed filing requirement of Form 8-K? If yes, please  discuss the types and expected dollar amounts of such costs.

V. Effect on Efficiency, Competition, and Capital Formation

Section 23(a)(2) ⁵⁶ of the Exchange Act requires us when adopting  rules under the Exchange Act, to consider the impact that any new rule  would have on competition. In addition, 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 purpose of the Exchange  Act. Proposed Regulation G and our proposed amendments to Item 10 of  Regulation S-K, Item 10 of Regulation S-B, Form 20-F and Form 8-K would  apply only to companies subject to the reporting requirements of  Sections 13(a) and 15(d) of the Exchange Act, other than registered  investment companies. Given that the estimated costs associated with  our proposals are small we do not expect that competitors not subject  to our proposals would gain any competitive advantage over those  subject to the proposals. We, however, request comment on whether our  proposals, if adopted, would impose a burden on competition. Commenters  are requested to provide empirical data and other factual support for  their views if possible.

In addition, Section 2(b) ⁵⁷ of the Securities Act and Section  3(f) ⁵⁸ of the Exchange Act 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. Proposed  Regulation G and our proposed amendments to Item 10 of Regulation S-K,  Item 10 of Regulation S-B and Form 20-F are proposed pursuant to the  Sarbanes-Oxley Act. As noted above the costs associated with these  proposals and our proposed amendment to Form 8-K are expected to be  minimal. Accordingly we do not believe that there will be any  significant effects on competition or capital formation. We do believe,  however, that there may be some benefits with regard to investor  protection and efficiency of the market. The additional information  provided has the potential to limit any misunderstanding with regard to  the value of certain non-GAAP measures. Accordingly, this may allow the  market to more rapidly and accurately price securities. If this occurs  there would be a benefit to capital formation.

We request comment on whether proposed Regulation G and our  proposed amendments, if adopted would promote efficiency, competition,  and capital formation. Commenters are requested to provide empirical  data and other factual support for their views if possible.

VI. Regulatory Flexibility Analysis

The Commission hereby certifies pursuant to 5 U.S.C. Sec.  605(b),  that proposed Regulation G, amendments to Item 10 of Regulation S-K,  Item 10 of Regulation S-B, Form 20-F and Form 8-K, contained in this  release, if adopted, would not have a significant economic impact on a  substantial number of small entities. The certification is based on the  following analysis.

The proposals would affect companies that are small entities. Rule  0-10(a) ⁵⁹ defines a company, other than an investment company, to be  a ''small business'' or ''small organization'' for purposes of the  Regulatory Flexibility Act if it had total assets of $10 million or  less on the last day of its most recent fiscal year. We estimate that  there were approximately 2,500 public companies, other than investment  companies, that may be considered small entities.

Proposed Regulation G would require registrants when publicly  disclosing material information that includes a non-GAAP financial  measure to provide a quantified reconciliation to the most directly  comparable GAAP financial measure. Regulation G is intended to  implement the requirements of the Sarbanes-Oxley Act. Specifically,  Regulation G is intended to provide investors with balanced financial  disclosure when non-GAAP financial measures are presented. Regulation G  defines a non-GAAP financial measure as a numerical measure of an  issuer's historical or future financial performance, financial position  or cash flow that:

Excludes amounts, or is subject to adjustments that have  the effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

Includes amounts, or is subject to adjustments that have  the effect of including amounts, that are excluded from the comparable  measure calculated and presented in accordance with GAAP.

Accordingly, by definition, a non-GAAP financial measure that  triggers the application of Regulation G would have been derived from a  GAAP financial measure. Therefore, we expect the cost of obtaining the  additional disclosure required by Regulation G to be minimal. Moreover,  much of the disclosure mandated by Regulation G, such as the most  directly comparable GAAP measure, is already required to be provided  pursuant to other forms and regulations, such as Form 10-KSB, Form 10- QSB and Regulation S-X. We have estimated for purpose of the PRA that  it will take .5 hour for small businesses to comply with Regulation G.  We anticipate that on average a company will have to comply with  Regulation G six times year. We would expect that an in house junior  accountant would prepare the actual reconciliation.

Using cost data from the Securities Industry Association's Report  on Management & Professional Earnings in the Securities Industry 2001  (''SIA'') and adding an additional 35% for costs associated with  overhead, we find that, on average, a junior accountant would earn $26  an hour. We believe the salary of a junior accountant is appropriate  for our estimates since in most cases we

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would expect the most directly comparable GAAP financial measure to be  available. Therefore, we have estimated the total salary costs  associated with complying with Regulation G to be $78 per small  business⁶⁰.

Our amendments to Item 10 of Regulation S-K and Item 10 of  Regulation S-B incorporate the requirements of Regulation G and codify  certain staff interpretations. Because the costs associated with  providing a reconciliation are already being accounted for in  Regulation G, we do not believe adding the same requirement to Item 10  of Regulation S-K and Item 10 of Regulation S-B incurs any additional  costs to small businesses. To account for the required reconciliation  in both Regulation G and Item 10 or Regulation S-K and Item 10 of  Regulation S-B would result in double counting. Additionally, because  the staff companies currently disclose the purposes for which the  registrant's management uses the non-GAAP financial measure and why it  believes that presentation of the non-GAAP financial measure provides  useful information to investors, this disclosure would not impose new  costs on small businesses. Accordingly, we do not believe our  amendments to Item 10 Regulation S-K and Regulation S-B result in any  additional costs not already included in Regulation G or current filing  requirements.

Our amendment to Form 8-K, would require the filing of earnings  releases or earnings announcement. There is no requirement to actually  make an earnings announcement or release. We have not included in our  estimates any additional legal review costs associated with the filing  of earnings releases or announcements, since we do not anticipate any  additional significant review would be needed. In this regard, we note  that many issuers already file their earnings releases and those  releases whether filed or not are subject to Rule 10b-5.

We believe that personnel in finance, investor relations or  corporate communications departments would most likely file the  earnings announcement or release since most earnings announcements and  releases are disseminated via press release. We have estimated that the  actual time required to file an earnings announcement or release on  Form 8-K to be .5 hours. In estimating this time burden we note that  most press releases are fairly short in length, making the actual  process of filing easier. We also note that the software necessary to  file a Form 8-K is available free of charge from the Commission.

We have estimated that small businesses would be required to comply  with Item 1.04 of Form 8-K roughly four times a year. Again using the  SIA Report and adding an additional 35% for costs associated with  overhead, a Corporate Communications Manager, on average, earns $56.00  an hour. Accordingly, we have estimated the total costs to a small  business associated with our amendments to Form 8-K to be $112.⁶¹

Additionally, our proposed amendments to Form 20-F would  incorporate Item 10 of Regulation S-K. Because only foreign private  issuers file Form 20-F we do not include the impact on them in our  analysis.

Finally, to further examine the possible impact of the proposals on  small businesses, we sampled publicly available information about 75  small businesses. We searched the Dow Jones Press Release Wire, for the  period January 1, 2001 to July 1, 2002 to review any earnings  announcements or earnings releases by the 75 small businesses. We found  that 30 small businesses had no earnings announcements or releases  available over the period and the other 45 companies reported only GAAP  earnings. Accordingly, the cost impact would be significantly less if  the small business does not use non-GAAP financial measures since there  would be no reconciliation required. Additionally, if the small  business does not issue earnings releases or announcements there would  be no filing requirement on Form 8-K.

In sum, the proposals are expected to result in minimal additional  costs to all subject companies, large or small. Accordingly, we believe  the proposals should not have a significant economic impact on a  substantial number of small entities.

We encourage written comments regarding this certification. We  solicit comment as to whether the proposed changes could have an effect  that we have not considered. We request that commenters describe the  nature of any impact on small entities and provide empirical data to  support the extent of the impact.

VII. Small Business Regulatory Enforcement Fairness Act

For purposes of the Small Business Regulatory Enforcement Fairness  Act of 1996, a rule is ''major'' if it has resulted, or is likely to  result in:

An annual effect on the economy of $100 million or more;

A major increase in costs or prices for consumers or  individual industries; or

Significant adverse effects on competition, investment or  innovation.

We request comment with regard to our analysis. Commenters should  provide empirical data on (a) the annual effect on the economy; (b) any  increase in costs or prices for consumers or individual industries; and  (c) any effect on competition, investment or innovation.

VIII. Statutory Basis

The proposed new Regulation G, new Item 1.04 to Form 8-K and the  amendments to Item 6.01 of Form 8-K, Item 10 of Regulation S-K, Item 10  of Regulation S-B and Form 20-F are being proposed pursuant to Sections  2(b), 6, 7, 8, 19(a), and 28 of the Securities Act of 1933 as amended,  Sections 3, 4, 10, 12, 13, 15, 23 and 36 of the Securities Exchange Act  of 1934, as amended and Sections 3(a), 401 and 409 of the Sarbanes- Oxley Act.

List of Subjects

17 CFR Part 228

Reporting and recordkeeping requirements, Securities, Small  businesses.

17 CFR Parts 229, 244 and 249

Reporting and recordkeeping requirements, Securities.

Text of the Proposed Amendments

In accordance with the foregoing, the Securities and Exchange  Commission proposes to amend Title 17, chapter II of the Code of  Federal Regulations as follows:

PART 228--INTEGRATED DISCLOSURE SYSTEM FOR SMALL BUSINESS ISSUERS

1. The general authority citation for Part 228 is revised to read  as follows:

Authority: 15 U.S.C. 7261, 77e, 77f, 77g, 77h, 77j 77k, 77s,  77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77jjj,  77nnn, 77sss, 78l, 78m, 78n, 78o, 78u-5, 78w, 78ll, 78mm, 80a-8,  80a-29, 80a-30, and 80b-11. * * * * *

2. Amend Sec.  228.10 by adding paragraph (h) to read as follows:

[[Page 68802]]

Sec.  228.10  (Item 10) General.

* * * * *

(h) Use of non-GAAP financial measures in Commission filings. (1)  Whenever one or more non-GAAP financial measures are included in a  filing with the Commission:

(i) The registrant must include the following in the filing:

(A) A presentation with equal or greater prominence of the most  directly comparable financial measure or measures calculated and  presented in accordance with Generally Accepted Accounting Principles  (GAAP);

(B) A quantitative reconciliation (by schedule or other clearly  understandable method) of the differences between the non-GAAP  financial measure disclosed or released with the financial measure or  measures calculated and presented in accordance with GAAP identified in  paragraph (h)(1)(i)(A) of this section;

(C) A statement disclosing the purposes for which the registrant's  management uses the non-GAAP financial measure; and

(D) A statement disclosing the reasons why the registrant's  management believes that presentation of the non-GAAP financial measure  provides useful information to investors regarding the registrant's  financial condition and results of operations; and

(ii) A registrant must not:

(A) Present the non-GAAP financial measure in a manner that would  give it greater authority or prominence than the comparable GAAP  financial measure or measures;

(B) Exclude charges or liabilities that required, or will require,  cash settlement, or would have required cash settlement absent an  ability to settle in another manner, from non-GAAP liquidity measures;

(C) Adjust a non-GAAP performance measure to eliminate or smooth  items identified as non-recurring, infrequent or unusual, when the  nature of the charge or gain is such that it is reasonably likely to  recur;

(D) Present non-GAAP financial measures on the face of the  registrant's financial statements prepared in accordance with GAAP or  in the accompanying notes;

(E) Present non-GAAP financial measures on the face of any pro  forma financial information required to be disclosed by Article 11 of  Regulation S-X (17 CFR 210.11-01 through 210.11-03);

(F) Use titles or descriptions of non-GAAP financial measures that  are the same as, or confusingly similar, to titles or descriptions used  for GAAP measures; or

(G) Present a non-GAAP per-share measure; and

(iii) If the filing is not an annual report on Form 10-KSB (17 CFR  249.310b), a registrant need not include the information required by  paragraphs (h)(1)(i)(C) and (h)(1)(i)(D) of this section if that  information was included in its most recent annual report on Form 10- KSB or a more recent filing, provided that the required information is  updated to the extent necessary to meet the requirements of paragraphs  (h)(1)(i)(C) and (h)(1)(i)(D) of this section at the time of the  registrant's current filing.

(2) For purposes of this paragraph (h), a non-GAAP financial  measure is a numerical measure of a registrant's historical or future  financial performance, financial position or cash flow that:

(i) Excludes amounts, or is subject to adjustments that have the  effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

(ii) Includes amounts, or is subject to adjustments that have the  effect of including amounts, that are excluded from the comparable  measure so calculated and presented.

(3) For purposes of this paragraph (h), ''GAAP'' refers to  generally accepted accounting principles in the United States.

(4) For purposes of this paragraph (h), non-GAAP financial measures  exclude operating and other financial measures and ratios or measures  calculated using only:

(i) Financial measures calculated in accordance with GAAP and;

(ii) Operating measures or other measures that are not non-GAAP  financial measures.

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

3. The general authority citation for Part 229 is revised to read  as follows:

Authority: 15 U.S.C. 7261, 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(d), 78mm, 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-31(c), 80a- 37, 80a-38(a) and 80b-11, unless otherwise noted. * * * * *

4. Amend Sec.  229.10 by revising the section heading and adding  paragraph (e) to read as follows:

Sec.  229.10  (Item 10) General.

* * * * *

(e) Use of non-GAAP financial measures in Commission filings. (1)  Whenever one or more non-GAAP financial measures are included in a  filing with the Commission:

(i) The registrant must include the following in the filing:

(A) A presentation of the most directly comparable financial  measure or measures calculated and presented in accordance with  Generally Accepted Accounting Principles (GAAP);

(B) A quantitative reconciliation (by schedule or other clearly  understandable method) of the differences between the non-GAAP  financial measure disclosed with the financial measure or measures  calculated and presented in accordance with GAAP identified in  paragraph (e)(1)(i)(A) of this section;

(C) A statement disclosing the purposes for which the registrant's  management uses the non-GAAP financial measure; and

(D) A statement disclosing the reasons why the registrant's  management believes that presentation of the non-GAAP financial measure  provides useful information to investors regarding the registrant's  financial condition and results of operations; and

(ii) A registrant must not:

(A) Present the non-GAAP financial measure in a manner that would  give it greater authority or prominence than the comparable GAAP  financial measure or measures;

(B) Exclude charges or liabilities that required, or will require,  cash settlement, or would have required cash settlement absent an  ability to settle in another manner, from non-GAAP liquidity measures;

(C) Adjust a non-GAAP performance measure to eliminate or smooth  items identified as non-recurring, infrequent or unusual, when the  nature of the charge or gain is such that it is reasonably likely to  recur;

(D) Present non-GAAP financial measures on the face of the  registrant's financial statements prepared in accordance with GAAP or  in the accompanying notes;

(E) Present non-GAAP financial measures on the face of any pro  forma financial information required to be disclosed by Article 11 of  Regulation S-X (17 CFR 210.11-01 through 210.11-03);

(F) Use titles or descriptions of non-GAAP financial measures that  are the

[[Page 68803]]

same as, or confusingly similar to, titles or descriptions used for  GAAP financial measures; or

(G) Present a non-GAAP per share measure; and

(iii) If the filing is not an annual report on Form 10-K or Form  20-F (17 CFR 249.220f), a registrant need not include the information  required by paragraphs (e)(1)(i)(C) and (e)(1)(i)(D) of this section if  that information was included in its most recent annual report on Form  10-K or Form 20-F or a more recent filing, provided that the required  information is updated to the extent necessary to meet the requirements  of paragraphs (e)(1)(i)(C) and (e)(1)(i)(D) of this section at the time  of the registrant's current filing.

(2) For purposes of this paragraph (e), a non-GAAP financial  measure is a numerical measure of a registrant's historical or future  financial performance, financial position or cash flows that:

(i) Excludes amounts, or is subject to adjustments that have the  effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

(ii) Includes amounts, or is subject to adjustments that have the  effect of including amounts, that are excluded from the comparable  measure so calculated and presented.

(3) For purposes of this paragraph (e), ''GAAP'' refers to  generally accepted accounting principles in the United States, except  that in the case of foreign private issuers whose primary financial  statements are prepared in accordance with other generally accepted  accounting principles, references to GAAP also include the principles  under which those primary financial statements are prepared.

(4) For purposes of this paragraph (e), non-GAAP financial measures  exclude operating and other financial measures and ratios or measures  calculated using only:

(i) Financial measures calculated in accordance with GAAP; and

(ii) Operating measures or other measures that are not non-GAAP  financial measures.

(5) This paragraph (e) is not applicable to investment companies  registered under Section 8 of the Investment Company Act of 1940 (15  U.S.C. 80a-8).

Note to paragraph (e). A non-GAAP financial measure that would  otherwise be prohibited by paragraph (e)(1)(ii) of this section is  permitted in a filing of a foreign private issuer if:

1. The non-GAAP financial measure is expressly permitted under  the GAAP used in the registrant's primary financial statements  included in the filing with the Commission; and

2. The non-GAAP financial measure is included in the annual  report prepared by the registrant for use in the jurisdiction in  which it is domiciled, incorporated or organized or for distribution  to its security holders.

5. Part 244 is added to read as follows:

PART 244--Regulation G

Sec. 244.100 General rules regarding disclosure of non-GAAP financial  measures. 244.101 Definitions. 244.102 No effect on antifraud liability.

Authority: 15 U.S.C. 7261, 78c, 78i, 78j, 78m, 78o, 78w, 78mm,  and 80a-29.

Sec.  244.100  General rules regarding disclosure of non-GAAP financial  measures.

(a) Whenever a registrant, or person acting on its behalf, publicly  discloses material information that includes a non-GAAP financial  measure, the registrant must accompany that non-GAAP financial measure  with:

(1) A presentation of the most directly comparable financial  measure calculated and presented in accordance with Generally Accepted  Accounting Principles (GAAP); and

(2) A reconciliation (by schedule or other clearly understandable  method), which shall be quantitative for historical non-GAAP measures  presented, and quantitative, to the extent available without  unreasonable efforts, for forward-looking information, of the  differences between the non-GAAP financial measure disclosed or  released with the most comparable financial measure or measures  calculated and presented in accordance with GAAP identified in  paragraph (a)(1)(i) of this section; and

(b) A registrant, or a person acting on its behalf, shall not make  public a non-GAAP financial measure that, taken together with the  information accompanying that measure and any other accompanying  discussion of that measure, contains an untrue statement of a material  fact or omits to state a material fact necessary in order to make the  presentation of the non-GAAP financial measure, in light of the  circumstances under which it is presented, not misleading.

(c) This section shall not apply to a disclosure of a non-GAAP  financial measure that is made by or on behalf of a registrant that is  a foreign private issuer if the following conditions are satisfied:

(1) The securities of the registrant are listed or quoted on a  securities exchange or inter-dealer quotation system outside the United  States;

(2) The non-GAAP financial measure and the most comparable GAAP  financial measure are not calculated and presented in accordance with  generally accepted accounting principles in the United States; and

(3) The disclosure is made by or on behalf of the registrant  outside the United States, or is included in a written communication  that is released by or on behalf of the registrant only outside the  United States.

Notes to Sec.  244.100:

1. If a non-GAAP financial measure is made public orally,  telephonically, by webcast or broadcast or by similar means, the  requirements of paragraphs (a)(1)(i) and (a)(1)(ii) of this section  will be satisfied if:

(i) The required information in those paragraphs is provided on  the registrant's Web site at the time the non-GAAP financial measure  is made public; and

(ii) The location of the Web site is made public in the same  presentation in which the non-GAAP financial measure is made public.

2. The provisions of paragraph (c) of this section shall apply  notwithstanding the existence of one or all of the following  circumstances:

(i) Foreign or U.S. journalists or other third parties have  access to the information, so long as the information is disclosed  or released by or on behalf of the registrant only outside the  United States;

(ii) Following its release or disclosure, the information  appears on one or more web sites maintained by the registrant, so  long as the web sites, taken together, are not available exclusively  to, or targeted at, persons located in the United States; and/or

(iii) Following the disclosure or release of the information  outside the United States, the information is included in a  submission by the registrant to the Commission made under cover of a  Form 6-K.

Sec.  244.101  Definitions.

This section defines certain terms as used in Regulation G  (Sec. Sec.  244.100 through 244.102).

(a)(1) Non-GAAP financial measure. A non-GAAP financial measure is  a numerical measure of a registrant's historical or future financial  performance, financial position or cash flows that:

(i) Excludes amounts, or is subject to adjustments that have the  effect of excluding amounts, that are included in the comparable  measure calculated and presented in accordance with GAAP in the  statement of income, balance sheet or statement of cash flows (or  equivalent statements) of the issuer; or

(ii) Includes amounts, or is subject to adjustments that have the  effect of including amounts, that are excluded

[[Page 68804]]

from the comparable measure so calculated and presented.

(2) A non-GAAP financial measure would not include operating and  other financial measures and ratios or measures calculated using only:

(i) Financial measures calculated in accordance with GAAP; and

(ii) Operating measures or other measures that are not non-GAAP  financial measures.

(b) GAAP. GAAP refers to generally accepted accounting principles  in the United States, except that in the case of foreign private  issuers whose primary financial statements are prepared in accordance  with other generally accepted accounting principles, references to GAAP  also include the principles under which those primary financial  statements are prepared.

(c) Registrant. A registrant subject to this regulation is one that  has a class of securities registered under Section 12 of the Securities  Exchange Act of 1934 (15 U.S.C. 78l), or is required to file reports  under Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.  78o(d)), excluding any investment company registered under Section 8 of  the Investment Company Act of 1940 (15 U.S.C. 80a-8).

(d) United States. United States means the United States of  America, its territories and possessions, any State of the United  States, and the District of Columbia.

Sec.  244.102  No effect on antifraud liability.

Nothing in this Regulation G (Sec. Sec. 244.100 through 244.102)  shall affect any person's liability, and a person's compliance or non- compliance with this Regulation G shall not affect any person's  liability, under Section 10(b) (15 U.S.C. 78j(b)) of the Securities  Exchange Act of 1934 or Sec.  240.10b-5 of this chapter.

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

7. The authority citation for part 249 continues to read in part as  follows:

Authority: 15 U.S.C. 78a, et seq., unless otherwise noted. * * * * *

8. Amend Form 8-K (referenced in Sec.  249.308 as proposed in  Release No. 33-8106, 67 FR 42913) by adding Item 1.04 and revising Item  6.01 of Section 1.

Note.-- The text of Form 8-K does not, and this amendment will  not, appear in the Code of Federal Regulations.

Form 8-K--Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

* * * * *

Section 1--Registrant's Business Operations

* * * * *

Item 1.04. Results of Operations and Financial Condition

(a) If a registrant, or any person acting on its behalf, makes  any public announcement or release (including any update of an  earlier announcement or release) disclosing material non-public  information regarding the registrant's results of operations or  financial condition for a completed quarterly or annual fiscal  period, the registrant shall briefly identify the announcement or  release and file the text of that announcement or release as an  exhibit;

(b) A filing under this Item shall not be required in the case  of disclosure of material non-public information that is disclosed  orally, telephonically, webcast, or by similar means if:

(1) The information is provided as part of a presentation that  initially occurs within 48 hours of a related, written announcement  or release that is filed on Form 8-K pursuant to this Item 1.04;

(2) The presentation is accessible to the public by dial-in  conference call, webcast or similar technology;

(3) The financial and other statistical information contained in  the presentation is provided on the registrant's Web site, together  with any information that would be required under Sec.  244.100 of  Regulation G; and

(4) The presentation was announced by a widely disseminated  press release, that included instructions as to when and how to  access the presentation and the location on the registrant's Web  site where the information would be available.

(c) Forward-looking information, as defined by Section 21E of  the Securities Exchange Act of 1934, included in an announcement or  release that would otherwise be required to be filed pursuant to  paragraph (a) of this Item, may instead be identified specifically  and furnished under Item 6.01 in the same Form 8-K that contains the  historical information filed pursuant to Item 1.04.

Instructions

1. The filing requirement under this Item 1.04 is triggered by  the disclosure of material non-public information regarding a  completed fiscal year or quarter. Release of additional or updated  material non-public information regarding a completed fiscal year or  quarter would trigger an additional Item 1.04 filing requirement.

2. Issuers that make earnings announcements or other disclosures  of material non-public information regarding a completed fiscal year  or quarter in an interim or annual report to shareholders, are  permitted to specify which portion of the report contains the  information required to be filed under Item 1.04.

3. This Item 1.04 does not apply in the case of a disclosure of  material non-public information that is made in a quarterly report  filed with the Commission on Form 10-Q (or 10-QSB) or an annual  report filed with the Commission on Form 10-K (or 10-KSB). * * * * *

Item 6.01. Regulation FD Disclosure and Forward Looking Information.

Unless filed under Item 7.01 or Item 1.04, report under this  item only information that the registrant elects to disclose through  Form 8-K pursuant to Regulation FD (Sec. Sec.  243.100--243.103 of  this chapter) or forward-looking information that is required to be  filed under Item 1.04 of this form. * * * * *

9. By amending Form 20-F (referenced in Sec.  249.220) by  removing in General Instruction C.(e) the words ''performance and  the Commission's policy on securities ratings'' and adding, in their  place, the words ''performance, the Commission's policy on  securities ratings and the Commission's policy on use of non-GAAP  financial measures in Commission filings''.

Dated: November 4, 2002.

By the Commission.

¹ 17 CFR 244.100 through 244.102.

² 17 CFR 229.10.

³ 17 CFR 228.10.

⁴ 15 U.S.C. Sec. Sec. 78a et seq.

⁵ 17 CFR 249.308.

⁶ 17 CFR 249.220.

⁷ Pub. L. No. 107-204, 116 Stat. 745 (2002).

⁸ See Release No. 33-5337 (Mar. 15, 1973).

⁹ See Release No. 33-8039 (Dec. 4, 2001) [66 FR 63731].

¹⁰ See In the Matter of Trump Hotels & Casino Resorts, Inc., Release No. 34-45287 (Jan. 16, 2002).

¹¹ 17 CFR 210.1-01 through 210.12-29.

¹² In limited circumstances, such as in a merger, pro forma financial information is required to be disclosed in Commission filings. See Article 11 of Regulation S-X 17 CFR 210.11-01--210.11- 03] for the conditions that require the presentation of pro forma information, as well as the preparation requirements. Such pro forma information is intended to depict the continuing impact of an actual or proposed transaction on the historical GAAP financial statements. Article 11 requires tabular presentation of the balance sheet and income statements, starting with the historical GAAP financial statements, showing the specific adjustments that would have been required by GAAP had the transaction occurred at an earlier time,