Union Planters Corporation
May 17, 2002
Mr. Jonathan G. Katz
Secretary, Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549
File No. S7-08-02
Dear Mr. Katz:
I am the Chief Financial Officer of Union Planters Corporation, a $33 billion multi-bank holding company whose stock is traded on the New York Stock Exchange and has a market capitalization of $6.8 billion. I write on behalf of Union Planters in response to the Security and Exchange Commissionís (the "Commission") proposed changes regarding the acceleration of quarterly and annual report due dates and website access to information. For a variety of reasons, we do not believe the Commissionís proposal to accelerate quarterly and annual report filings is in the best interest of the investing public or of public companies. We support the Commissionís proposal on website access to information with slight modifications.
Acceleration of Quarterly and Annual Report Due Dates
In the past several years, the Commission has, on a variety of occasions, stressed the importance the investing public places on materially accurate financial information and even went so far as to clarify, through SAB 99, its view of materiality. Moreover, the Commission has repeatedly urged registrants to include more robust commentary and explanations in managementís discussion and analysis ("MD&A") and to avoid "boilerplate" discussion. Like many companies, Union Planters is capable of producing consolidated financial information, including the basic consolidated financial statements without accompanying notes, that is materially correct in a very short period of time; however, materially correct financial information in the format and level of detail mandated by generally accepted accounting principles, including notes to the consolidated financial statements, and by the Commission takes time to develop. Furthermore, ensuring that the MD&A is robust and consistent with the financial statements takes even longer. Absent any relief in the quantity of information required, diminishing by one-third the amount of time registrants have to accumulate and review the financial and non-financial information currently required in periodic filings as well as the overall financial statement presentation, in our view, increases the likelihood that more registrants will file periodic reports containing financial information that is not materially correct or is otherwise lacking in quality.
Greater consideration should be given to the proliferation of new pronouncements from the various bodies that develop generally accepted accounting principles. Moreover, the Commission has issued, from time to time, its interpretations of those pronouncements as well as its interpretation of already existing practices (e.g., SAB 99 and SAB 102). The Commission points out that the rules setting the deadlines for filing periodic reports on Forms 10-K and 10-Q are over 30 years old. During that same 30-year period, the body of authoritative literature constituting generally accepted accounting principles has grown dramatically. The pace at which pronouncements continue to be exposed and adopted is without precedent, and the pronouncements are having a significant impact on registrants (e.g., Statement of Financial Accounting Standards No. 133). The new accounting pronouncements are also growing in their complexity, in not only the prescribed accounting, but also, and perhaps even more challenging, in the prescribed disclosures, which, in some instances, comprise a more significant part of the reporting burden. In applying these new pronouncements, companies are required to exercise more and more judgment. Indeed, the Commission has deemed this judgment worthy of disclosure not only in the notes to the financial statements but also in the MD&A (e.g., FR 60). Technology has certainly improved through the years making certain financial information more readily available. However, technology will never be able to replace managementís judgment about the fair presentation of financial statements. Again, decreasing by one-third the amount of time management has to make judgments and ensure they result in a fair presentation of the financial statements runs counterintuitive to this idea.
The Commission gave consideration to the impact of its proposal on smaller registrants and concluded that the accelerated filing dates should only apply to companies with a public float of $75 million or more. Embodied in the Commissionís proposal seems to be the premise that larger registrants might not be as adversely affected by the accelerated filing deadlines. We believe larger registrants, in most instances, are more likely to be involved in transactions requiring the exercise of greater judgment. This coupled with the fact that larger registrants tend to seek input from a greater variety of sources (both internal and external) may suggest, in fact, larger registrants need even more time than smaller registrants to make a fair presentation of their financial statements. We also believe it important that some larger registrants do business in highly regulated industries that have additional financial reporting burdens. Bank holding companies, banks, insurance companies and broker-dealers all have requirements to submit financial information concurrent with or in advance of the current filing deadlines for Forms 10-K and 10-Q.
While we oppose the acceleration of quarterly and annual report due dates, we recognize that the investing public needs timely information to make investing decisions. For that reason, Union Planters provides an announcement of earnings on the third Thursday of each month following the end of the fiscal quarter. In that earnings announcement, we provide an unaudited balance sheet and income statement along with a textual discussion of our net interest margin, noninterest income, noninterest expense, credit quality and capital strength. We also provide other measurements pertinent to the banking industry (e.g., average balance sheet and interest rate data, asset quality data and selected financial ratios). A copy of this information is also filed via a Form 8-K on the date of the earnings release. The amount of effort exerted to provide this level of information by the aforementioned date is tremendous and includes internal vetting with executive management, the audit committee, and internal and external legal counsel. We believe the information in our earnings releases to represent what most investors and analysts base their decisions on. Even still, this information is substantially less than what is required in the periodic filings on Forms 10-K and 10-Q. If quarterly and annual report due dates are accelerated, registrants will be forced to consider whether there is time to provide a meaningful earnings release and comply with the accelerated filing deadline. Accelerated filing deadlines may accomplish the goal of reducing the timeframe between a registrantís earnings release and the filing of the Form 10-K or 10-Q while causing an unintended significant delay in the communication of valuable information to the investing public.
The Commission comments that "hundreds of public companies issue press releases to announce quarterly and annual results well before they file their reports with us" and goes on to indicate that "it appears that companies and their auditors have developed efficiencies over the years that allow them to generate financial data quickly." Furthermore, the Commission states that information contained in those earnings releases "varies from company to company." We feel that a better idea would be to require a timely earnings release from registrants and to set some general parameters for what should be included in such an earnings release. For this idea to be plausible it would have to require the type of information that companies could generate through the "efficiencies" referred to above; this information is, obviously, substantially less than what is required in Forms 10-K and 10-Q.
Website Access to Information
While we generally support the Commissionís proposal to have registrants add disclosure to their Form 10-K discussing public access to filings with the Commission, we believe modification should be made to the "same day availability" information. While the Commission does not seem to overtly require that Exchange Act filings be posted to a registrantís website the same day they are filed with the Commission, there is an indication such is the Commissionís preference. Because registrants tend to file their Exchange Act filings late in the day in order to maximize the review of "edgarized" documents and a number of registrants outsource their web hosting, same day posting of Exchange Act filings may not be practical. Because of these facts, we feel that posting within two business days should be viewed as an acceptable practice.
We hope our response will be useful to you.
Bobby L. Doxey
Senior Executive Vice President and
Chief Financial Officer