May 23, 2002

Mr. Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Dear Mr. Katz:

We respectfully submit our comments regarding the Securities and Exchange Commission's (the "Commission") proposed rules to accelerate the periodic filing dates for annual and quarterly reports (the "Proposed Rules").

We support the fundamental goal of the Proposed Rules and believe that relevant corporate information should be promptly disseminated to the marketplace. We are concerned, however, that the Proposed Rules will not permit the timely preparation of disclosure that is complete and meaningful and will impose burdens on companies that are not commensurate with the benefits sought by the Commission for readers of corporate information. In fact, we fear that the accelerated schedule will lead to a greater likelihood for errors occurring in the reporting process as less time is afforded to the appropriate review of disclosure and, in the end, the accelerated schedule may diminish both the quantity and quality of the information in periodic reports. Accordingly, we recommend that the Commission not accelerate the filing dates for periodic reports.

If the Commission decides to accelerate periodic filing dates nonetheless, we recommend that the Commission modify the filing deadlines for quarterly and annual reports to within 40 and 75 days, respectively, after the relevant period end and/or provide a longer phase-in period to permit companies to adapt their procedures and systems to the accelerated filing regime.

Current and Proposed Disclosure Requirements Will Make Proposed Deadlines Difficult to
Achieve

The depth and breadth of disclosure requirements have increased substantially in recent years. When the Commission established periodic filing deadlines over 30 years ago, periodic reports were relatively streamlined documents. Over time, these reports have grown into voluminous documents of increasing complexity. In our experience, preparing complete and accurate periodic disclosure requires careful consideration of changes in business, industry and competitive conditions, coupled with an analysis of the latest period's financial results. Although technology has increased companies' ability to capture and process raw data, these advances have been exceeded by the changes in accounting and disclosure standards that require increasingly extensive presentation and analysis of detailed information.

In recent years, financial reporting in accordance with GAAP has become increasingly more complex and the FASB has promulgated accounting standards that have required substantially more disclosure. For example, SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," has lead to the reporting and presentation of business segments that is ever increasing as a company's business grows and diversifies. In addition, implementing new and complex accounting standards, such as SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125," has also increased the volume of detailed disclosure and presented substantial analytical and implementation challenges. Accounting disclosures will only increase as the FASB develops or modifies accounting standards in the wake of the Enron bankruptcy.

In addition, the Commission has promulgated rules that add to the detail and complexity of disclosure. For instance, Item 305 of Regulation S-K, "Quantitative and Qualitative Disclosures about Market Risk," requires the disclosure of complex, additional risk management data that takes time to analyze and present in a meaningful way. Detailed disclosure of equity compensation plan information required by new Item 201(d) of Regulation S-K will also add to the volume and complexity of disclosure. Recently, the Commission recommended that public companies provide enhanced disclosure relating to liquidity and capital resources, including off-balance sheet arrangements, trading activities in certain types of commodity contracts and related party transactions. The Commission also announced its intention to propose several new corporate disclosure rules and has already proposed additional disclosure requirements regarding the impact of critical accounting estimates.

At the same time, the Commission has, correctly, emphasized the need for clarity and transparency of corporate information. However, such clarity and transparency does not come easily. To compile the increasingly detailed and complex information required to be disclosed and to present such information to the public in a clear and user-friendly format takes time and an ever increasing amount of effort. Viewed in this light, the Commission's proposal to accelerate the reporting process seems to be incongruous with its proposals for increased disclosure.

In light of these increasing disclosure requirements, we believe that it will be very difficult for large, complex, diversified global companies involved in many businesses with varied products and services to obtain, analyze and report all of the required corporate data within the proposed 30 and 60 day periods. In addition, smaller companies with perhaps less complex and diversified businesses may not have the resources available to meet the accelerated deadlines. We know from experience that many issuers, both large and small, are challenged to meet the current filing deadlines. This is evidenced by the fact that many registrants file their periodic reports under the current rules only on or just prior to the due dates. Another illustration of the difficulties companies face with the current reporting schedule is the increasing number of companies filing notices of late filings. LiveEdgar shows that over 2,500 notices of late filings on Form 12b-25 have been filed with respect to annual reports for fiscal years ending during the 2001 calendar year. We fear that a significant number of reporting companies that struggle to meet the current reporting deadlines will be unable to prepare properly their Form 10-Qs and Form 10-Ks and still file them on a timely basis under the proposed accelerated schedule. Failure to file timely periodic reports would lead to serious consequences. In addition to possible enforcement action by the Commission, delinquent companies would be ineligible to use the Commission's short-form registration statements on Form S-2 and S-3 to make public offerings or to use Form S-8 for offerings to employees. Also, securityholders of such companies could not resell securities pursuant to Rule 144 until the periodic report is filed. Certain of such companies may also find themselves in violation of their financing agreements.

Accelerated Filing Deadlines May Adversely Affect the Quality of Disclosure

The MD&A is, as the Commission has stated, an issuer's opportunity to explain fully the key factors and assumptions driving earnings, capital and liquidity and highlight the risks inherent in its business model. Although many issuers voluntarily highlight key business drivers in their earnings releases, they refine and augment this analysis in their MD&A. They continue refining this analysis through the date of filing. If condensed deadlines force issuers to prepare this important disclosure without sufficient time for reflection and analysis, we believe its usefulness will be compromised. Exerting additional time pressure for filing periodic reports may lead companies to focus more on the minimum requirements for a timely filing than on the quality of disclosure. It could discourage companies from making meaningful disclosure that requires more time to prepare and for senior management and the audit committee to review. Condensed filing deadlines may also encourage the perfunctory "mark-up" of the prior period's MD&A rather than rethinking the disclosure for each period. We believe the accelerated deadlines present a real risk that some (and perhaps many) companies may be forced to provide an excessively general MD&A in order to meet the contracted time frame. Without a well developed explanation of the significant facts and circumstances underlying the company's results, readers of the report will be deprived of the type of analysis the Commission has sought to foster. Accelerating the filing deadline may also discourage companies from providing useful voluntary disclosures that may not technically be required by disclosure rules.

Accelerated Filing Deadlines Will Hamper the Appropriate Review of Disclosure and
Increase Costs

The periodic report for most companies reflects the cooperative efforts of various contributors. Besides input from business units, company controllers, internal counsel, senior management, the audit committee and the board of directors, companies rely on external resources to assist in the reporting process, such as independent auditors and outside counsel. Accelerated filing deadlines could limit meaningful review, particularly from external advisors and board members. Curtailing this review increases the likelihood that filings will have to be amended to correct errors in figures published prematurely. We believe this may lead to unwarranted and/or inaccurate media attention that will likely confuse readers of corporate information.

At year-end especially, reviewers need time to absorb complex disclosure and achieve an appropriate level of understanding. Senior management and the audit committee must review the disclosure in order to recommend to the board of directors that the audited financial statements be included in the Form 10-K. This review process is even lengthier in the case of a large or complex company. To abbreviate the reporting deadline for the Form 10-K by 30 days could severely compromise this review process.

We also believe that acceleration of the current due dates will strain the capabilities of many issuers. The effort to compile and analyze the complex data required in an abbreviated time frame while avoiding errors is likely to increase filing costs. Many companies may face increased costs due to the necessity of hiring additional staff or incurring overtime expense to meet accelerated filing deadlines. Furthermore, as discussed above, accelerated filing deadlines may lead to more amendments to correct errors in figures published prematurely, which in turn will also increase costs.

Alternatively, Change Deadlines to 40/75 Days

As indicated above, we recommend that the filing deadlines remain unchanged. We urge the Commission to weigh the benefits of accelerating disclosure against the challenges faced by companies seeking to prepare meaningful disclosure. If, however, the Commission decides to accelerate the filing deadlines, we request that the Commission act cautiously and not accelerate the filing schedule by 33% but instead modify the filing deadlines for quarterly and annual reports to within 40 and 75 days, respectively, after the relevant period end. In the alternative, we strongly suggest that the Commission introduce this substantial change incrementally (e.g., provide a one-year phase-in period) to ease the burden on companies attempting to comply with the Commission's enhanced disclosure requirements.

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In conclusion, although we strongly agree with the fundamental objectives of the Proposed Rules, we fear that the effect of the proposals would be to achieve the goal of prompt disclosure of corporate information at the expense of the quality of such disclosure.

We are grateful for the opportunity to provide our comments on the important issues raised by the Proposed Rules.

Very truly yours,

/s/ Sidley Austin Brown & Wood LLP