Perkins Coie LLP

May 22, 2002

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

Re:   Acceleration of Periodic Report Filing Dates and Disclosure
        Concerning Website Access to Reports (File No. S7-08-02)

Dear Mr. Katz:

       We appreciate this opportunity to respond to the request of the Securities and Exchange Commission for comments regarding the Commission's proposal to accelerate the filing deadlines for periodic reports and to encourage posting of those reports on company websites (the "Proposed Rule"). We wish to make clear that our comments relate only to the Proposed Rule's accelerated filing deadlines, not to the requirements related to posting reports on issuer websites, and the remainder of this letter addresses only the former.

1.   Summary

      We support the Commission's efforts to improve public company financial reporting and disclosure. However, we do not believe the acceleration of filing deadlines in the Proposed Rule, as currently written, would produce such an improvement. Based on our own experience and the feedback of our public company clients, we think the costs of implementing the Proposed Rule, both in terms of increased reporting expenses for issuers and, more importantly, increased risk of material misstatements and omissions in periodic filings, outweigh the marginal benefits to investors from earlier access to periodic reports filed with the Commission. Although we oppose the Proposed Rule, we believe that the filing deadline for Annual Reports on Form 10-K could be accelerated by a modest amount, no more than 15 days, without undue risk of lowering the quality of disclosure. However, we believe any acceleration of the filing deadline for Quarterly Reports on Form 10-Q would present a significant risk of errors and omissions in disclosure documents and should not be pursued.

       We understand and agree that the investment community needs access to information that is clear, accurate and timely. In our view, however, the Proposed Rule would not further this objective, but would instead sacrifice accuracy for speed, ultimately degrading the quality of disclosure. We represent a large number of public companies on reporting and compliance matters under the Securities Exchange Act of 1934, and surveyed them regarding the Proposed Rule. Nearly all the clients we spoke to in preparing this letter agreed that the Proposed Rule would reduce the quality of their disclosure and could substantially increase their reporting costs due to the time pressures involved in meeting the accelerated deadlines.

      Our clients express three main concerns about the Proposed Rule:

• the Commission's view that technology can overcome the increased burden and risk of accelerated filings is mistaken;

• the shortened timeframes do not leave sufficient time after the year-end audit or quarterly review is complete to prepare the corresponding periodic report, particularly a thoughtful and high-quality Management's Discussion and Analysis ("MD&A") section; and

• the accelerated filing deadlines are inconsistent with other Commission proposals and statements calling for increased accuracy and disclosure.

      The remainder of this letter addresses each of these concerns and concludes with our recommendations to the Commission.

2.   Technology Is Not Sufficient to Mitigate the Burdens and Risks of Accelerated Filing Deadlines.

      In its Proposed Rule, the Commission observes that timeframes for filing periodic reports have not changed in the past 30 years, but during this time significant technological advances have increased the market's demand for more timely corporate disclosure and the ability of companies to capture, process and disseminate this information. In particular, the Commission points to computers, sophisticated financial software, e-mail, teleconferencing and videoconferencing as modern tools that make financial reporting easier for companies.

      Clearly, technology has made remarkable strides over the past three decades. However, in this same period, we have seen equally significant expansions in (1) the complexity of global business and finance, in terms of both the operations of large corporations and the kinds of transactions they enter into; (2) the quantities of financial data and trend analysis generated by reporting companies; (3) the challenges of collecting and analyzing this information; (4) the expectations of the marketplace regarding availability and disclosure of financial information and explanatory support beyond GAAP financial statements, such as the MD&A section; (5) the complexity and rate of change of accounting rules for public companies, and the sweeping impact of these changes on the fundamental work and analysis that underlie financial reporting; (6) the scope of required disclosure, in MD&A and otherwise, under Commission rules; (7) the risk of securities fraud litigation for disclosures and omissions in the periodic reports; and (8) perhaps most importantly, the demands on boards of directors and audit committees to closely scrutinize, analyze and understand the financial information, and the MD&A discussion that supports it, prior to its inclusion in the company's public filings with the Commission. For most clients, these factors are challenging enough to negate the benefits of any timesaving advances in technology.

      As required disclosure has increased, businesses have concurrently become more complex and widespread, making it more difficult to comply with disclosure regulations. Companies with multiple subsidiaries or widespread operations must address complex financial and tax issues before a review or audit can be started. Companies with overseas operations face even more hurdles, such as converting financial data for foreign operations into U.S. GAAP. Clients also remind us that they operate in a more litigious environment than 30 years ago, necessitating an amount of caution and deliberation that could be lost in a rush to file under shorter timelines.

      Some of our smaller clients report that although they are over the $75 million cut-off and thus subject to the Proposed Rule, they do not have the financial resources to purchase some of the advanced technological systems the Commission refers to. Of even greater concern to smaller companies is the lack of personnel needed to do the job within the timelines contemplated by the Proposed Rule. Many of our clients subject to the Proposed Rule do not have separate finance departments dedicated to writing periodic reports. These clients worry that the shorter deadlines will require them to hire and train additional personnel during the reporting season, resulting in an increase in costs and a greater potential for error. Furthermore, our smaller clients are concerned that under the compressed filing schedules they will be unable to successfully compete alongside larger companies for access to external resources such as accountants, legal counsel and financial printers.

      Most importantly, despite advances in technology, much of the periodic reporting process remains labor-intensive, requiring people to make judgment calls based on professional experience. This is particularly true for MD&A disclosure, where a key element of good disclosure is a discussion of trends, uncertainties and forward-looking factors that are critical to understanding the key issues that will drive financial results. Identifying and accurately describing these factors requires judgment and a deep understanding of the businesses in question. Clearly communicating the relevant information in periodic reports takes care and time. Often it is only after review by senior management, outside legal counsel, independent auditors and the audit committee that certain disclosure issues are identified and resolved. Technology has largely kept up with the pace of change in business and finance, but it cannot replace the role that judgment, checks and balances, and adequate time for consideration and analysis play in the periodic reporting process. Rather than improving the quality of disclosure, many of our clients expect the shorter filing timelines to increase the number of error-correction filings and restatements they will be required to make. The marginal benefits from the acceleration of filings called for by the Proposed Rule would, in our view and those of our clients, be outweighed by a degradation of the vetting and review process that is necessary for accurate and complete disclosure.

3.   Shortened Timeframes Do Not Leave Sufficient Time After the Audit (or Review) Is Complete to Prepare Periodic Reports.

       The Commission states that one of its goals for the Proposed Rule is to lessen the information gap between a company's announcement of earnings and the filing of more extensive information in its periodic reports. The Commission explains that under today's rules, investors must wait for the more extensive information contained in periodic reports before they can put earnings announcements into the proper context. The Commission suggests that lessening the information gap is feasible because companies and their auditors have developed efficiencies over the years that allow them to generate financial data quickly, resulting in, the Commission believes, a situation where most companies have completed their audits (or reviews) by the time the company issues its earnings announcement.

       Many of our clients confirm the Commission's belief that companies' audits (or reviews) are generally complete by the time earnings are announced. Nevertheless, even if their outside auditors complete their work in a timely manner, our clients report that too many steps remain in the reporting process to finish the process much sooner, or any sooner in the case of Form 10-Qs, than is currently required. For example, after earnings are announced and before a periodic report is ready to be filed, corporations must prepare the MD&A, the footnotes, the consolidated financial statements, the statement of cash flows and final classifications on the balance sheet. After these steps are complete, the outside auditors, legal counsel, audit committee and board of directors must review the periodic reports. Shorter timeframes, however, might not give the accountants, legal counsel and directors the time they need to review reports with the level of scrutiny the Commission demands, nor would it allow sufficient time for directors to ask questions of management and the outside auditors to satisfy their duties as members of the audit committee and the board.

       Preparing periodic reports is a process that involves sequential steps. We believe, and our clients confirm, that this process would be difficult to shorten without cutting corners in either the preparation of financial statements or the review and analysis of the statements by outside auditors, legal counsel, audit committees and boards of directors. The greatest concern to clients is preparation of the MD&A section in the relevant report. Although the earnings release highlights some key factors impacting results for the quarter or year, that disclosure obviously does not begin to meet the requirements of MD&A. As noted above, discussion in MD&A of trends, uncertainties, contingencies, key businesses and financial variables, and forward-looking information all require very careful thought and must be communicated extremely carefully. MD&A disclosure is critical to understanding a company's financial condition and prospects, and is closely monitored by investors and the Commission. For this reason, we advise our clients to devote significant resources to preparation of the MD&A section, and our clients do in fact devote such resources. MD&A is the single most complex and time-consuming aspect of any report on Form 10-Q or Form 10-K.

       The following table lists the typical steps our clients follow in the preparation of their periodic reports and the average length of time required to complete each step.

      As the preceding table shows, for most of our clients, preparing periodic reports requires most of the time currently available.

4.   The Proposed Rule Is Inconsistent With Other Commission Proposals Calling for Increased Accuracy and Disclosure.

      Chairman Harvey Pitt explained that the accelerated filing proposal along with other proposals represent only the beginning in the Commission's efforts to improve the financial reporting and disclosure system. We understand the Commission views the Proposed Rule as playing an integral role in its reform agenda by serving as a means to modernize periodic reporting requirements and provide more current information to the financial markets. In our opinion, however, the Proposed Rule would work against the Commission's larger goal by reducing the time companies have to prepare periodic reports at a time when the Commission and the marketplace in general are expecting more accurate and complete disclosure, together with greater board of directors and audit committee involvement in the financial reporting process.

       Shorter timeframes would undercut the Commission's emphasis on improved director oversight of management and outside auditors, which has, in the wake of the Enron debacle, become a serious public concern. We have been advising boards of directors and audit committees to increase the time and effort they dedicate to reviewing, analyzing and understanding their companies' financial statements and other financial disclosures, and to make sure they fully understand the underlying financial drivers of their businesses, the risks to achieving projected financial results, key trends and uncertainties, and other business and financial fundamentals. This increased involvement and oversight, while essential to ensure quality and integrity in the financial reporting process, is less feasible with shorter deadlines for filing periodic reports. A compressed schedule also leaves less time for questioning and give-and-take between the audit committee and the outside auditors, just when audit committees are being urged to take extra time for such activities. In our view, increased board of directors and audit committee participation in the disclosure and reporting process will provide the most tangible benefit to investors. Shortening the deadlines for periodic filings runs counter to this solution.

      The Proposed Rule's accelerated filing deadlines undermine recent Commission proposals and statements which, if carried through, will increase the disclosure burden on reporting companies. For example, the Commission's recent proposal requiring companies to provide in MD&A both a description of critical accounting estimates and the initial adoption of certain accounting policies is likely to lengthen the time needed to prepare periodic reports. In addition, if the Commission adopts its recent proposal to require earlier reporting of transactions by company insiders, it will require even more time from reporting and compliance staff. In the end, we believe the increased demands on these individuals and the tighter schedule under which they will be forced to operate will further undercut the Commission's goal of enhancing the quality of disclosure.

5.   Conclusion

      We understand that many of our comments echo comments the Commission received in 1998 when the Commission proposed advancing filing deadlines as part of its "Aircraft Carrier" release. The sentiment among our clients, however, is that the periodic reporting process remains a time-intensive process that cannot be shortened much, if at all, without sacrificing completeness and accuracy for speed.

       On behalf of our reporting company clients, we make the following recommendations to the Commission with regard to the Proposed Rule:

• No acceleration of the filing deadline for Form 10-Qs should be adopted, as any such acceleration would unduly jeopardize disclosure quality relative to the marginal benefits achieved; and

• No acceleration of the filing deadline for Form 10-Ks by more than 15 days should be adopted, as any further acceleration would unduly jeopardize disclosure quality relative to the marginal benefits achieved.

* * *

       We hope that the Commission will find these comments helpful, and we would be pleased to discuss our views with members of the Staff at their convenience. We ask that questions be directed to Evelyn Cruz Sroufe in our Seattle office at (206) 264-6448.

Very truly yours,

/s/ PERKINS COIE LLP

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