On April 14, 2005, the SEC announced that it approved an extension of the deadline by which public companies would be required to adopt FAS 123(R), relating to the expensing of options.

• Public companies will now be required to start expensing options by their first fiscal year beginning after June 15, 2005. The original rules would have required adoption in the first fiscal quarter beginning after that date.
  
• For the typical calendar-year company, the extension results in a six-month delay, such that the companies will begin expensing options in January 2006.
  
• For small business issuers, the standard will be effective in the first fiscal year after December 15, 2005 (rather than the first fiscal quarter, as originally required).

The full text of the SEC press release can be found at http://www.sec.gov/news/press/2005-57.htm.

Please contact Michael Sullivan at msullivan@howardrice.com (415-399-3017), Deborah Marshall at dmarshall@howardrice.com (415-399-7856), Julia Vax at jvax@howardrice.com (415-399-3174) or your usual Howard Rice attorney to learn more about FAS 123(R) and how these rules may pertain to your particular circumstances.

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