3. That, in addition to 2 above, such analysis shall reflect also (1) profit or loss during the period from the first day of the calendar month during which the first vessel was delivered under the first bareboat charter agreement with the Commission (WARSHIPDEMISEOUT 203 or SHIPSALESDEMISE 303) to December 31, 1946, (11) direct adjustments to surplus during such period and (iii) the balance as at December 31, 1946; and

4. That such analyses for subsequent annual or overall accounting periods shall be prepared in a similar manner to reflect separately changes in surplus during each period with respect to which a separate determination of "capital necessarily employed" is required.

SCHEDULE E-1-ANALYSIS OF PROFIT AND Loss

The procedure for the preparation of this statement contemplates:

1. That there shall be submitted in support of each working trial balance required hereunder an analysis of profit and loss for the calendar year or overall accounting period involved and that such analysis shall be grouped by accounts in the manner indicated in the illustrative example included among those to be supplied by the Comptroller;

2. That such analysis shall include all adjustments effected by the Charterer and, as part of the working trial balance, shall be the basis upon which the Income Sheet (Exhibit "C") is prepared; and

3. That all items of income and expense reflected in the analysis of profit and loss shall be those prescribed in the Uniform System of Accounts and none other. (In any instance where the Charterer is subject to the jurisdiction of the Interstate Commerce Commission and is required to keep its books, records, and accounts in the form prescribed by that Commission, the statements prepared from such books, records, and accounts should be conformed for this purpose to the illustrative example included among those to be supplied by the Comptroller). $299.55 Certifications and verifications.

(a) The accounting required under this section shall be submitted under cover of an affidavit, executed by the corporate officer responsible for the accuracy and maintenance of the books of account and financial records of the Charterer, if a corporation, or by a general partner so responsible, if a partnership, which affidavit shall be substantially as follows:

Charterer under bareboat charter agreement(s) with the United States Maritime Commission known as "WARSHIPDEMISEOUT 203" (WSA ------)/"SHIPSALESDEMISE 303" (MCc ------); that, as such, I am responsible for the accuracy and maintenance of the books of account and financial records of the Charterer and am thoroughly familiar with such books and records and with the terms and conditions of the aforesaid bareboat charter agreement(s) and with the orders, rules, regulations, and instructions appertaining thereto as issued by the Maritime Administration (or the United States Maritime Commission); that I have carefully examined the statements comprising the accounting annexed hereto covering the period from to

1111

under the aforesaid bareboat charter agreement(s); and that, to the best of my knowledge and belief, the said accounting reflects a true and complete statement of the additional charter hire accrued to the Maritime Administration under the aforesaid bareboat charter agreement(s) during the period from to

under the terms and conditions thereof and in accordance with the orders, rules, regulations, and instructions issued by the Maritime Administration (or the United States Maritime Commission) appertaining thereto; the balance sheets included in the annexed accounting fairly present the financial position of the Charterer as at the dates thereof, including (but not limited to) an adequate statement of all known and ascertainable liabilities, and the income sheet included in the annexed accounting correctly states the operating results of the Charterer for the period covered by such accounting.

reasonable payments made by the Charterer to such professional accountants for services and incidental expenses relating to such certification may be allocated directly to operations under the bareboat charter agreements involved on the basis prescribed in § 299.48 (d), (e), (f), and (g): Provided, That the following minimum conditions are observed:

(1) Such certified public accountants will undertake to make their working papers available for examination by the Owner's auditors upon request and to permit the Owner's auditors to make copies of such papers to the extent they deem necessary;

(2) Such certified public accountants are independent in fact (An accountant will not be considered independent with respect to any person in whom he has any substantial interest, direct or indirect, or with whom he is, or was during the period of the bareboat charter agreements involved, connected as an officer, director, executive, or employee. As used in this subparagraph, the term "any person" shall include the Charterer, and any holding company, subsidiary, affiliate, or associate of the Charterer); and

(3) The statements submitted are accompanied, in addition to the affidavit required of the Charterer, by a signed opinion of the independent certified public accountant in the following or substantially similar form:

We [I] have examined the statements comprising the accounting annexed hereto, and have found the statements to have been prepared by the Charterer in accordance with the terms and conditions of the applicable bareboat charter agreement(s) and with the applicable orders, rules, regulations, and instructions issued by the Maritime Administration (or the United States Maritime Commission). Our [my] examination of the statements included examination of the underlying books of account and records for the period from

to

Our [my] examination was made in accordance with generally accepted auditing standards and included all procedures which we [I] considered necessary in the circumstances [state exceptions if any]. In our [my] opinion the annexed statements fairly present the proper determination of additional charter hire (in the aggregate amount of $--------) accrued to the account of the Maritime Administration under bareboat charter agreement(s) No.(s) for the period from

(a) The purpose of this procedure is to establish rules and regulations for uniform application to expedite and facilitate the rendition by Charterers to the Owner of final accountings under WARSHIPDEMISEOUT 203 and SHIP

SALESDEMISE 303.

(b) The receipt and consideration of such accountings by the Owner shall be subject to the following reservations:

(1) That all working papers (irrespective of by whom prepared) in support of the various statements comprising such accountings, shall be available for examination by the Owner's auditors upon request and that the Owner's auditors shall be permitted to make copies of such papers to the extent they deem necessary;

(2) That the Owner reserves the right to conduct such audits, examinations, or checks of the Charterers' accounts as it may deem necessary before approving final settlement of additional charter hire for any period under the bareboat charter agreements;

(3) That the examples to be supplied by the said Comptroller of the statements required by the Administration are for illustrative purposes only and are based on hypothetical figures; that no implications should be drawn from the relative magnitude of the figures used in these examples; and that if, in any instance, an example should conflict with the text of this procedure, the latter shall govern;

(4) That the establishment of the rules and regulations prescribed in this procedure is without prejudice to the right of the Administration to determine upon the employment of other bases for allocation and calculation in any instance where, upon the completion of any annual or final accounting, the results produced by the application of the rules and regulations prescribed herein

do not, in the judgment of the Administration, produce fair and reasonable results;

(5) That if, in any instance, the rules and regulations prescribed herein should conflict with the provisions of an applicable statute or agreement, such provisions shall govern;

(6) That if, in any instance, the rules and regulations prescribed herein should conflict with any General Order issued by the Maritime Administration (or the United States Maritime Commission), the question as to which shall take precedence should be referred to the Administration for decision; and

(7) That nothing contained herein shall be construed as a waiver of any right reserved to the Administration by statute or under WARSHIPDEMISEOUT 203 or SHIPSALESDEMISE 303.

Subpart D-Transfer of War-Built Vessels

§ 299.61 Transfer of war-built vessel in settlement of a claim against the United States.

(a) Application. Anyone who has a claim against the United States for just compensation due him for a vessel requisitioned for title by the United States, or indemnity for the loss of any vessel which was acquired for use by the United States, may make application to the Administration for the transfer to him of a war-built vessel or vessels at the statutory sales prices in complete or partial settlement of such claim. The application to receive consideration must be substantially in the form prescribed in § 299.131 including the submission of the certificate of settling department or agency provided therein. Three executed copies and fifteen conformed copies of the application must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Items or parts of items in the application which are inapplicable may be omitted. If any information called for by an applicable item is not furnished, an explanation of the omission shall be given. Detailed descriptions of exhibits need not be given. The applicant may furnish such relevant information as it may desire, in addition to that specified in the form

(b) Amendment of application. Such application may be amended at any time before the Administration has acted

upon it. Three executed copies and fifteen conformed copies of the amendment must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Amendments involving substitution of a different vessel for the vessel applied for, unless made promptly at the written request of the Administration, shall be effective as of the filing date of the amendment. All other timely amendments (including amendments involving substitutions for the vessel applied for when made at the request of the Administration) shall be effective as of the filing date of the original application. Any information called for by the Administration from time to time shall be furnished as an amendment or amendments to the application. The applicant shall file from time to time as amendments any information necessary to keep current and correct, while the application is pending, the information contained therein or furnished in connection therewith.

(c) Approval or disapproval by the Administration. If the Administration determines that, in its opinion, such transfer is in the interests of the United States and that the vessel applied for by the applicant is available for sale to him, the application may be granted. In determining whether the transfer should be made, the Administration among relevant factors will take into account the preferences provided for in § 299.2. If the application is disapproved by the Administration, the Secretary will promptly advise the applicant.

(d) Contract of settlement. If the application is approved by the Administration and if the Administration is the settling agency, the Secretary will furnish the applicant five counterparts of a contract of settlement which shall be executed by the applicant and redelivered to the Secretary within fifteen (15) days of the date of its receipt by the applicant. After the contract of settlement has been executed on behalf of the Administration, one of the counterparts will be sent to the applicant. If the settling agency is other than the Administration, the Administration will arrange to make the vessel or vessels available for the purposes of the settlement.

(e) Determination of claim. If claim is against the Maritime Administration (or the United States Maritime Commission) or the War Shipping Administration, the application may be filed,

but will be dated as of the date the certificate of settling agency is filed by applicant. If it is against another agency or department, the application must be accompanied by a certificate of settling department or agency.

(f) Types of settlements. Administration procedure will be generally as outlined below in the three usual types of settlements which are available under the act.

(1) Claim equal to the statutory sales price of the vessel. The Administration will in this case transfer the vessel without cash transaction and will execute a contract of sale to accompany the contract of settlement.

(2) Claim more than the statutory sales price. The Administration will in this case transfer the vessel and will execute a contract of sale. The balance of the amount of the claim will be handled by the settling agency as part of the consummation of settlement of the whole claim.

(3) Claim less than the statutory sales price. The Administration will in this case transfer the vessel and execute a contract of sale. If the application for purchase accompanying the application for transfer of the vessel in settlement requests mortgage aid with respect to the excess of the statutory sales price over the claim, provided the claim exceeds the required down payment, and such application is approved by the Administration, a preferred mortgage will be executed covering such excess. If the claim does not cover the down payment required on the vessel the claimant will be required to arrange for the necessary additional down payment.

(i) In all cases the Administration's action will be predicated upon the execution of instruments for the release of the claims satisfactory to the settling agency.

(11) If more than one vessel is applied for in connection with the settlement of the claim, then in all cases the amount thereof to be applied toward the purchase of each vessel shall be indicated in the application and shall be subject to the approval of the Administration.

§ 299.62 Transfer of another vessel for a vessel constructed in the United States since January 1, 1937, which has been taken for use by the United States.

(a) Application. Anyone who owns a vessel that was constructed in the United

States after January 1, 1937, and which was taken by the United States for use in any manner and has not been redelivered may make application to the Administration for the transfer to him of another vessel of comparable type in lieu of such vessel. The application to receive consideration must be substantially in the form prescribed by the Administration in § 299.132. Three executed copies and fifteen conformed copies of the application must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Items or parts. of items in the application which are inapplicable may be omitted. If any information called for by an applicable item is not furnished, an explanation of the omission shall be given. Detailed descriptions of exhibits need not be given. The applicant may furnish such relevant information as it may desire, in addition to that specified in the form.

(b) Amendment of application. Such application may be amended at any time before the Administration has acted upon it. Three executed copies and fifteen conformed copies of the amendment must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Admendments involving substitution of a different vessel for the vessel applied for, unless promptly made at the written request of the Administration, shall be effective as of the filing date of the amendment. All other timely amendments (including amendments involving a substitution for the vessel applied for when made at the request of the Administration) shall be effective as of the filing date of the original application. Any information called for by the Administration from time to time shall be furnished as an amendment or amendments to the application. The applicant shall fille from time to time as amendments any information necessary to keep current and correct, while the application is pending the information contained therein or furnished in connection therewith.

(c) Approval or disapproval by the Administration. If the Administration determines that, in its opinion, such transfer would aid in carrying out the policies of the act, the application may be granted. If the application is dis

approved by the Administration, the Secretary will promptly advise the applicant.

(d) Contract for transfer. If the application is approved by the Administration, the Secretary will furnish the applicant five counterparts of a contract for transfer in exchange which shall be executed by the applicant and redelivery to the Secretary within fifteen (15) days of the date of its receipt by the applicant. Such contract for transfer in exchange shall provide for adjustments for depreciation and difference in design or speed and, to the extent applicable, adjustments provided in § 299.66 with respect to the applicant's vessel retained by the United States and such other adjustments and terms and conditions, including tranfer of mortgage obligations in favor of the United States binding upon the applicant's vessel, as the Administration may prescribe. After the contract has been executed on behalf of the Administration, one of the counterparts will be sent to the applicant.

Subpart E-Adjustments for Prior
Sales to Citizens

§ 299.66 Adjustment for prior sales to citizens.

(a) Application. Within 60 days after the date of publication of the applicable prewar domestic costs in the FEDERAL REGISTER, as defined in § 299.1 (h), who is entitled to an adjustment in the price of a vessel as provided for in paragraph (c) of this section may apply to the Administration for such adjustment. The application to receive consideration must be substantially in the form prescribed by the Administration in § 299.133 and shall be accompanied by applicant's own computation. Three executed copies and fifteen conformed copies of the application must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Items or parts of items in the application which are inapplicable may be omitted. If any information called for by an applicable item is not furnished, an explanation of the omission shall be given. Detailed descriptions of exhibits need not be given. The applicant may furnish such relevant information as it may desire, in addition to that specified in the form.

(b) Amendment of application. Such application may be amended at any time

before the Administration has acted upon it. Three executed copies and fifteen conformed copies of the amendment must be filed with the Secretary, Maritime Administration, Washington, D.C., 20235. Any information called for by the Administration from time to time shall be furnished as an amendment or amendments to the application. The applicant shall file from time to time as amendments any information necessary to keep current and correct, while the application is pending, the information contained therein or furnished in connection therewith.

(c) Persons entitled to adjustment. Any citizen of the United States, as defined in § 299.1 (h), who on March 8, 1946:

(1) Owned a vessel which he purchased from the United States Maritime Commission prior to such date and which was delivered by its builder after December 31, 1940; or

(2) Was a party to a contract with the Commission to purchase from the Commission a vessel, which had not yet been delivered to him; or

(3) Owned a vessel on account of which a construction-differential subsidy was paid, or agreed to be paid, by the Commission under section 504 of the Merchant Marine Act, 1936, as amended, and which was delivered by its builder after December 31, 1940; or

(4) Was a party to a contract with a shipbuilder for the construction for him of a vessel, which had not yet been delivered to him, and on account of which a construction-differential subsidy was agreed, prior to such date, to be paid by the Commission under section 504 of the Merchant Marine Act, 1936, as amended, shall, except as hereinafter provided, be entitled to an adjustment in the price of such vessel as provided in paragraph (a) of this section. No adjustment will be made in respect of any vessel the contract for the construction of which was made after September 2, 1945; under the provisions of Title V (including section 504) or Title VII of the Merchant Marine Act, 1936, as amended.

(d) Amount of adjustment. An adjustment will be made, as provided in this section, by treating the vessel as if it were being sold to the applicant on March 8, 1946, and not before that time.