ule may be omitted if (1) neither the sum of captions 9 and 10 in the related balance sheet nor the amount of caption 29 in such balance sheet exceeds 5 percent of total assets (exclusive of intangible assets) as shown by the related balance sheet at either the beginning or end of the period, or (2) there have been no changes in the information required to be filed from that last previously reported.

Schedule XI-Guarantees of securities of other issuers. The schedule prescribed by § 210.12-12 shall be filed with respect to any guarantees of securities of other issuers by the person for which the statement is filed.

Schedule XII-Reserves. The schedule prescribed by § 210.12-13 shall be filed in support of reserves included in the balance sheet but not included in Schedules VI and VIII.

Schedule XIII-Capital shares. The schedule prescribed by § 210.12-14 shall be filed in support of caption 34 of each balance sheet.

Schedule XIV-Warrants or rights. The schedule prescribed by § 210.12-15 shall be filed with respect to warrants or rights granted by the person for which the statement is filed to subscribe for or purchase securities to be issued by such person.

If

Schedule XV-Other securities. there are any classes of securities not included in Schedules IX, XI, XIII, or XIV, set forth in this schedule information concerning such securities corresponding to that required for the securities included in such schedules. Information need not be set forth, however, as to notes, drafts, bills of exchange, bankers' acceptances, having a maturity at the time of issuance of not exceeding 1 year.

or

Schedule XVI-Supplementary profit and loss information. The schedule prescribed by § 210.12-16 shall be filed in support of each profit and loss statement in which sales or operating revenues were of significant amount. This schedule may also be omitted if the information required by columns B and C and footnotes 4 and 5 thereof is furnished in the profit and loss or income statement or in a footnote thereto.

Schedule XVII-Income from dividends; equity in net profit and loss of affiliates. The schedule prescribed by § 210.12-17 [Rule 12–17] shall be filed for each period for which a profit and loss statement is filed. This schedule may be

omitted if neither the sum of captions 9 and 10 in the related balance sheet nor the amount of caption 29 in such balance sheet exceeds 5 percent of total assets (exclusive of intangible assets) as shown by the related balance sheet at either the beginning or end of the period. [Reg. S-X, 5 F.R. 954, as amended at 7 F.R. 775, 10801, 8 F.R. 16675; 15 F.R. 9389, Dec. 29, 1950]

COMMERCIAL, INDUSTRIAL

AND MINING COMPANIES IN THE PROMOTIONAL, EXPLORATORY OF DEVELOPMENT STAGE

SOURCE: §§ 210.5a-01 to 210.5a-07 appear at 13 F.R. 6440, Nov. 2, 1948 unless otherwise noted.

§ 210.5a-01 Application of §§ 210.5a01 to 210.5a-07.

Sections 210.5a-01 to 210.5a-07 shall be applicable to the financial statements filed as a part of:

(a) Registration statements on Form S-2 (§ 239.12 of this chapter) or Form S-3 (§ 239.13 of this chapter), except as otherwise specifically provided in such forms, under the Securities Act of 1933;

(b) Applications for registration and annual reports pursuant to sections 12, 13 and 15(d) respectively of the Securities Exchange Act of 1934 filed by commercial and industrial companies in the promotional or development stage which, if registering under the Securities Act of 1933, would be required to use Form S-2.

(c) Applications for registration and annual reports pursuant to sections 12, 13 and 15(d) respectively of the Securities Exchange Act of 1934 filed by mining companies not in the production stage but engaged primarily in the exploration for or the development of mineral deposits other than oil, gas or coal, if all of the following conditions are met:

(1) The registrant has not been in production during the period of the report or the two years immediately prior thereto; except that being in production for an aggregate period of no more than

1 For the purpose of financial statements prepared pursuant to the instructions contained in this article a mine will be considered to have passed from a development to a production stage when the major portion of the mineral production is obtained from workings other than those opened for the purpose of exploration or development or when the principal activity of the mine becomes the production of developed ore rather than the development of additional ores for mining.

practice, made during any period for which financial statements are filed which affects comparability of such financial statements with those of prior or future periods, and the effect thereof upon the net income for each period for which financial statements are filed, shall be disclosed in a note to the appropriate financial statement.

(b) Any material retroactive adjustment made during any period for which financial statements are filed, and the effect thereof upon net income of prior periods shall be disclosed in a note to the appropriate financial statement. § 210.3-08 Summary of accounting principles and practices.

Information required in notes as to accounting principles and practices reflected in the financial statements may be presented in the form of a single statement. In such case specific references shall be made in the appropriate financial statements to the applicable portion of such single statement.

§ 210.3-09 Conversion of items in foreign currencies.

The basis of conversion of all items in foreign currencies shall be stated, and the amount and disposition of the resulting unrealized profit or loss shown. § 210.3-10 Opening balances.

Instructions which permit the balance of an account at the beginning of the period for which financial statements are being filed to be "as per the accounts" shall not be applicable with respect to companies which have previously filed financial statements under the Securities Act of 1933, or the Securities Exchange Act of 1934. As to such companies, however, balances as per accounts may be taken as of the close of the most recent period for which certified financial statements are on file.

particular instruction, it is stated to be acceptable with respect to a particular item.

§ 210.3-13 Current assets.

Items classed as current assets shall be generally realizable within one year. However, generally recognized trade practices may be followed with respect to the inclusion of items such as instalment receivables or inventories long in process, provided an appropriate explanation of the circumstances is made and, if practicable, an estimate is given of the amount not realized within one year.

§ 210.3-14 Current liabilities.

Items due and payable within one year shall in general be classed as current liabilities. However, generally recognized trade practices may be followed with respect to the exclusion of items such as customers' deposits and deferred income, provide an appropriate explanation of the circumstances is made. § 210.3-15

Reacquired evidences of in

debtedness.

Reacquired evidences of indebtedness shall be shown separately as a deduction, under the appropriate liability caption. However, reacquired evidences of indebtedness held for pension and other special funds not related to the particular issues may be shown as assets of such funds: Provided, That there be stated parenthetically the amount of such evidences of indebtedness, the cost thereof, and the amount at which carried. § 210.3-16 Reacquired shares.

Reacquired shares shall be shown separately as a deduction from capital shares, or from the total of capital shares and surplus, or from surplus, at either par or stated value, or cost, as circumstances require.

§ 210.3-17 Discount on capital shares.

Discount on capital shares, or any unamortized balance thereof, shall be shown separately as a deduction from capital shares or from surplus, as circumstances require.

If present in regard to the person for which the statement is filed the following shall be set forth in the balance sheet or in notes thereto:

(a) Assets subject to lien. The amounts of assets mortgaged, pledged, or otherwise subject to lien shall be designated and the obligations secured shall be briefly identified. However, in the case of commercial, industrial, and public utility companies this rule need not be followed with respect to assets (other than current assets and securities) given as security for bonds, mortgages, and similar debt.

(b) Intercompany profits and losses. The effect upon any balance sheet item of profits or losses resulting from transactions with affiliated companies shall be stated. If impracticable of accurate determination, without unreasonable effort or expense, give an estimate or explain.

(c) Defaults. The facts and amounts concerning any default in principal, interest, sinking fund, or redemption provisions with respect to any issue of securities or credit agreements, or any breach of covenant of a related indenture or agreement, shall be stated. Notation of such default or breach of covenant shall be made in the balance sheet.

(d) Preferred shares. (1) If callable, the date or dates and the amount per share at which such shares are callable shall be stated.

(2) Arrears in cumulative dividends per share and in total for each class of shares shall be stated.

3) Preferences on involuntary liquidation, if other than the par or stated value, shall be shown. When the excess involved is material there shall be shown (i) the difference between the aggregate preference on involuntary liquidation and the aggregate par or stated value; (ii) a statement that this difference, plus any arrears in dividends, exceeds the sum

of the par or stated value of the junior capital shares and the surplus, if such is the case; and (iii) a statement as to the existence, or absence, of any restrictions upon surplus growing out of the fact that upon involuntary liquidation the preference of the preferred shares exceeds its par or stated value.

(e) Pension and retirement plans. (1) A brief description of the essential provisions of any employee pension or retirement plan shall be given.

(2) The estimated annual cost of the plan shall be stated.

(3) If a plan has not been funded or otherwise provided for, the estimated amount that would be necessary to fund or otherwise provide for the past service cost of the plan shall be disclosed.

(f) Restrictions which limit the availability of surplus for dividend purposes. Describe any such restriction, other than as reported in paragraph (d) of this section, indicating briefly its source, its pertinent provisions, and, where appropriate and determinable, the amount of the surplus so restricted.

(g) Contingent liabilities. A brief statement as to contingent liabilities not reflected in the balance sheet shall be made. In the case of guarantees of securities of other issuers a reference to the appropriate schedule shall be included.

210.3-20 General notes to profit and loss statements.

If present in regard to the person for which the statement is filed, the following shall be set forth in the profit and loss statement or in notes thereto:

(a) Instalment or deferred sales. If sales are made on a deferred basis, such as instalment sales or sales of equipment long in process of manufacture, the basis of taking profits into income shall be stated.

(b) Intercompany profits and losses. The amount of any profits or losses resulting from transactions between affiliated companies shall be stated. If impracticable of determination without unreasonable effort and expense, give an estimate or explain.

(c) Depreciation, depletion, obsolescence, and amortization. State for the period for which profit and loss statements are filed, the policy followed with respect to:

(1) The provision for depreciation, depletion, and obsolescence of physical properties or reserves created in lieu

thereof, including the methods and, if practicable, the rates used in computing the annual amounts;

(2) The provision for depreciation and amortization of intangibles, or reserves created in lieu thereof, including the methods and, if practicable, the rates used in computing the annual amounts;

(3) The accounting treatment for maintenance, repairs, renewals, and betterments; and

(4) The adjustment of the accumulated reserves for depreciation, depletion, obsolescence, amortization or reserves in lieu thereof, at the time the properties are retired or otherwise disposed of, including the disposition made of any profit or loss on sale of such properties.

(a) Capital stock optioned to officers and employees. (1) A brief description of the terms of each option arrangement shall be given, including (i) the title and amount of securities subject to option; (11) the year or years during which the options were granted; and (iii) the year or years during which the optionees became, or will become, entitled to exercise the options.

(2) Btate (1) the number of shares under option at the balance sheet date, and the option price and the fair value thereof, per share and in total, at the dates the options were granted; (ii) the number of shares with respect to which options became exercisable during the period, and the option price and the fair value thereof, per share and in total, at the dates the options became exercisable; and (111) the number of shares with respect to which options were exercised during the period, and the option price and the fair value thereof, per share and In total, at the dates the options were exercised. The required information may be summarized as appropriate with respect to each of these categories.

(2) Pitate the basis of accounting for Buch option arrangements and the Bomb of charges, if any, reflected in income with respect thereto.

[15 PR. WARS, Dec. 29, 1950, as amended at 18 PR TRAY, Nov. 14, 1958]

CONSOLIDATED AND COMBINED
STATEMENTS

152104 01 to 210.4 14 appear at
, Dec. 29, 1950, unless otherwise

§ 210.4-01 Application of §§ 210.4-01 to 210.4-14.

Sections 210.4-01 to 210.4-14 shall govern the preparation of consolidated and combined statements.

§ 210.4-02 Consolidated statements of the registrant and its subsidiaries.

The registrant shall follow in the consolidated statements principles of inclusion or exclusion which will clearly exhibit the financial condition and results of operations of the registrant and its subsidiaries: Provided, however, That,

(a) The registrant shall not consolidate any subsidiary which is not a majority-owned subsidiary;

(b) If the statements of a subsidiary are as of a date or for periods different from those of the registrant, such subsidiary may be consolidated only if all the following conditions exist: (1) Such difference is not more than 93 days; (2) the closing date of the subsidiary is expressly indicated; (3) the necessity for the use of different closing dates is briefly explained; and (4) any changes in the respective fiscal periods of the registrant and the subsidiary made during the period of report are clearly indicated, together with the manner of treatment;

(c) Consolidation of foreign subsidiaries: Due consideration shall be given to the propriety of consolidating with domestic corporations foreign subsidiaries whose operations are effected in terms of restricted foreign currencies. If consolidated, disclosure should be made as to the effect, insofar as this can be reasonably determined, of foreign exchange restrictions upon the consolidated financial position and operating results of the registrant and its subsidiaries.

§ 210.4-03 Group statements of subsidiaries not consolidated.

For majority-owned subsidiaries not consolidated with the registrant there may be filed statements in which such subsidiaries are consolidated or combined in one or more groups pursuant to principles of inclusion or exclusion which will clearly exhibit the financial condition and results of operations of the group or groups. If it is essential to a properly summarized presentation of the facts, such consolidated or combined statement shall be filed.

§ 210.4-04 Statement as to principle of consolidation or combination followed.

(a) The principle adopted in determining the inclusion and exclusion of subsidiaries in each consolidated balance sheet and in each group balance sheet of unconsolidated subsidiaries shall be stated in a note to the respective balance sheet.

(b) As to each consolidated statement and as to each group statement of unconsolidated subsidiaries, a statement shall be made as to whether there have been included or excluded any persons not similarly treated in the corresponding statement for the preceding fiscal period filed with the Commission. If the answer to the foregoing is in the affirmative, the names of such persons shall be given.

There

(a) Consolidated subsidiaries. shall be set forth in a note to each consolidated balance sheet filed a statement of any difference between the investment in subsidiaries consolidated, as shown by the parent's books, and the parent's equity in the net assets of such subsidiaries as shown by the books of the latter. If any such difference exists, there shall be set forth the amount of the difference and the disposition made thereof in preparing the consolidated statements, naming the balance sheet captions and stating the amount included in each.

(b) Subsidiaries not consolidated. A statement shall be made of the amount of any difference between the investment of the parent and its consolidated subsidiaries, as shown by their books, in the unconsolidated subsidiaries and fiftypercent owned persons for which statements are filed and the equity of such persons in the net assets of such unconsolidated subsidiaries, and fifty-percent owned persons, as shown by the books of the latter.

§ 210.4-06 Reconciliation of dividends received from, and earnings of, unconsolidated subsidiaries.

The proportion of the sum of, or difference between, current earnings or losses and the dividends declared or paid by the unconsolidated subsidiaries required to be included in the schedule pre

scribed by § 210.12-17 that is applicable to the parent and its consolidated subsidiaries shall be set forth in a note to each consolidated profit and loss statement.

§ 210.4-07 Minority interests.

(a) Minority interests in the net assets of subsidiaries consolidated shall be shown in each consolidated balance sheet. Separation shall be made between the minority interest in the capital and in the surplus.

§ 210.4-09

Special requirements as to

insurance companies.

(a) Except as provided in paragraph (b) of this section, the statements of an insurance company shall not be consolidated or combined with the statements of any person.

(b) The statements of an insurance company other than a life insurance company may be consolidated if all of the following conditions exist:

(1) The insurance company is a totally-held subsidiary of the top parent included in the consolidation;

(2) Such top parent is not an insurance company, investment company, or bank holding company;

(3) The insurance company engages in no business of a material amount other than the insuring of risks arising in the ordinary course of business of such top parent and its other subsidiaries; and

(4) Separate financial statements for the insurance company are filed.

§ 210.4-10 Special requirements as to registrants which are bank holding companies.

If the registrant is a bank holding company: (a) Statements of the registrant may be consolidated only with the statements of subsidiaries which are bank holding companies.

(b) A consolidated statement of the registrant and any of its bank holding company subsidiaries shall not be filed unless accompanied by a consolidating