-------------------- BEGINNING OF PAGE #1 ------------------- SECURITIES AND EXCHANGE COMMISSION 17 CFR PARTS 210, 229 and 249 RELEASE NOS. 33-7118; 34-35094; IC-20766; FR44 INTERNATIONAL SERIES NO. 758 FILE NO. S7-12-94 RIN 3235-AG17 FINANCIAL STATEMENTS OF SIGNIFICANT FOREIGN EQUITY INVESTEES AND ACQUIRED FOREIGN BUSINESSES OF DOMESTIC ISSUERS AND FINANCIAL SCHEDULES AGENCY: Securities and Exchange Commission. ACTION: Final rules. SUMMARY: The Commission is announcing the adoption of amendments to Regulation S-X, which governs the form and content of financial statements and schedules furnished by public companies in filings with the Commission, and Form 20-F, which is applicable to foreign private issuers. The amendments extend accommodations adopted recently with respect to financial statements of foreign issuers to filings by domestic issuers that are required to include financial statements of foreign equity investees or acquired foreign businesses. The accommodations relate to the age of financial statements and the reconciliation of financial statements to U.S. generally accepted accounting principles. In addition, the amendments revise the tests for determining whether financial statements of an equity investee must be provided, and they eliminate the requirement to furnish certain supplemental financial schedules. EFFECTIVE DATES: [Insert date of publication in the FEDERAL REGISTER] FOR FURTHER INFORMATION CONTACT: Wayne E. Carnall, (202) 942- 2960, Deputy Chief Accountant, Division of Corporation Finance, Mail Stop 3-13, or, with respect to investment company matters, Jim Volk, (202) 942-0637, Office of Disclosure and Review, Division of Investment Management, U.S. Securities and Exchange Commission, Mail Stop 10-5, 450 Fifth Street, Washington, D.C. 20549. SUPPLEMENTARY INFORMATION: The Commission is adopting amendments to the following rules and forms: Rules 1-02, -[1]- 3-05, -[2]- 3-09, -[3]- 3-12, -[4]- 4-08, -[5]- 5-02, -[6]- 5-04, -[7]- 6- 07, -[8]- 6-10, -[9]- 7-05, -[10]- 9-07, -[11]- 12-01, -[12]- of -[1]- 17 CFR 210.1-02. -[2]- 17 CFR 210.3-05. -[3]- 17 CFR 210.3-09. -[4]- 17 CFR 210.3-12. -[5]- 17 CFR 210.4-08. -[6]- 17 CFR 210.5-02. -[7]- 17 CFR 210.5-04. -[8]- 17 CFR 210.6-07. -[9]- 17 CFR 210.6-10. -[10]- 17 CFR 210.7-05. -[11]- 17 CFR 210.9-07. -------------------- BEGINNING OF PAGE #2 ------------------- Regulation S-X, -[13]- and Items 404 -[14]- and 601 -[15]- of Regulation S-K. -[16]- In addition, the Commission is amending Form 20-F -[17]- under the Securities Exchange Act of 1934 ("Exchange Act"). -[18]- I. INTRODUCTION The Commission today is adopting several amendments that will extend financial statement accommodations available to foreign issuers to filings by domestic issuers that are required to include financial statements of foreign equity investees or acquired foreign businesses. -[19]- The accommodations relate to the age of financial statements -[20]- and the reconciliation of financial statements to U.S. generally accepted accounting principles ("GAAP") for those foreign entities. -[21]- In addition, the adopted amendments revise the tests of significance for determining whether financial statements of an equity investee must be provided. The amendments also eliminate certain supplemental financial schedules that were eliminated recently for foreign issuers, -[22]- as well as eliminate two additional schedules that foreign and domestic issuers have been required to include in annual reports and registration statements filed with the Commission. The amendments adopted today were proposed by the Commission on April 19, 1994. -[23]- Comment letters received from registrants, accounting firms, and related professional membership associations generally supported the proposals and frequently commented that the schedules were generally redundant to information already required in the financial statements and that the costs of preparing the schedules therefore outweighed the benefit. Comments by financial analysts were critical of the proposed amendments, expressing a general concern about a -[12]-(...continued) -[12]- 17 CFR 210.12-01. -[13]- 17 CFR Part 210. -[14]- 17 CFR 229.404. -[15]- 17 CFR 229.601. -[16]- 17 CFR 229. -[17]- 17 CFR 249.220f. -[18]- 15 U.S.C. 78a et seq. -[19]- The amendments regarding acquired foreign businesses adopted today would also apply to issuers that file under Regulation S-B. -[20]- See Securities Act Release No. 7026 (November 3, 1993) [58 FR 60304] regarding the age of financial statements for foreign private issuers. -[21]- See Securities Act Release No. 7053 (April 19, 1994) [59 FR 21644] regarding the modification of the reconciliation requirements for foreign equity investees and foreign acquired businesses. -[22]- Id. -[23]- See Securities Act Release No. 7055 (April 19, 1994) [59 FR 21814] (the "Proposing Release"). -------------------- BEGINNING OF PAGE #3 ------------------- perceived relaxation of disclosure requirements. -[24]- The Commission believes concerns regarding the revised requirements do not consider fully the offsetting effects of other disclosure requirements that must be met by reporting companies. The amendments are being adopted substantially as proposed because the Commission believes they will result in reduced costs of registration and reporting by public companies without loss of material basic disclosure for the protection of investors. II. FINANCIAL STATEMENTS OF SIGNIFICANT BUSINESS ACQUISITIONS AND EQUITY INVESTEES The changes to Regulation S-X and Form 20-F adopted today revise the tests of significance which determine whether financial statements of an equity investee must be provided, and modify the requirements for reconciliation to U.S. GAAP of the financial statements of the significant foreign business acquisitions and foreign investees of domestic registrants. A. Tests of Significance of Equity Investees Separate audited financial statements of a company accounted for by the registrant using the equity method of accounting (an "equity investee") must be provided if the investee is "significant" as measured pursuant to Rule 3-09 of Regulation S- X. The amendments adopted today eliminate one of the three tests of significance made pursuant to that rule. Pursuant to the adopted rule, significance of an investee is measured by comparison of the registrant's proportionate share of the investee's pretax income to that of the registrant and of the registrant's investment in the investee to the registrant's total assets. The determination of significance will no longer require comparison of the investee's total assets to the total assets of the registrant. While generally favored by commenters, several financial analysts observed that the two tests retained under the adopted rule may lead to the omission of financial statements of highly leveraged investees because the registrant's investment and proportion of earnings will be minimized as a result of the investee's debt. However, exclusion of separate audited financial statements appears reasonable given that the unfavorable financial impact of the investee is generally limited to the registrant's investment in that entity; losses in excess of that investment generally are not recognized under GAAP. To the extent that a registrant has guaranteed an investee's debt or is otherwise committed to fund its operations, the registrant must continue to recognize losses of the investee, -[25]- and such losses would continue to be considered in one prong of the two-pronged test for significance. If there are other material consequences of a registrant's investment in a highly leveraged investee, the Commission believes discussion of these will be elicited by Item 303 of Regulation S-K, "Management's Discussion and Analysis." -[26]- In addition, summarized financial -[24]- Forty-one comment letters on the Proposing Release were received. Those letters and a summary of comments are available for public inspection and copying in File No. S7-12-94 at the Commission's Public Reference Room in Washington, D.C. -[25]- Accounting Principles Board Opinion No. 18, "The Equity Method of Accounting for Investments in Common Stock." -[26]- 17 CFR 229.303. -------------------- BEGINNING OF PAGE #4 ------------------- information, pursuant to Rule 4-08(g) of Regulation S-X, -[27]- that would be required to be provided in a note to the financial statements if the significance of the investees individually or in aggregate exceeds the 10% level under any of the three tests, would generally provide sufficient information in these or similar circumstances. B. Reconciliation of Financial Statements of Significant Foreign Equity Investees and Foreign Acquirees The amendments adopted today permit domestic issuers to furnish financial statements of significant foreign business acquisitions and foreign equity investees on substantially the same basis as may foreign private issuers. That is, the financial statements of foreign acquirees, furnished pursuant to Rule 3-05 of Regulation S-X as amended, -[28]- or investees, furnished pursuant to Rule 3-09 of Regulation S-X as amended, in periodic reports or registrations statements of domestic issuers need only comply with Item 17 of Form 20-F. Although some commenters questioned whether the cost of compliance with existing requirements justified the accommodation, most commenters cited the significant compliance costs incurred under the prior rule and strongly favored the proposal. Pursuant to Item 17, the financial statements may be prepared on a comprehensive basis other than U.S. GAAP. Quantitative reconciliation of net income and material balance sheet items is required, but the additional information specified by U.S. GAAP for disclosure in notes to financial statements is not necessary. However, no reconciliation is required at all if the foreign business does not exceed the 30% level under the tests of significance which call for the inclusion of its financial statements of a significant business acquisition -[29]- or significant investee. -[30]- The adopted rules are applicable to a foreign business, as defined. Several commenters recommended that the definition be identical to the definition of a foreign private issuer, but it -[27]- 17 CFR 210.4-08(g). -[28]- 17 CFR 210.3-05. -[29]- Consistent with the recently adopted amendments for foreign private issuers (See Securities Act Release No. 7053 (April 19, 1994)), reconciliation to U.S. GAAP would continue to be required for pro forma financial information depicting the effects of a registrant's acquisition of a foreign business. -[30]- In circumstances where a registrant furnishes separate financial statements of an equity investee pursuant to Rule 3-09 of Regulation S-X, the staff has not required the registrant to also furnish summarized financial data of the investee pursuant to Rule 4-08(g) of Regulation S-X. (See Staff Accounting Bulletin No. 44, Topic 6:K (March 3, 1983) [47 FR 10789]. However, consistent with the recently adopted amendments for foreign private issuers (See Securities Act Release No. 7053 (April 19, 1994)), a domestic registrant that furnishes separate financial statements of a foreign investee that are not reconciled pursuant to the proposed rule should furnish the summarized financial data pursuant to Rule 4-08(g) in accordance with U.S. GAAP in its primary financial statements. -------------------- BEGINNING OF PAGE #5 ------------------- is adopted as proposed. -[31]- The adopted definition of a foreign business varies from the definition of a foreign private issuer because the relief available under the rule is intended to be applicable to a branch or other component of an entity, rather than only to a legally recognized business entity. Also, the rule is not intended to be applicable to a business that is incorporated outside the U.S. but that is, prior to the registrant's investment, majority owned by one or more U.S. shareholders, because such an entity can be expected to maintain its books and records on a basis permitting reconciliation to U.S. GAAP without unreasonable cost. -[32]- C. Age of Financial Statements of Significant Foreign Equity Investees or Foreign Acquirees Under the amendments adopted today, the financial statements of significant foreign equity investees and acquired foreign businesses furnished in filings by domestic issuers can be updated on the same time schedule as foreign private issuers. -[33]- Registration statements of foreign private issuers need not include audited financial statements of the most recently completed fiscal year until six months after the year-end; unaudited interim financial statements are required only to the extent necessary to bring the most recent financial statements included in the filing to a date within ten months of effectiveness.-[34]- Although two commenters doubted that there was significant additional cost or difficulty associated with updating foreign investees and acquiree financial statements on the same basis as domestic issuers, most commenters felt that financial reporting practices outside the U.S. varied to such a degree as to present significant obstacles to the preparation of separate financial statements on as timely a basis as is required for U.S. companies. III. STREAMLINING OF REQUIRED FINANCIAL STATEMENT SCHEDULES The amendments adopted today eliminate the following six schedules that had previously been eliminated for foreign private issuers: (1) Rule 12-02 - Marketable Securities - Other Investments including Schedule XIII (2) Rule 12-03 - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees Other Than Related Parties (3) Rule 12-05 - Indebtedness of and to Related Parties - Not Current. (4) Rule 12-06 - Property, Plant and Equipment (5) Rule 12-07 - Accumulated Depreciation, Depletion -[31]- If the acquired business or investee does not meet the definition of a foreign business, the issuer can file financial statements prepared in accordance with a basis of accounting other than US GAAP provided a reconciliation to US GAAP under Item 18 of Form 20-F is included regardless of the level of materiality. This is consistent with current staff practice. -[32]- Ownership is measured prior to the acquisition of the business. -[33]- If the acquired business or investee does not meet the definition of a foreign business, financial statements would need to be updated pursuant to Rule 3-12 of Regulation S-X. -[34]- 17 CFR 210.3-19. -------------------- BEGINNING OF PAGE #6 ------------------- and Amortization of Property, Plant and Equipment (6) Rule 12-08 - Guarantees of Securities of Other Issuers Two additional schedules previously required for both foreign and domestic issuers also will be eliminated: (1) Rule 12-10 - Short-term Borrowings (2) Rule 12-11 - Supplementary Income Statement Information A. Schedules Previously Eliminated from Foreign Issuer Filings 1. Marketable securities - other investments The rules adopted today eliminate this schedule. All of the issuers and accountants supported elimination of this schedule, but several financial analyst commenters did not favor elimination because they believed that the schedule provided information facilitating comparisons among companies whose accounting is affected by the classification of investments as either current or noncurrent. Elimination of this schedule was proposed because much of its information is required to be disclosed in financial statements by Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities" ("SFAS 115"), issued in May 1993 by the Financial Accounting Standards Board ("FASB") and effective for fiscal years beginning after December 15, 1993. Under SFAS 115, the designation as current or noncurrent no longer affects the carrying value of a security. Some commenters favored retention of the schedule's requirement for identification of securities of individual issuers exceeding 2% of the registrant's total assets. The Commission believes retention of the specific disclosure is unnecessary because other rules applicable to filings by public companies should lead to appropriate disclosure if a particular investment is material. Disclosures required by Item 303 of Regulation S-K, "Management's Discussion and Analysis," include discussion of the material effects and uncertainties associated with concentrations and risks in the investment portfolio. -[35]- In addition, Statement of Financial Accounting Standards No. 105, "Disclosure of Information about Financial Instruments with Off- Balance-Sheet Risk and Financial Instruments with Concentrations of Credit Risk," ("SFAS 105") requires disclosure of all significant concentrations of credit risk arising from an individual counterparty or groups of counterparties that would be similarly affected by changes in economic or other conditions. 2. Amounts receivable from related parties and underwriters, promoters and employees other than related parties and indebtedness of and to related parties The Commission has eliminated these schedules as proposed. None of the commenters cited the need to retain these schedules, as similar information is required to be furnished pursuant to Statement of Financial Accounting Standards No. 57, "Related Party Transactions" ("SFAS 57") and Regulation S-K, Item 404 "Certain Relationships and Related Transactions." 3. Property, plant, and equipment, and accumulated depreciation, depletion, and amortization Although comments from financial analysts were generally opposed to elimination of these schedules, most commenters supported the proposal, citing the cost of their preparation and audit, and their limited usefulness. Financial analysts reported that they sometimes use the schedules to estimate the age, -[35]- See Securities Act Release No. 6835 (May 18, 1989). -------------------- BEGINNING OF PAGE #7 ------------------- relative age, and average depreciable life of each class of a company's depreciable assets. Other commenters agreed with observations in the proposing release that estimates based on the schedules would not be reliable if the issuer has significant foreign operations (due to the effects of currency translation on depreciation expense), or if a depreciation method other than straight line is used. The Commission believes that adequate quantitative disclosure regarding property, plant and equipment is elicited by Accounting Principle Board Opinion No. 12, ("Omnibus Opinion - 1967"), which requires disclosure of total depreciation expense for each period and the balances of major classes of depreciable assets. Where the age of capital assets may be indicative of increasing maintenance and replacement budgets, the registrant would be expected to disclose the material reasonably likely effects on operating trends, capital expenditures and liquidity pursuant to Item 303 of Regulation S- K. 4. Guarantees of securities of other issuers The Commission has eliminated these schedules as proposed. None of the commenters cited the need to retain this schedule, as similar information is required to be disclosed by Statement of Financial Accounting Standards No. 5, "Accounting for Contingencies," ("SFAS 5"). B. Additional Schedules Eliminated for both Foreign and Domestic Issuers 1. Short term borrowings The adopted amendments eliminate this schedule. However, as proposed, weighted average interest rate on borrowings outstanding as of each of the dates for which balance sheets are presented will be required to be disclosed in a note to the financial statements. In addition, for investment companies, although the schedule requirement has been eliminated, the information formerly required by 210.12-10 will now be required to be provided in the body of the financial statements or in the footnotes. While two of the financial analysts indicated that the year end rates may not be indicative of the average rate during the period, they did not address the computational problems arising from foreign currency translation and other factors, as discussed in the proposing release. A number of other commenters cited those computational problems and indicated that the information disclosed in the schedule frequently was not meaningful. The Commission concluded that the costs of furnishing the information outweighs its usefulness. 2. Supplementary income statement information The Commission has eliminated this schedule by today's amendments. While the amounts of the items formerly referenced by this schedule (maintenance and repairs; depreciation and amortization of the cost of intangible assets, preoperating costs and similar deferred costs; taxes other than payroll; royalties; and advertising costs) need not be disclosed on an ongoing basis by registrants, discussion of discretionary expenses and other items in the schedule, quantified to the extent practicable, will be required in the company's Management's Discussion and Analysis where necessary to explain material trends and uncertainties that affected operating results, liquidity or financial condition of the registrant, or that may be reasonably likely to affect future results, liquidity or financial condition. -[36]- IV. COST-BENEFIT ANALYSIS Several registrants provided quantified estimates of the -[36]- See Financial Reporting Release 36. -------------------- BEGINNING OF PAGE #8 ------------------- cost reductions which would vary from registrant to registrant. All of the registrants and accounting firms that addressed the cost-benefit of the amendments indicated that the cost of preparation and audit of the schedules and other information that have been eliminated today exceeded their benefit. Several financial analysts indicated that they thought that the actual costs of providing this information is small, and that the benefits exceeded such costs. They suggested that the reduced disclosures could lead to an increase in the costs of capital due to an increase in investor uncertainty. For reasons discussed above, the Commission believes that the adoption of these rules will reduce the regulatory burden and costs of the vast majority of the registrants without a loss of information that is necessary for investor protection. V. AVAILABILITY OF FINAL REGULATORY FLEXIBILITY ANALYSIS A Final Regulatory Flexibility Analysis in accordance with the Regulatory Flexibility Act has been prepared with respect to the final amendments. A summary of a corresponding Initial Regulatory Flexibility Analysts was included in the Proposing Release. Members of the public who wish to obtain a copy of the Final Regulatory Flexibility Analysis should contact Wayne E. Carnall, Deputy Chief Accountant, Division of Corporation Finance, Securities and Exchange Commission, Mail Stop 3-13, 450 5th Street, N.W., Washington, D.C. 20549, (202) 942-2960. VI. STATUTORY BASIS FOR RULES The Commission's rules and forms are amended pursuant to section 19 of the Securities Act of 1933 and sections 3(b), 4A, 12, 13, 14, 15, 16 and 23 of the Securities Exchange Act of 1934. VII. EFFECTIVE DATE The final rule and amendments to the Commission's rules and forms shall be effective immediately upon publication in the FEDERAL REGISTER, in accordance with the Administrative Procedure Act, which allows effectiveness in less than 30 days after publications for, inter alia, "a substantive rule which grants or recognizes an exemption or relieves a restriction." 5 U.S.C. 553(d)(1). List of Subjects in 17 CFR Parts 210, 229 and 249 Accounting, Reporting and recordkeeping requirements, Securities. TEXT OF AMENDMENTS In accordance with the foregoing, Title 17, Chapter II of the Code of Federal Regulations is amended as follows: PART 210 -- FORM AND CONTENT OF AND REQUIREMENTS FOR FINANCIAL STATEMENTS, SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934, PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, INVESTMENT COMPANY ACT OF 1940, AND ENERGY POLICY AND CONSERVATION ACT OF 1975. 1. The authority citation for Part 210 is continues to read as follows: AUTHORITY: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77aa(25), 77aa(26), 78l, 78m, 78n, 78o(d), 78w(a), 78ll(d), 79e(b), 79j(a), 79n, 79t(a), 80a-8, 80a-20, 80a-29, 80a-30, 80a-37a, unless otherwise noted. 2. By amending 210.1-02 by redesignating paragraphs (l) through (aa) as paragraphs (m) through (bb), and adding paragraph (l) to read as follows: 210.1-02 Definitions of terms used in Regulation S-X (17 CFR 210). * * * * * (l) Foreign business. A business that is majority owned by persons who are not citizens or residents of the United States and is not organized under the laws of the United States or any state thereof, and either: (1) More than 50 percent of its assets are located outside -------------------- BEGINNING OF PAGE #9 ------------------- the United States; or (2) The majority of its executive officers and directors are not United States citizens or residents. * * * * * 3. By amending 210.3-05 by revising the last sentence of the introductory text of paragraph (b)(1) and adding paragraph (c) to read as follows: 210.3-05 Financial statements of businesses as acquired or to be acquired. * * * * * (b) Periods to be presented. (1) * * * The periods for which such financial statements are to be filed shall be determined using the conditions specified in the definition of significant subsidiary in 210.1-02(w) as follows: * * * * * (c) Financial statements of foreign businesses. If the business acquired or to be acquired is a foreign business, financial statements of the business meeting the requirements of Item 17 of Form 20-F ( 249.220f of this chapter) will satisfy this section. 4. By amending 210.3-09 by revising the last sentence of paragraph (a), revising the last two sentences of paragraph (b) and adding paragraph (d) to read as follows: 210.3-09 Separate financial statements of subsidiaries not consolidated and 50 percent or less owned persons. (a) * * * Similarly, if either the first or third condition set forth in 210.1-02(w), substituting 20 percent for 10 percent, is met by a 50 percent or less owned person accounted for by the equity method either by the registrant or a subsidiary of the registrant, separate financial statements of such 50 percent or less owned person shall be filed. (b) * * * However, these separate financial statements are required to be audited only for those fiscal years in which either the first or third condition set forth in 210.1-02(w), substituting 20 percent for 10 percent, is met. For purposes of a filing on Form 10-K ( 249.310 of this chapter), if the fiscal year of any 50 percent or less owned person ends within 90 days before the date of the filing, or if the fiscal year ends after the date of the filing, the required financial statements may be filed as an amendment to the report within 90 days, or within six months if the 50 percent or less owned person is a foreign business, after the end of such subsidiary's or person's fiscal year. (c) * * * (d) If the 50 percent or less owned person is a foreign business, financial statements of the business meeting the requirements of Item 17 of Form 20-F ( 249.220f of this chapter) will satisfy this section. 5. By amending 210.3-12 by adding a second sentence to paragraph (f) to read as follows: 210.3-12 Age of financial statements at effective date of registration statement or at mailing date of proxy statement. * * * * * (f) * * * Financial statements of a foreign business which are furnished pursuant to 210.3-05 or 210.3-09 because it is an acquired business or a 50 percent or less owned person may be of the age specified in 210.3-19. -------------------- BEGINNING OF PAGE #10 ------------------- 6. By amending 210.4-08 by revising paragraph (g) to read as follows: 210.4-08 General notes to financial statements. * * * * * (g) Summarized financial information of subsidiaries not consolidated and 50 percent or less owned persons. (1) The summarized information as to assets, liabilities and results of operations as detailed in 210.1-02(bb) shall be presented in notes to the financial statements on an individual or group basis for: (i) Subsidiaries not consolidated; or (ii) For 50 percent or less owned persons accounted for by the equity method by the registrant or by a subsidiary of the registrant, if the criteria in 210.1-02(w) for a significant subsidiary are met: (A) Individually by any subsidiary not consolidated or any 50% or less owned person; or (B) On an aggregated basis by any combination of such subsidiaries and persons. (2) Summarized financial information shall be presented insofar as is practicable as of the same dates and for the same periods as the audited consolidated financial statements provided and shall include the disclosures prescribed by 210.1-02(bb). Summarized information of subsidiaries not consolidated shall not be combined for disclosure purposes with the summarized information of 50 percent or less owned persons. * * * * * 7. By amending 210.5-02 by adding a sentence following the first sentence to paragraph 19.(b) to read as follows: 210.5-02 Balance sheets. * * * * * 19. Accounts and notes payable * * * (b) * * * The weighted average interest rate on short term borrowings outstanding as of the date of each balance sheet presented shall be furnished in a note. * * * * * * * * 8. By amending 210.5-04 to: revise paragraph (a); remove Schedule I, Schedule II, Schedule IV, Schedule V, Schedule VI, Schedule VII, Schedule IX, Schedule X, and Schedule XIII of paragraph (c) and redesignate the remaining schedules in paragraph (c) to read as follows: Schedule III as Schedule I, Schedule VIII as Schedule II, Schedule XI as Schedule III, Schedule XII as Schedule IV, and Schedule XIV as Schedule V. 210.5-04 What Schedules are to be filed. (a) Except as expressly provided otherwise in the applicable form: (1) The schedules specified below in this Section as Schedules II and III shall be filed as of the date of the most recent audited balance sheet for each person or group. (2) Schedule II shall be filed for each period for which an audited income statement is required to be filed for each person or group. (3) Schedules I and IV shall be filed as of the date and for periods specified in the schedule. * * * * * 9. By amending 210.6-07.3 by adding the following sentence to read as follows: 210.6-07 Statements of operations. * * * * * -------------------- BEGINNING OF PAGE #11 ------------------- 3. Interest and amortization of debt discount and expense. Provide in the body of the statements or in the footnotes, the average dollar amount of borrowings and the average interest rate. * * * * * 10. By amending 210.6-10 by: removing Schedule IV and Schedule VII from paragraph (c) and redesignating the remaining schedules in paragraph (c) as follows: Schedule V as Schedule IV and Schedule VI as Schedule V; remove Schedule VI, Schedule VII, Schedule VIII, Schedule IX, and Schedule X in paragraph (e)(2) and redesignate Schedule XI as Schedule VI and Schedule XII as Schedule VII. 11. By amending 210.7-05 by: revising paragraph (a), removing Schedule II, Schedule IV, Schedule VII, and Schedule IX of paragraph (c) and redesignating the remaining schedules in paragraph (c) as follows: Schedule III as Schedule II, Schedule V as Schedule III, Schedule VI as Schedule IV, Schedule VIII as Schedule V, and Schedule X as Schedule VI. 210.7-05 What Schedules are to be filed. (a) Except as expressly provided otherwise in the applicable form: (1) The schedule specified below in this section as Schedules I shall be as of the date of the most recent audited balance sheet for each person or group. (2) The schedules specified below in this section as Schedule IV and V shall be filed for each period for which an audited income statement is required to be filed for each person or group. (3) Schedules II, III and V shall be filed as of the date and for periods specified in the schedule. * * * * * 12. By removing and reserving 210.9-07. 13. By revising 210.12-01 to read as follows: 210.12-01 Application of 210.12-01 to 210.12-29. These sections prescribe the form and content of the schedules required by 210.5-04, 210.6-10, 210.6A-05, and 210.7-05. 14. By removing and reserving 210.12-02, 210.12-03, 210.12-05, 210.12-06, 210.12-07, 210.12-08, 210.12-10, and 210.12-11. PART 229 - STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY POLICY AND CONSERVATION ACT OF 1975 - REGULATION S-K 15. The authority citation for Part 229 continues to read in part as follows: AUTHORITY: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l, 78m, 78n, 78o, 78w, 78ll(d), 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-11, unless otherwise noted. * * * * * 16. By revising instructions 2.C and 3.C of the Instructions to Paragraph (b) of 229.404 to read as follows: 229.404 (Item 404) Certain relationships and related transactions. * * * * * -------------------- BEGINNING OF PAGE #12 ------------------- Instructions to Paragraph (b) of Item 404 * * * * * 2. * * * C. Payments made or received by subsidiaries other than significant subsidiaries as defined in Rule 1-02(w) of Regulation S-X [ 210.1-02(w) of this chapter], provided that all such subsidiaries making or receiving payments, when considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as defined in Rule 1-02(w). 3. * * * C. Indebtedness incurred by subsidiaries other than significant subsidiaries as defined in Rule 1-02(w) of Regulation S-X [ 210.1-02(w) of this chapter], provided that all such subsidiaries incurring indebtedness, when considered in the aggregate as a single subsidiary, would not constitute a significant subsidiary as defined in Rule 1-02(w). * * * * * 17. By revising the second sentence in paragraph (b)(21)(ii) of 229.601 to read as follows: 229.601 (Item 601) Exhibits. * * * * * (b) * * * (21) Subsidiaries of the registrant. (i) * * * (ii) * * * (See the definition of "significant subsidiary" in Rule 1-02(w) (17 CFR 210.1-02(w)) of Regulation S-X.) * * * * * * * * PART 249 - FORMS, SECURITIES EXCHANGE ACT OF 1934 18. The authority citation for Part 249 continues to read in part as follows: AUTHORITY: 15 U.S.C. 78a, et seq., unless otherwise noted; * * * * * 19. By amending Form 20-F (referenced in 249.220f) by revising paragraph (a) to Item 17 and paragraph (a) to Item 18 to read as follows: NOTE: THE TEXT OF FORM 20-F IS NOT AND THE AMENDMENTS WILL NOT APPEAR IN THE CODE OF FEDERAL REGULATIONS. Form 20-F * * * * * Item 17. Financial Statements. (a) The registrant shall furnish financial statements for the same fiscal years and accountants' certificates that would be required to be furnished if the registration statement were on Form 10 or the annual report on Form 10-K. Schedules designated by 210.12-04, 210.12-09, 210.12-15, 210.12-16, 210.12-17, 210.12-18, 210.12-28, and 210.12-29 of this chapter shall be furnished if applicable to the registrant. * * * * * Item 18. Financial Statements. (a) The registrant shall furnish financial statements for the same fiscal years and accountants' certificates that would be required to be furnished if the registration statement were on Form 10 or the annual report on Form 10-K. Schedules designated by 210.12-04, 210.12-09, 210.12-15, 210.12-16, 210.12-17, 210.12-18, 210.12-28, and 210.12-29 of this chapter shall be furnished if applicable to the registrant. * * * * * By the Commission. -------------------- BEGINNING OF PAGE #13 ------------------- Jonathan G. Katz Secretary Dated: December 13, 1994