Financial Statements of Significant Foreign Equity Investees and Acquired Foreign Businesses of Domestic Issuers and Financial Schedules

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.

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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: December 20, 1994.

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, DC 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 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\

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\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.

\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.

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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

business.\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.

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\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.

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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 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.

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\23\See Securities Act Release No. 7055 (April 19, 1994) (59 FR

21814) (the ``Proposing Release'').

\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, DC.

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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 registrants 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

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.

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\25\Accounting Principles Board Opinion No. 18, ``The Equity

Method of Accounting for Investments in Common Stock.''

\26\17 CFR 229.303.

\27\17 CFR 210.4-08(g).

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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.

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\28\17 CFR 210.3-05.

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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\

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\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.

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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 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\

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\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.

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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\

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\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.

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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 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.

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\35\See Securities Act Release No. 6835 (May 18, 1989).

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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, 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 Sec. 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\

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\36\See Financial Reporting Release 36.

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IV. Cost-Benefit Analysis

Several registrants provided quantified estimates of the 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

Analysis 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 continued 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 Sec. 210.1-02 by redesignating paragraphs (l)

through (aa) as paragraphs (m) through (bb), and adding paragraph (l)

to read as follows:

Sec. 210.1-02 Definitions of terms used in Regulations 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 the

United States; or

(2) The majority of its executive officers and directors are not

United States citizens or residents

* * * * *

3. By amending Sec. 210.3-05 by revising the last sentence of the

introductory text of paragraph (b)(1) and adding paragraph (c) to read

as follows:

Sec. 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

Sec. 210.1-02(w) as follows:

* * * * *

(c) Financial statements of foreign business. 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

(Sec. 249.220f of this chapter) will satisfy this section.

4. By amending Sec. 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:

Sec. 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 Sec. 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 Sec. 210.1-02(w), substituting 20 percent

for 10 percent, is met. For purposes of a filing on Form 10-K

(Sec. 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 (Sec. 249.220f of this chapter) will satisfy this

section.

5. By amending Sec. 210.3-12 by adding a second sentence to

paragraph (f) to read as follows:

Sec. 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 Secs. 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 Sec. 210.3-19.

6. By amending Sec. 210.4-08 by revising paragraph (g) to read as

follows:

Sec. 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 Sec. 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 Sec. 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 Sec. 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 Sec. 210.5-02 by adding a sentence following the

first sentence to paragraph 19.(b) to read as follows:

Sec. 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 Sec. 210.5-04: 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.

Sec. 219.5-04 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

balanced 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 Sec. 210.6-07 by adding the following sentence to

paragraph 3. to read as follows:

Sec. 210.6-07 Statements of operations.

* * * * *

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.

Sec. 210.6-10 [Amended]

10. By amending Sec. 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 Sec. 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.

Sec. 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.

* * * * *

Sec. 210.9-07 [Removed and Reserved]

12. By removing and reserving Sec. 210.9-07.

13. By revising Sec. 210.12-01 to read as follows:

Sec. 210.12-01 Application of Secs. 210.12-01 to 210.12-29.

These sections prescribe the form and content of the schedules

required by Secs. 210.5-04, 210.6-10, 210.6A-05, and 210.7-05.

Secs. 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 [Removed and Reserved]

14. By removing and reserving Secs. 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 Sec. 229.404 to read as follows:

Sec. 229.404 (Item 404) Certain relationships and related

transactions.

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 [Sec. 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 [Sec. 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

Sec. 229.601 to read as follows:

Sec. 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;

* * * * *

Sec. 249.220f [Amended]

19. amending Form 20-F (referenced in Sec. 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

Secs. 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

Secs. 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.

Dated: December 13, 1994.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-31036 Filed 12-19-94; 8:45 am]

BILLING CODE 8010-01-P