[Federal Register Volume 59, Number 243 (Tuesday, December 20, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31036]


[[Page Unknown]]

[Federal Register: December 20, 1994]


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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