Regulation S-X, 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,

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e-CFR Data is current as of March 6, 2008
Title 17: Commodity and Securities Exchanges
am""s.aEre.YiQlls I ßJ.Q""sßN~)(t

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, INVESTMENT ADVISERS ACT OF 1940, AND ENERGY POLICY AND
CONSERVATION ACT OF 1975

Section Contents

Appllçatio!10fRegulationS-X. (17 CFRPart2tOJ
§21Q.l:-OJ,AppUçation .of.RegulationS-X(J ZCFRpart 210).
§21 QJ..Q£,QefioitiQJ)sof termsLJsaq.inBagLilatioIJS:-X,f17CERpgrt2JQ).

QualifiçatioJlsand...Reports of Accountants
§210,2:-01_...QLJaliJiçatioris. of. accountants,
§2tO,,2.:.!t2_,_Aç.GQlJDtants' reports . anclClt1asJation reports, ,

§21Q,2:-02I...AççoLlotants' reports and.attestatiOOJeportSûniotemal.control Qver financial
repQrting,
§21Q.,2:-0S . .E~amination ûffinancial statements.oyJoraigngû'£ernmeDt aLlditors.
§ 210.2-04 ExaminatlQD.-uf fiUançLal-statemm:tsûtpersons other UlaJlJhe registrant.
§2JO,2:-QS .E~aminatiQnof finançial. statements bymoreJhanoneaççountant.
of audit andreviewreçûrc:s.
§21Q.2:-0Q Retention
§,21Q,Z:-QZ, CQm mLlniçCltiûn. with auqitcomrrittees~

GeneralJnstructiooSasto Financial Statements
§2JQ,S:-OJ_CûosoUdatec:balance .sheets.
§2HtS.:Q2__,CoOsQliqatgdstatements. ûf..ioçomaCloçlç,h_angesjDJioançial positions.
§21Q,S.:QS_.Jr:structiûns tQincome statemeotreqlJiremer:ts,
§21Q,S:-04.Chaogesin other stockholders' eqLJity.

§21Q":i:-,Q,S,,fir:ançialstatements ofPLJsiuessesac:qLiireçl ûiJQpe açguirec:,

§ 210.3-06 Financial statements covering a period of nine to twelve months.
§§2tQ,3:-QZ:-.:-21.Q..S:-Qß.........rReserveçl)

§2tQ,s:-mLSeparataJinançial statemantsoLsLlbsic:iariasnQtçonsoliclatedand50 percent..or
le-ss,O\Nne.cpersûOs,
§ 210.3-10 Finançli:Lslata,mgntsûtguarantors-ng issuers of gllqr~nteecLsaçLlrities

regi.stereçl,QrRaingregistered.
§2JO,S:-1JEioancial.statements ofan..inactiye registrant
§,.21 0 .,S..__i-j~geOUinançial.staterrariSaJ effac:tiyaßßteQLregistiatiQri. statement oLat

mailrigq~ileQtproXYstatement,
§2JO,3:-JS.. filing Qfûther financialstatements .in çertainç¡:ses.
§2JQ,.3:-J4,__Specialjnstruçtions.for .realestate oPi:ratjpns,-IQReaçqLJireCi.

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§21Q,S:-1 S . SpeçiaLpf9visjQosaSJ-uieaLestateinvi:stmenttrlJsts.
§21.Q,S,:-p,_..fj.ngnçigLs-ta-timents...QLgff!ia-tes_wJJ-us,a,saçl,rities. .çû!lalaralI:z_e_9JLis-slla
rngi-st~re~:L or bei09-a-glslered.

§2JQ,S-11.._FiDançialstati:mentsQf natlJr9L.parsûns.
§.21Q,S:1S ... .SpeçiaLpiQvisiûns. asJoregisti:ri:c: ..managi:mentinvestmantçompanies C1nc:
ç-uilganiE:-S..regLJIreq..J-u.p.i:.ri:g(steraçl.as.m9riagemantjnvestment CQm par:ia-s.

§2J..!tS,:-jJ~-iReservedJ
§.210.S-:20...ClJrrençyJoLfìnançialstatements.ûfJ-ureigopriyatajssuars.

Consolidated and Combined Financial Statemeol~
§..210,SA:01 Appl.içatioO....ûf..§210,SA=Q1....tQ...§2JQ.SA=OS.
§21Q,SA-Q2_ Cons-uUc:atec:JioançiaLstatements oLtheregistraotanclitssqpsic:i9ries.

§2JO.SA:OS . Statementß.sJO_RrinçiplasûLç-uOs-uliqatiooorcûmpinatioo follûweCi,

§.2LQ~A-04 IntercomRanY' items and transactions.
§21Q.SA-OS SpeçialreaLliramentsas tQPubJiçutHitY' .h-u1cHng.ç-umpanies,

RuJes.ofGeneJalAppHcatior)
§210A:QLuEûIrr"or:QeL and terminology-,
§...21.0.A-02.....JJems...n-ut..malerial"

§2HL4:-0SJnaRPlic:í3JJJe_çaptI-uDsêDQ,omi-ssiûnûLlJoreq lJ iradûr inaRPliçaoJeJiriao,çial
statELmelJls~

§21OA:-04 QmissionûtslJPstantiallyidentiçaln-utes.
§§ 21 OA:QS-:21 0.04:0p .1ReserveçlJ

Qi-sc-uuntonshares,
§21QA:Qa,Gaoarí3l-notes to financial stgt-ameots.
§.2JQA-!: ._(Reserved)
§21 0,4:10 .... FinançialaççolJntingandrep-urtiogJor .oilanc:gasprodlJçiogaçtiyitieSPlJrsLJantJo
thi:Fec:araLsec-Litie,s,lawsamLthe...EoergyPoliçYClndConsaryationAçL-uL1!:,L,S,
§.2JO.4-0Z,. .

Commercial.cir)d..lndustriaLCompanies
§ 21 0,5:QJAppUçatioaot§§210~S=Qlto21 0.5=Q4.
§.21Q.5-02.J3..1ance sheets,

§21 Q, 5:QS Incomestaternents,
§ 210,5:04 WhatsçhedlJlesaratopeJileq,

Regist~r~d l-rJY~sl-111e.r)lCompan ies
§21Q.6-01.. Appliçationof§§2JO,p:-JJo21

Q.p=1

O.

§ 210.6-02 . pefiniti-unof çertaintar!ls.
§ 210 ,13:03 ..SpeçiCl1rLJles-uLgeneralapplicationJoregisterec:inyestrnaDtcompClni.e,s,
§.2JO~6:-QA,n Bala-nce sh.e.eJs-,
§ 210 ,p:05 Statements ûfnetassets.

§, 21 0 ,13:06SpeçiaLpro'£isiQ_osappljcableJoJhapí3lancesheets. .ofissLlElrs-uUaçEl:amQunt

Qertificates.

§ 210.6:07 Staterneots of oparatioos,

§ ..210.6-08SpeçiaIRroyisionsapplic9PleJo thEl.statemElntsûtoperali-uns.ûtisslJersotfaçe:
amOlJot certificates.
§.21Q..9.0.!:... _S-tQtements--l-Q.ba-g.es lrine.ts-S,Elts.

§ 210,6-10 WhatsçhedlJlesare tope filac:,

Emliloyee.Stock,.fu,rc:base.__SaYings,ar:d__SimiliKPJans
§,210.6A-Ot_l\pplication of §§21 0.6A-01 to 21 0.6A-QS~

§ 21 0,pA-02 SpeçialJlJ1esappljçClpietoemp1oyeestock plJrçhase,saYingsançlsimiJaLPlans.
§2JO,pA:Q3. Statementsotfio.9.Dçjalçooc:jtiûn.
§210.61\.::04. Statements of income and.Jh_ar:m:isjnRlan eglit__

§ 210.6A-05 Whatsçhequlesare tobeJilecl.

lr)surar)c:e..Companies
§21 O. 7 :QL,Apt~licatioaoL§§21 O. 7-01 to,210~Z=Q.S,
§21 0,7 :02 Geoeralri:alJirElment

§ 21 0,7-0S ... Balançe,sheets.

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§.21P.7-0LLaçomestatameots,
§.21Q, 7 -OS_Y'h-at scheçula~c:reJoJ::.eJjleçl,

Artiçl.eJtFinanc:ial...Statements...of...S.maller.Reporli.l1g...Compal1ies
§...21Q~.S:-Ql........Preliminary.Notes...toArtiçle.S.,

§210_J~.:-02___.AnmJaJf¡oancjaLstaterr~n1s.,

§ 210.8-03 Interim financial statements.
§21Q,1~::Q4__EioClnçia-lstatemeolspfo!JsinessesaçqLlirec:.o to.. PeaçaLiirec:,
§210.8-05 Pro formaJinanç,aLLoJ.ûlJDQ.li.ûo,

§ 210.8-06 Real estate operations acquired or to be acquired.

§21Q,_S:-07.-limiteqpartnersh.ips.
§.21Q,.S:-QS_Age..ûfJioal1çial...statem.e.ots.,

Bank Holding Companies
§21Q,Jl:-01..Appljçati.ûo.pf..§§2.1..Q,9:-0J...to...21.Q,9:-QZ
§...21..Q,9:-02.........General...realJirameot,
§..2.1Q-'9.:-.Q.s__J~alança.sheels.

§ 210.9-04 Income statements.
§...21Q,Jl:-QQ_E.ûreig.o...açtivities.

§21 0.9-06 Çond,ens-a fina nci-airi.omati.ûnptregi.str-ant
& 210.9-07 fReserved)

1.l1terim...Enançi.aJ.S.talemel1ts
§2JO, 1 O:-Q1JnterimJinaDçia-Lstatem~ris,
Pro..Forma..Fina.I1.c:ial..ll1formation

§21QJJ:-Q1Pn:!seotati.ûnJeqLJirements.
§__21Q.J.1.:-.Q2....E'rep.arati.û.n,re-aLliram~rils.

§ 210.11-03 Presentation of financial forecast,
FOJ.m-aJ:dÇonlenl.oLSc:J1edul~s

§ 210.12-01 Applicali.ûn.o§210.12-01 to 210,12,-:29,
§§2JQJ.2:-Q2:-:-2JQ,12:-QS._IReserveql
§21Q,12:-Q4_Cûoc:eoseçlJioançialinformaliûl1...ûf registrant,
§21Q .12 -05:-:-2:LQ,12:-QSJR.e-s.e"rveçll

§ 210.12-09 Valuation and glJ.Cljfying accounts.
§§2JQ.J2.:10:-:-210J.2:-11. _ JReservac:J

§2JQJ.2:-J2...... JovestmantsjnsaçLJritiespLLiOaffiJiClteçl. issqars.
§.2JJU.2.:-J2AJo.vastments==saçLlritas spIq,shûrt,

§ 210.12-128 Open option contractswdtten.

§21Q,12:-12C_SLJmmary sçhequJeoLinvestments in seçurities of unaffiliClted issuers,
§2JQJ.2:-JS...ln'£estments.. QtheI.JhaJLs-acyritias,

§ 210.12-14 .lova-slments in and advançes to"affliates..
§210.J2:-JS _ SlJrrmary of investments--ther thaninvestments .in related parties,
§2JQ.J2:-1p .SqpplementaryjnsLlraOceioformati.ûn.

§21Q,J2.:JI..,Bginsqrançe,
§ 21 0.12-18,SYJmlerrental infQrmatiQO.(JQLP(QP.ert:-.GasJJaltjrisuranç~LuD_d.eryriters).

§21Q,12:-21. InvastmerisjnseçLlritiesoLLiOaffiliated issuers.
§.2JOJ2.:-22.. Jovestmantsjaanc:ac:yançe.sJûaffliatesançljocoma thereon.
§2JQ,12.:2S .Mortgage..1oClOSQoraaLestataaOc:interestearDed. on. m.ûrtgages..1

§ 210.12-24 Real estate owned and rental income)
§2JQJ2:-2SSqpplementaryprofilariqIQss .inf.ûrmatiQo.
§.21..QJ.2:-29. Certifiçate.rasarves.,

§21Q,12::27 .QlJaljfec:assetsûncleposit.J
§21,!:J12:-2S.. Bgal. estateanclaÇ~LlmLlJataçlc:epreçiation..1
§ 21Q J2-29
MortgClgalQans on. reaLastate.1

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Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 78c, 78j-1,
78 I, 78m, 78n, 780(d), 78q, 78u-5, 78w(a), 781/, 78mm, 80a-8, 80a-20, 80a-29, 80a-30,

80a-31, 80a-37(a), 80b-3, 80b-11, 7202 and 7262, unless otherwise noted.
ATTENTION ELECTRONIC FILERS
THIS REGULATION SHOULD BE READ IN CONJUNCTION WITH REGULATION S-T
(PART 232 OF THIS CHAPTER), WHICH GOVERNS THE PREPARATION AND
SUBMISSION OF DOCUMENTS IN ELECTRONIC FORMAT. MANY PROVISIONS
RELATING TO THE PREPARATION AND SUBMISSION OF DOCUMENTS IN PAPER
FORMAT CONTAINED IN THIS REGULATION ARE SUPERSEDED BY THE PROVISIONS
OF REGULATION S-T FOR DOCUMENTS REQUIRED TO BE FILED IN ELECTRONIC
FORMAT.
Application of Regulation S-X (17 CFR Part 210)

(¡JoP
§ 210.1-01 Application of Regulation S-X (17 CFR part 210).

(¡top
(a) This part (together with the Financial Reporting Releases (part 211 of this chapter)) sets forth the
form and content of and requirements for financial statements required to be filed as a part of:
(1) Registration statements under the Securities Act of 1933 (part 239 of this chapter), except as
otherwise specifically provided in the forms which are to be used for registration under this Act;

(2) Registration statements under section 12 (subpart C of part 249 of this chapter), annual or other
reports under sections 13 and 15( d) (subparts 0 and E of part 249 of this chapter), and proxy and
information statements under section 14 of the Securities Exchange Act of 1934 except as otherwise
specifically provided in the forms which are to be used for registration and reporting under these
sections of this Act;

(3) Registration statements and annual reports fied under the Public Utilty Holding Company Act of
1935 (part 259 of this chapter) by public utility holding companies registered under such Act; and
the Investment Company Act of 1940 (part
(4) Registration statements and shareholder reports under
274 of this chapter), except as otherwise specifically provided in the forms which are to be used for
registration under this Act.
(b) The term financial statements as used in this part shall be deemed to include all notes to the
statements and all related schedules.

(c) In addition to filings pursuant to the Federal securities laws, §210A-10 applies to the preparation of
accounts by persons engaged, in whole or in part, in the production of crude oil or natural gas in the
United States pursuant to section 503 of the Energy Policy and Conservation Act of 1975 (42 U.S.C.
6383) ( EPCA ) and section 1(c) of the Energy Supply and Environmental Coordination Act of 1974 (15
U.S.C. 796), as amended by section 505 of EPCA.
(37 FR 14593, July 21, 1972, as amended at 43 FR 40712, Sept. 12, 1978; 45 FR 63680, Sept. 25,

1980; 45 FR 63687, Sept. 25, 1980; 46 FR 36124, July 14,1981; 50 FR 25214, June 18, 1985)

§ 210.1-02 Definitions of terms used in Regulation S-X (17 CFR part 210).

(¡top

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Unless the context otherwise requires, terms defined in the general rules and regulations or in the
instructions to the applicable form, when used in Regulation S-X (this part 210), shall have the
respective meanings given in such instructions or rules. In addition, the following terms shall have the
meanings indicated in this section unless the context otherwise requires.
(a)(1) Accountant's report. The term accountant's report, when used in regard to financial statements,
means a document in which an independent public or certified public accountant indicates the scope of
the audit (or examination) which he has made and sets forth his opinion regarding the financial
statements taken as a whole, or an assertion to the effect that an overall opinion cannot be expressed.
When an overall opinion cannot be expressed, the reasons therefor shall be stated.

(2) Attestation report on internal control over financial reporting. The term attestation report on internal
control over financial reporting means a report in which a registered public accounting firm expresses an
opinion, either unqualified or adverse, as to whether the registrant maintained, in all material respects,
effective internal control over financial reporting (as defined in §240.13a-15(f) or 240.15d-15(f) of this
chapter), except in the rare circumstance of a scope limitation that cannot be overcome by the registrant
or the registered public accounting firm which would result in the accounting firm disclaiming an opinion.
(3) Attestation report on assessment of compliance with servicing criteria for asset-backed securities.
The term attestation report on assessment of compliance with servicing criteria for asset-backed
securities means a report in which a registered public accounting firm, as required by §240.13a-18(c) or
240.15d-18(c) of
this chapter, expresses an opinion, or states that an opinion cannot be expressed,
concerning an asserting party's assessment of compliance with servicing criteria, as required by
§240.13a-18(b) or 240.15d-18(b) of
this chapter, in accordance with standards on attestation
engagements. When an overall opinion cannot be expressed, the registered public accounting firm must
state why it is unable to express such an opinion.
(4) Definitions of terms related to internal control over financial reporting.

Material weakness means a deficiency, or a combination of deficiencies, in internal control over financial
reporting (as defined in §240.13a-15(f) or 240.15d-15(f) of this chapter) such that there is a reasonable
possibility that a material misstatement of the registrant's annual or interim financial statements will not
be prevented or detected on a timely basis.
Significant deficiency means a deficiency, or a combination of deficiencies, in internal control over
financial reporting that is less severe than a material weakness, yet important enough to merit attention
by those responsible for oversight of the registrant's financial reporting.

(b) Affilate. An affilate of, or a person affiliated with, a specific person is a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled by, or is under common control
with, the person specified.
(c) Amount. The term amount, when used in regard to securities, means the principal amount if relating
to evidences of indebtedness, the number of shares if relating to shares, and the number of units if
relating to any other kind of security.
(d) Audit (or examination). The term audit (or examination ), when used in regard to financial statements,
means an examination of the financial statements by an independent accountant in accordance with
generally accepted auditing standards, as may be modified or supplemented by the Commission, for the
purpose of expressing an opinion thereon.

(e) Bank holding company. The term bank holding company means a person which is engaged, either
directly or indirectly, primarily in the business of owning securities of one or more banks for the purpose,
and with the effect, of exercising control.
(f) Certified. The term certified, when used in regard to financial statements, means examined and
reported upon with an opinion expressed by an independent public or certified public accountant.

(g) Control. The term control (including the terms controlling, controlled by and under common control
with) means the possession, direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting shares, by contract, or

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otherwise.
(h) Development stage company. A company shall be considered to be in the development stage if it is
devoting substantially all of its efforts to establishing a new business and either of the following
conditions exists: (1) Planned principal operations have not commenced. (2) Planned principal
operations have commenced, but there has been no significant revenue therefrom.
(i) Equity security. The term equity security means any stock or similar security; or any security
convertible, with or without consideration, into such a security, or carrying any warrant or right to
subscribe to or purchase such a security; or any such warrant or right.
U) Fifty-percent-owned person. The term 50-percent-owned person, in relation to a specified person,
means a person approximately 50 percent of whose outstanding voting shares is owned by the specified
person either directly, or indirectly through one or more intermediaries.

(k) Fiscal year. The term fiscal year means the annual accounting period or, if no closing date has been
adopted, the calendar year ending on December 31.
(I) 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 offcers and directors are not United States citizens or residents.
(m) Insurance holding company. The term insurance holding company means a person which is
engaged, either directly or indirectly, primarily in the business of owning securities of one or more
insurance companies for the purpose, and with the effect, of exercising control.
(n) Majority-owned subsidiary. The term majority-owned subsidiary means a subsidiary more than 50
percent of whose outstanding voting shares is owned by its parent and/or the parent's other majority-

owned subsidiaries.
(0) Material. The term material, when used to qualify a requirement for the furnishing of information as to
any subject, limits the information required to those matters about which an average prudent investor
ought reasonably to be informed.

(p) Parent. A parent of a specified person is an affliate controllng such person directly, or indirectly
through one or more intermediaries.
(q) Person. The term person means an individual, a corporation, a partnership, an association, a jointstock company, a business trust, or an unincorporated organization.
(r) Principal holder of equity securities. The term principal holder of equity securities, used in respect of a
registrant or other person named in a particular statement or report, means a holder of record or a
known beneficial owner of more than 10 percent of any class of equity securities of the registrant or
other person, respectively, as of the date of the related balance sheet filed.
(s) Promoter. The term promoter includes:

(1) Any person who, acting alone or in conjunction with one or more other persons, directly or indirectly
takes initiative in founding and organizing the business or enterprise of an issuer;
(2) Any person who, in connection with the founding and organizing of the business or enterprise of an
issuer, directly or indirectly receives in consideration of services or property, or both services and

propert, 10 percent or more of any class of securities of the issuer or 10 percent or more of the
proceeds from the sale of any class of securities. However, a person who receives such securities or
proceeds either solely as underwriting commissions or solely in consideration of property shall not be
deemed a promoter within the meaning of this paragraph if such person does not otherwise take part in

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founding and organizing the enterprise.

(t) Registrant. The term registrant means the issuer of the securities for which an application, a
registration statement, or a report is filed.

(u) Related parties. The term related parties is used as that term is defined in the Glossary to Statement
of Financial Accounting Standards No. 57, "Related Part Disclosures."
(v) Share. The term share means a share of stock in a corporation or unit of interest in an
unincorporated person.

(w) Significant subsidiary. The term significant subsidiary means a subsidiary, including its subsidiaries,
which meets any of the following conditions:
(1) The registrant's and its other subsidiaries' investments in and advances to the subsidiary exceed 10
percent of the total assets of the registrant and its subsidiaries consolidated as of the end of the most
recently completed fiscal year (for a proposed business combination to be accounted for as a pooling of
interests, this condition is also met when the number of common shares exchanged or to be exchanged
by the registrant exceeds 10 percent of its total common shares outstanding at the date the combination
is initiated); or
(2) The registrant's and its other subsidiaries' proportionate share of the total assets (after intercompany
eliminations) of the subsidiary exceeds 10 percent of the total assets of the registrants and its
subsidiaries consolidated as of the end of the most recently completed fiscal year; or
(3) The registrant's and its other subsidiaries' equity in the income from continuing operations before
income taxes, extraordinary items and cumulative effect of a change in accounting principle of the
subsidiary exceeds 10 percent of such income of the registrant and its subsidiaries consolidated for the
most recently completed fiscal year.

Note to paragraph (w): A registrant that files its financial statements in accordance with or
provides a reconciliation to U.S. Generally Accepted Accounting Principles shall make the
prescribed tests using amounts determined under U.S. Generally Accepted Accounting
Principles. A foreign private issuer that files its financial statements in accordance with IFRS
as issued by the IASB shall make the prescribed tests using amounts determined under IFRS
as issued by the IASB.
Computational note: For purposes of making the prescribed income test the following
guidance should be applied:
1. When a loss has been incurred by either the parent and its subsidiaries consolidated or the
tested subsidiary, but not both, the equity in the income or loss of the tested subsidiary should
be excluded from the income of the registrant and its subsidiaries consolidated for purposes
of the computation.

2. If income of the registrant and its subsidiaries consolidated for the most recent fiscal year is
at least 10 percent lower than the average of the income for the last five fiscal years, such
average income should be substiuted for purposes of the computation. Any loss years should
be omitted for purposes of computing average income.
3. Where the test involves combined entities, as in the case of determining whether
summarized financial data should be presented, entities reporting losses shall not be
aggregated with entities reporting income.
(x) Subsidiary. A subsidiary of a specified person is an affliate controlled by such person directly, or
indirectly through one or more intermediaries.
(y) Totally held subsidiary. The term totally held subsidiary means a subsidiary (1) substantially all of

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whose outstanding equity securities are owned by its parent and/or the parent's other totally held
subsidiaries, and (2) which is not indebted to any person other than its parent and/or the parent's other
totally held subsidiaries, in an amount which is material in relation to the particular subsidiary, excepting
indebtedness incurred in the ordinary course of business which is not overdue and which matures within
1 year from the date of its creation, whether evidenced by securities or not. Indebtedness of a subsidiary
which is secured by its parent by guarantee, pledge, assignment, or otherwise is to be excluded for
purposes of paragraph (x)(2) ofthis section.

(z) Voting shares. The term voting shares means the sum of all rights, other than as affected by events
of default, to vote for election of directors and/or the sum of all interests in an unincorporated person.

(aa) Wholly owned subsidiary. The term wholly owned subsidiary means a subsidiary substantially all of
whose outstanding voting shares are owned by its parent and/or the parent's other wholly owned

subsidiaries.
(bb) Summarized financial information. (1) Except as provided in paragraph (aa)(2), summarized
financial information referred to in this regulation shall mean the presentation of summarized information
as to the assets, liabilities and results of operations of
the entity for which the information is required.
Summarized financial information shall include the following disclosures:
(i) Current assets, noncurrent assets, current liabilities, noncurrent liabilities, and, when applicable,
redeemable preferred stocks (see §210.5-02.28) and minority interests (for specialized industries in
which classified balance sheets are normally not presented, information shall be provided as to the
nature and amount of
the major components of assets and liabilities);

(ii) Net sales or gross revenues, gross profi (or, alternatively, costs and expenses applicable to net
sales or gross revenues), income or loss from continuing operations before extraordinary items and
cumulative effect of a change in accounting principle, and net income or loss (for specialized industries,
other information may be substituted for sales and related costs and expenses if necessary for a more
meaningful presentation); and
(2) Summarized financial information for unconsolidated subsidiaries and 50 percent or less owned
persons referred to in and required by §21 0.1 0-01 (b) for interim periods shall include the information
required by paragraph (aa)(1 )(ii) of this section.
(37 FR 14593, July 21, 1972, as amended at 38 FR 6066, Mar. 6, 1973; 39 FR 17931, May 22, 1974; 40
FR 55835, Dec. 2, 1975; 45 FR 63668, Sept. 25, 1980; 46 FR 56178, Nov. 16, 1981; 47 FR 29836, July
9,1982; 50 FR 25214, June 18, 1985; 50 FR 49531, Dec. 3,1985; 59 FR 65636, Dec. 20,1994; 62 FR
12749, Mar. 18, 1997; 68 FR 36660, June 18, 2003; 70 FR 1593, Jan. 7,2005; 72 FR 35320, June 27,
2007; 72 FR 44927, Aug. 9, 2007; 73 FR 1009, Jan. 4, 2008)

Qualifications and Reports of Accountants
(t. toP

Source: Sections 210.2-01 through 210.2-05 appear at 37 FR 14594, July 21,1972, unless

otherwise noted.

§ 210.2-01 Qualifications of accountants.

(ttop
Preliminary Note to §210.2-01
1. Section 210.2-01 is designed to ensure that auditors are qualified and independent of their
audit clients both in fact and in appearance. Accordingly, the rule sets forth restrictions on
financial, employment, and business relationships between an accountant and an audit client
and restrictions on an accountant providing certain non-audit services to an audit client.

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(b) sets forth the general standard of auditor independence. Paragraphs
(c)(1) to (c)(5) reflect the application of the general standard to particular circumstances. The
rule does not purport to, and the Commission could not, consider all circumstances that raise
independence concerns, and these are subject to the general standard in §21 0.2-01 (b). In
considering this standard, the Commission looks in the first instance to whether a relationship
or the provision of a service: creates a mutual or conflcting interest between the accountant
and the audit client; places the accountant in the position of auditing his or her own work;
results in the accountant acting as management or an employee of the audit client; or places
the accountant in a position of being an advocate for the audit client.
2. Section 21

0.2-01

3. These factors are general guidance only and their application may depend on particular
facts and circumstances. For that reason, §210.2-01 provides that, in determining whether an
accountant is independent, the Commission will consider all relevant facts and circumstances.
For the same reason, registrants and accountants are encouraged to consult with the
Commission's Office of the Chief Accountant before entering into relationships, including
relationships involving the provision of services, that are not explicitly described in the rule.
(a) The Commission wil not recognize any person as a certified public accountant who is not duly
registered and in good standing as such under the laws of the place of his residence or principal offce.
The Commission wil not recognize any person as a public accountant who is not in good standing and
entitled to practice as such under the laws of the place of his residence or principal offce.
(b) The Commission will not recognize an accountant as independent, with respect to an audit client, if
the accountant is not, or a reasonable investor with knowledge of all relevant facts and circumstances
would conclude that the accountant is not, capable of exercising objective and impartial judgment on all
issues encompassed within the accountant's engagement. In determining whether an accountant is
independent, the Commission wil consider all relevant circumstances, including all relationships
between the accountant and the audit client, and not just those relating to reports fied with the

Commission.
(c) This paragraph sets forth a non-exclusive specification of circumstances inconsistent with paragraph

(b) ofthis section.
(1) Financial relationships. An accountant is not independent if, at any point during the audit and
proTessional engagement period, the accountant has a direct financial interest or a material indirect
financial interest in the accountant's audit client, such as:
(i) Investments in audit clients. An accountant is not independent when:

(A) The accounting firm, any covered person in the firm, or any of his or her immediate family members,
has any direct investment in an audit client, such as stocks, bonds, notes, options, or other securities.
The term direct investment includes an investment in an audit client through an intermediary if:

( 1 ) The accounting firm, covered person, or immediate family member, alone or together with other
persons, supervises or participates in the intermediary's investment decisions or has control over the

intermediary; or
( 2 ) The intermediary is not a diversified management investment company, as defined by section 5(b)
(1) of the Investment Company Act of 1940, 15 U.S.C. 80a-5(b)(1), and has an investment in the audit
client that amounts to 20% or more of the value of the intermediary's total investments.

(B) Any partner, pnncipal, shareholder, or professional employee of the accounting firm, any of his or her
immediate family members, any close family member of a covered person in the firm, or any group of
the above persons has filed a Schedule 13D or 13G (17 CFR 240.13d-101 or 240.13d-102) with the
Commission indicating beneficial ownership of more than five percent of an audit client's equity
securities or controls an audit client, or a close family member of a partner, principal, or shareholder of
the accounting firm controls an audit client.
(C) The accounting firm, any covered person in the firm, or any of his or her immediate family members,
serves as voting trustee of a trust, or executor of an estate, containing the securities of an audit client,

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unless the accounting firm, covered person in the firm, or immediate family member has no authority to
make investment decisions for the trust or estate.

(D) The accounting firm, any covered person in the firm, any of his or her immediate family members, or
any group of the above persons has any material indirect investment in an audit client. For purposes of
this paragraph, the term material indirect investment does not include ownership by any covered person
in the firm, any of his or her immediate family members, or any group of the above persons of 5% or less
of the outstanding shares of a diversified management investment company, as defined by section 5(b)
(1) of the Investment Company Act of 1940, 15 U.S.C. 80a-5(b)(1), that invests in an audit client.
(E) The accounting firm, any covered person in the firm, or any of his or her immediate family members:
( 1 ) Has any direct or material indirect investment in an entity where:

( i) An audit client has an investment in that entity that is material to the audit client and has the ability to
exercise significant influence over that entity; or
( ii ) The entity has an investment in an audit client that is material to that entity and has the ability to
exercise significant influence over that audit client;
( 2 ) Has any material investment in an entity over which an audit client has the ability to exercise

significant influence; or
( 3 ) Has the ability to exercise significant influence over an entity that has the ability to exercise
significant influence over an audit client.
(ii) Other financial interests in audit client. An accountant is not independent when the accounting firm,
any covered person in the firm, or any of his or her immediate family members has:

(A) Loans/debtor-creditor relationship. Any loan (including any margin loan) to or from an audit client, or

an audit client's offcers, directors, or record or beneficial owners of more than ten percent of the audit
client's equity securities, except for the following loans obtained from a financial institution under its
normal
lending procedures, terms, and requirements:
( 1 ) Automobile loans and leases collateralized by the automobile;

( 2 ) Loans fully collateralized by the cash surrender value of an insurance policy;
( 3 ) Loans fully collateralized by cash deposits at the same financial institution; and
( 4 ) A mortgage loan collateralized by the borrower's primary residence provided the loan was not
obtained while the covered person in the firm was a covered person.
(B) Savings and checking accounts. Any savings, checking, or similar account at a bank, savings and
loan, or similar institution that is an audit client, if the account has a balance that exceeds the amount
insured by the Federal Deposit Insurance Corporation or any similar insurer, except that an accounting
firm account may have an uninsured balance provided that the likelihood of the bank, savings and loan,
or similar institution experiencing financial diffculties is remote.
(C) Broker-dealer accounts. Brokerage or similar accounts maintained with a broker-dealer that is an
audit client, if:
( 1 ) Any such account includes any asset other than cash or securities (within the meaning of "security"
provided in the Securities Investor Protection Act of 1970 ("SIPA") (15 U.S.C. 78aaa et seq. ));

( 2 ) The value of assets in the accounts exceeds the amount that is subject to a Securities Investor
Protection Corporation advance, for those accounts, under Section 9 of SIPA (15 U.S.C. 78ff-3); or

( 3) With respect to non-U.S. accounts not subject to SIPA protection, the value of assets in the

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a program similar to SIPA.

(0) Futures commission merchant accounts. Any futures, commodity, or similar account maintained with
a futures commission merchant that is an audit client.
(E) Credit cards. Any aggregate outstanding credit card balance owed to a lender that is an audit client
that is not reduced to $10,000 or less on a current basis taking into consideration the payment due date
and any available grace period.
(F) Insurance products. Any individual policy issued by an insurer that is an audit client unless:
( 1 ) The policy was obtained at a time when the covered person in the firm was not a covered person in
the firm; and
( 2 ) The likelihood of the insurer becoming insolvent is remote.

(G) Investment companies. Any financial interest in an entity that is part of an investment company
complex that includes an audit client.
(iii) Exceptions. Notwithstanding paragraphs (c)( 1 )(i) and (c)( 1 )(ii) of this section, an accountant will not
be deemed not independent if:

(A) Inheritance and gift. Any person acquires an unsolicited financial interest, such as through an
unsolicited gift or inheritance, that would cause an accountant to be not independent under paragraph
(c)( 1 )(i) or (c)( 1 )(ii) of this section, and the financial interest is disposed of as soon as practicable, but no
later than 30 days after the person has knowledge of and the right to dispose of the financial interest.
(B) New audit engagement. Any person has a financial interest that would cause an accountant to be
not independent under paragraph (c)(1 )(i) or (c)(1 )(ii) of

this section, and:

( 1 ) The accountant did not audit the client's financial statements for the immediately preceding fiscal
year; and
( 2) The accountant is independent under paragraph (c)(1 )(i) and (c)(1 )(ii) of this section before the
earlier of:

( i) Signing an initial engagement letter or other agreement to provide audit, review, or attest services to

the audit client; or

( íí) Commencing any audit, review, or attest procedures (including planning the audit of

the client's

financial statements).

(C) Employee compensation and benefit plans. An immediate family member of a person who is a
covered person in the firm only by virtue of paragraphs (f)(11 )(iii) or (f)(11 )(iv) of this section

has a

financial interest that would cause an accountant to be not independent under paragraph (c)( 1 )(i) or (c)
the financial interest was an unavoidable consequence of
(1 )(ii) of this section, and the acquisition of
participation in his or her employer's employee compensation or benefis program, provided that the
financial interest, other than unexercised employee stock options, is disposed of as soon as practicable,
but no later than 30 days after the person has the right to dispose of the financial interest.

(iv) Audit clients' financial relationships. An accountant is not independent when:

(A) Investments by the audit client in the accounting firm. An audit client has, or has agreed to acquire,
any direct investment in the accounting firm, such as stocks, bonds, notes, options, or other securities,
or the audit client's offcers or directors are record or beneficial owners of more than 5% of the equity
securities of the accounting firm.

(B) Underwritng. An accounting firm engages an audit client to act as an underwriter, broker-dealer,
market-maker, promoter, or analyst with respect to securities issued by the accounting firm.

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(2) Employment relationships. An accountant is not independent if, at any point during the audit and
professional engagement period, the accountant has an employment relationship with an audit client,

such as:
(i) Employment at audit client of accountant. A current partner, principal, shareholder, or professional
employee of the accounting firm is employed by the audit client or serves as a member of the board of
directors or similar management or governing body of the audit client.
(ii) Employment at audit client of certain relatives of accountant. A close family member of a covered
person in the firm is in an accounting role or financial reporting oversight role at an audit client, or was in
such a role during any period covered by an audit for which the covered person in the firm is a covered

person.
(iii) Employment at audit client of former employee of accounting firm. (A) A former partner, principal,
shareholder, or professional employee of an accounting firm is in an accounting role or financial
reporting oversight role at an audit client, unless the individual:
( 1 ) Does not influence the accounting firm's operations or financial policies;
( 2 ) Has no capital balances in the accounting firm; and

( 3 ) Has no financial arrangement with the accounting firm other than one providing for regular payment
of a fixed dollar amount (which is not dependent on the revenues, profits, or eamings of the accounting
firm):

( i) Pursuant to a fully funded retirement plan, rabbi trust, or, in jurisdictions in which a rabbi trust does
not exist, a similar vehicle; or

( ii) In the case of a former professional employee who was not a partner, principal, or shareholder of

the accounting firm and who has been disassociated from the accounting firm for more than five years,
that is immaterial to the former professional employee; and
(B) A former partner, principal, shareholder, or professional employee of an accounting firm is in a
financial reporting oversight role at an issuer (as defined in section 10A(f) of the Securities Exchange Act
of 1934 (15 U.S.C. 78j-1(f)), except an issuer that is an investment company registered under section 8
of the Investment Company Act of 1940 (15 U.S.C. 80a-8), unless the individual:

( 1 ) Employed by the issuer was not a member of the audit engagement team of the issuer during the
one year period preceding the date that audit procedures commenced for the fiscal period that included
the date of initial employment of the audit engagement team member by the issuer;

( 2) For purposes of paragraph (c)(2)(iii)(B)( 1 ) of this section, the following individuals are not
considered to be members of the audit engagement team:
( i ) Persons, other than the lead partner and the concurring partner, who provided ten or fewer hours of
audit, review, or attest services during the period covered by. paragraph (c)(2)(iii)(B)( 1 ) of this section;

( ii) Individuals employed by the issuer as a result of a business combination between an issuer that is
an audit client and the employing entity, provided employment was not in contemplation of

the business

combination and the audit committee of the successor issuer is aware of the prior employment

relationship; and
( ii ) Individuals that are employed by the issuer due to an emergency or other unusual situation
provided that the audit committee determines that the relationship is in the interest of investors;

( 3) For purposes of paragraph (c)(2)(iii)(B)( 1 ) of this section, audit procedures are deemed to have
commenced for a fiscal period the day following the filing of the issuer's periodic annual report with the
Commission covering the previous fiscal period; or
(C) A former partner, principal, shareholder, or professional employee of an accounting firm is in a

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financial reporting oversight role with respect to an investment company registered under section 8 of
the Investment Company Act of 1940 (15 U.S.C. 80a-8), if:
( 1 ) The former partner, principal, shareholder, or professional employee of an accounting firm is
employed in a financial reporting oversight role related to the operations and financial reporting of the
registered investment company at an entity in the investment company complex, as defined in (f)(14) of
this section, that includes the registered investment company; and
( 2 ) The former partner, principal, shareholder, or professional employee of an accounting firm
employed by the registered investment company or any entity in the investment company complex was
a member of the audit engagement team of the registered investment company or any other registered
investment company in the investment company complex during the one year period preceding the date
that audit procedures commenced that included the date of initial employment of the audit engagement
team member by the registered investment company or any entity in the investment company complex.

( 3 ) For purposes of paragraph (c)(2)(iii)(C)( 2) of this section, the following individuals are not
considered to be members of the audit engagement team:
( i ) Persons, other than the lead partner and concurring partner, who provided ten or fewer hours of
audit, review or attest services during the period covered by paragraph (c)(2)(iii)(C)( 2 ) of this section;

( ii) Individuals employed by the registered investment company or any entity in the investment

company complex as a result of a business combination between a registered investment company or
any entity in the investment company complex that is an audit client and the employing entity, provided
employment was not in contemplation of the business combination and the audit committee of the
registered investment company is aware of the prior employment relationship; and
company or any entity in the investment
( ii) Individuals that are employed by the registered investment
company complex due to an emergency or other unusual situation provided that the audit committee
determines that the relationship is in the interest of investors.

( 4) For purposes of paragraph (c)(2)(iii)(C)( 2) of this section, audit procedures are deemed to have

commenced the day following the filing of the registered investment company's periodic annual report
with the Commission.

former employee of audit client. A former offcer, director, or
(iv) Employment at accounting firm of
employee of an audit client becomes a partner, principal, shareholder, or professional employee of the
accounting firm, unless the individual does not participate in, and is not in a position to influence, the
audit of the financial statements of the audit client covering any period during which he or she was
employed by or associated with that audit client.
(3) Business relationships. An accountant is not independent if, at any point during the audit and
professional engagement period, the accounting firm or any covered person in the firm has any direct or
material indirect business relationship with an audit client, or with persons associated with the audit
client in a decision-making capacity, such as an audit client's offcers, directors, or substantial
stockholders. The relationships described in this paragraph do not include a relationship in which the
accounting firm or covered person in the firm provides professional services to an audit client or is a
consumer in the ordinary course of business.
(4) Non-audit services. An accountant is not independent if, at any point during the audit and
professional engagement period, the accountant provides the following non-audit services to an audit
client:

(i) Bookkeeping or other services related to the accounting records or financial statements of the audit
client. Any service, unless it is reasonable to conclude that the results of these services wil not be
subject to audit procedures during an audit of the audit client's financial statements, including:
(A) Maintaining or preparing the audit client's accounting records;

(8) Preparing the audit client's financial statements that are filed with the Commission or that form the

basis of financial statements fied with the Commission; or

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(C) Preparing or originating source data underlying the audit client's financial statements.

(ii) Financial information systems design and implementation. Any service, unless it is reasonable to
conclude that the results of these services wil not be subject to audit procedures during an audit of the
audit client's financial statements, including:
(A) Directly or indirectly operating, or supervising the operation of, the audit client's information system
or managing the audit client's local area network; or
(8) Designing or implementing a hardware or softare system that aggregates source data underlying

the financial statements or generates information that is significant to the audit client's financial
statements or other financial information systems taken as a whole.
(iii) Appraisal or valuation services, fairness opinions, or contribution-in-kind reports. Any appraisal
service, valuation service, or any service involving a faimess opinion or contribution-in-kind report for an
audit client, unless it is reasonable to conclude that the results of these services wil not be subject to
audit procedures during an audit of the audit client's financial statements.

(iv) Actuarial services. Any actuarially-oriented advisory service involving the determination of amounts
recorded in the financial statements and related accounts for the audit client other than assisting a client
in understanding the methods, models, assumptions, and inputs used in computing an amount, unless it

is reasonable to conclude that the results of these services wil not be subject to audit procedures during
an audit of the audit client's financial statements.

(v) Internal audit outsourcing services. Any internal audit service that has been outsourced by the audit
client that relates to the audit client's internal accounting controls, financial systems, or financial
statements, for an audit client unless it is reasonable to conclude that the results of these services wil
not be subject to audit procedures during an audit of the audit client's financial statements.

(vi) Management functions. Acting, temporarily or permanently, as a director, offcer, or employee of an
audit client, or performing any decision-making, supervisory, or ongoing monitoring function for the audit
client.
(vii) Human resources. (A) Searching for or seeking out prospective candidates for managerial,
executive, or director positions;

(8) Engaging in psychological testing, or other formal testing or evaluation programs;
(C) Undertaking reference checks of prospective candidates for an executive or director,position;
(D) Acting as a negotiator on the audit client's behalf, such as determining position, status or

title,

compensation, fringe benefis, or other conditions of employment; or
(E) Recommending, or advising the audit client to hire, a specific candidate for a specific job (except that
an accounting firm may, upon request by the audit client, interview candidates and advise the audit client
on the candidate's competence for financial accounting, administrative, or control positions).
(viii) Broker-dealer, investment adviser, or investment banking services. Acting as a broker-dealer
(registered or unregistered), promoter, or underwriter, on behalf of an audit client, making investment
decisions on behalf of the audit client or otherwise having discretionary authority over an audit client's
investments, executing a transaction to buy or sell an audit client's investment, or having custody of
assets of the audit client, such as taking temporary possession of securities purchased by the audit
client.
(ix) Legal services. Providing any service to an audit client that, under circumstances in which the
service is provided, could be provided only by someone licensed, admitted, or otherwise qualified to
practice law in the jurisdiction in which the service is provided.
(x) Expert services unrelated to the audit. Providing an expert opinion or other expert service for an audit
client, or an audit client's legal representative, for the purpose of advocating an audit client's interests in

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Federal Regulations:

litigation or in a regulatory or administrative proceeding or investigation. In any litigation or regulatory or
administrative proceeding or investigation, an accountant's independence shall not be deemed to be
impaired if

the accountant provides factual accounts, including in testimony, of

work performed or

explains the positions taken or conclusions reached during the performance of any service provided by
the accountant for the audit client.
(5) Contingent fees. An accountant is not independent if, at any point during the audit and professional
engagement period, the accountant provides any service or product to an audit client for a contingent
fee or a commission, or receives a contingent fee or commission from an audit client.

(6) Partner rotation. (i) Except as provided in paragraph (c)(6)(ii) of this section, an accountant is not
independent of an audit client when:
(A) Any audit partner as defined in paragraph (f)(7)(ii) of this section performs:
( 1 ) The services of a lead partner, as defined in paragraph (f)(7)(ii)(A) of this section, or concurring
partner, as defined in paragraph (f)(7)(ii)(B) of this section, for more than five consecutive years; or

( 2) One or more of the services defined in paragraphs (f)(7)(ii)(C) and (D) of this section for more than
seven consecutive years;
(B) Any audft partne~

( 1 ) Within the five consecutive year period following the performance of services for the maximum
period permitted under paragraph (c)(6)(i)(A)( 1 ) of this section, performs for that audit client the
services of a lead partner, as defined in paragraph (f)(7)(ii)(A) of this section, or concurring partner, as
defined in paragraph (f)(7)(ii)(B) of this section, or a combination of those services, or
( 2 ) Within the two consecutive year period following the performance of services for the maximum
period permitted under paragraph (c)(6)(i)(A)( 2 ) of this section, performs one or more of the services
defined in paragraph (f)(7)(ii) of

this section.

(ii) Any accounting firm with less than five audit clients that are issuers (as defined in section 10A(f) of
the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f)) and less thanten partners shall be exempt
from paragraph (c)(6)(i) of
this section provided
the Public Company Accounting Oversight Board
conducts a review at least once every three years of each of the audit client engagements that would
result in a lack of auditor independence under this paragraph.
(iii) For purposes of paragraph (c)(6)(i) of this section, an audit client that is an investment company
registered under section 8 of
the Investment Company Act of 1940 (15 U.S.C. 80a-8), does not include

an affliate of the audit client that is an entity in the same investment company complex, as defined in
paragraph (f)(14) of
this section, except for another registered investment company in the same
investment company complex. For purposes of calculating consecutive years of service undèr paragraph
(c )(6)(i) of this section with respect to investment companies in an investment company complex, audits
of registered investment companies with different fiscal year-ends that are performed in a continuous 12month period count as a single consecutive year.

(7) Audit commitee administration of the engagement. An accountant is not independent of an issuer
(as defined in section 10A(f) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f))), other than an
issuer that is an Asset-Backed Issuer as defined in §229.11 01 of this chapter, or an investment company
registered under section 8 of
the Investment Company Act of 1940 (15 U.S.C. 80a-8), other than a unit
investment trust as defined by section 4(2) of
the Investment Company Act of 1940 (15 U.S.C. 80a-4

(2)), unless:
(i) In accordance with Section 10A(i) ofthe Securities Exchange Act of 1934 (15 U.S.C. 78j-1(i)) either:
(A) Before the accountant is engaged by the issuer or its subsidiaries, or the registered investment
company or its subsidiaries, to render audit or non-audit services, the engagement is approved by the
issuer's or registered investment company's
audit committee; or
(B) The engagement to render the service is entered into pursuant to pre-approval policies and

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procedures established by the audit committee of the issuer or registered investment company, provided
the policies and procedures are detailed as to the particular service and the audit committee is informed
of each service and such policies and procedures do not include delegation of the audit committees
responsibilties under the Securities Exchange Act of 1934 to management; or
(C) With respect to the provision of services other than audit, review or attest services the pre-approval
requirement is waived if:
( 1 ) The aggregate amount of all such services provided constitutes no more than five percent of the
total amount of revenues paid by the audit client to its accountant during the fiscal year in which the
services are provided;

( 2 ) Such services were not recognized by the issuer or registered investment company at the time of
the engagement to be non-audit services; and
( 3 ) Such services are promptly brought to the attention of the audit committee of the issuer or
registered investment company and approved prior to the completion of
the audit by the audit committee
or by one or more members of the audit committee who are members of the board of directors to whom
authority to grant such approvals has been delegated by the audit committee.
(ii) A registered investment company's audit committee also must pre-approve its accountant's
engagements for non-audit services with the registered investment company's investment adviser (not
including a sub-adviser whose role is primarily portolio management and is sub-contracted or overseen
by another investment adviser) and any entity controlling, controlled by, or under common control with
the investment adviser that provides ongoing services to the registered investment company in
accordance with paragraph (c)(7)(i) of this section, if the engagement relates directly to the operations
and financial reporting of the registered investment company, except that with respect to the waiver of
the pre-approval requirement under paragraph (c)(7)(i)(C) of this section, the aggregate amount of all
services provided constitutes no more than five percent of the total amount of revenues paid to the
registered investment company's accountant by the registered investment company, its investment
adviser and any entity controlling, controlled by, or under common control with the investment adviser
thát provides ongoing services to the registered investment company during the fiscal year in which the
services are provided that would have to be pre-approved by the registered investment company's audit

committee pursuant to this section.
(8) Compensation. An accountant is not independent of an audit client if, at any point during the audit
and professional engagement period, any audit partner earns or receives compensation based on the
audit partner procuring engagements with that audit client to provide any products or services other than
audit, review or attest services. Any accounting firm with fewer than ten partners and fewer than five
audit clients that are issuers (as defined in section 10A(f) of the Securities Exchange Act of 1934 (15
U.S.C. 78j-1(f))) shall be exempt from the requirement stated in the previous sentence.

(d) Quality controls. An accounting firm's independence wil not be impaired solely because a covered
person in the firm is not independent of an audit client provided:
(1) The covered person did not know of the circumstances giving rise to the lack of independence;
corrected as promptly as possible under the
relevant circumstances after the covered person or accounting firm became aware of it; and

(2) The covered person's lack of independence was

(3) The accounting firm has a quality control system in place that provides reasonable assurance, taking
into account the size and nature of the accounting firm's practice, that the accounting firm and its
employees do not lack independence, and that covers at least all employees and associated entities of
the accounting firm participating in the engagement, including employees and associated entities
located outside of the United States.
(4) For an accounting firm that annually provides audit, review, or attest services to more than 500
companies with a class of securities registered with the Commission under section 12 of the Securities

Exchange Act of 1934 (15 U.S.C. 78/), a quality control system wil not provide such reasonable
assurance unless it has at least the following features:

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(i) Written independence policies and procedures;

(ii) With respect to partners and managerial employees, an automated system to identify their
investments in securities that might impair the accountant's independence;
(iii) With respect to all professionals, a system that provides timely information about entities from which
the accountant is required to maintain independence;
(iv) An annual or on-going firm-wide training program about auditor independence;

(v) An annual internal inspection and testing program to monitor adherence to independence

requirements;

(vi) Notification to all accounting firm members, offcers, directors, and employees of the name and title
of the member of senior management responsible for compliance with auditor independence

requirements;
(vii) Written policies and procedures requiring all partners and covered persons to report promptly to the
accounting firm when they are engaged in employment negotiations with an audit client, and requiring
the firm to remove immediately any such professional from that audit client's engagement and to review
promptly all work the professional performed related to that audit client's engagement; and
(viii) A disciplinary mechanism to ensure compliance with this section.
(e)( 1) Transition and grandfathering. Provided the following relationships did not impair the accountant's
independence under pre-existing requirements of the Commission, the Independence Standards, Board,
or the accounting profession in the United States, the existence of the relationship on May 6, 2003 wil
not be deemed to impair an accountant's independence:

(i) Employment relationships that commenced at the issuer prior to May 6, 2003 as described in
paragraph (c)(2)(iii)(B) of

this section.

(ii) Compensation earned or received, as described in paragraph (c)(B) of

this section during the fiscal

year of the accounting firm that includes the effective date of this section.

(ii) Until May 6, 2004, the provision of services described in paragraph (c)(4) of this section provided
those services are pursuant to contracts in existence on May 6, 2003.
(iv) The provision of services by the accountant under contracts in existence on May 6, 2003 that have
not been pre-approved by the audit committee as described in paragraph (c)(7) of

this section.

(v) Until the first day of the issuets fiscal year beginning after May 6, 2003 by a "lead" partner and other
audit partner (other than the "concurring" partner) providing services in excess of those permitted under
paragraph (c)(6) of
this section. An accountant's independence will not be deemed to be impaired unti
the first day of the issuer's fiscal year beginning after May 6, 2004 by a "concurring" partner providing
services in excess of
those permitted under paragraph (c)(6) of
this section. For
the purposes of
calculating periods of service under paragraph (c)(6) of this section:
(A) For the "lead" and "concurring" partner, the period of service includes time served as the "lead" or
"concurring" partner prior to May 6, 2003; and
(B) For audit partners other than the "lead" partner or "concurring" partner, and for audit partners in
foreign firms, the period of service does not include time served on the audit engagement team prior to
the first day of issuer's fiscal year beginning on or after May 6, 2003.

(2) Setting financial arrangements with former professionals. To the extent not required by pre-existing
requirements of the Commission, the Independence Standards Board, or the accounting profession in
the United States, the requirement in paragraph (c)(2)(iii) of
this section to settle financial arrangements
with former professionals
applies to situations that arise after the effective date of this section.

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this section:

(1 ) Accountant, as used in paragraphs (b) through (e) of this section, means a registered public
accounting firm, certified public accountant or public accountant performing services in connection with
an engagement for which independence is required. References to the accountant include any
accounting firm with which the certifed public accountant or public accountant is affliated.

(2) Accounting firm means an organization (whether it is a sole proprietorship, incorporated association,
partnership, corporation, limited liability company, limited liability partnership, or other legal entity) that is
engaged in the practice of public accounting and furnishes reports or other documents fied with the
Commission or otherwise prepared under the securities laws, and all of the organization's departments,
divisions, parents, subsidiaries, and associated entities, including those located outside of the United
States. Accounting firm also includes the organization's pension, retirement, investment, or similar plans.
(3)(i) Accounting role means a role in which a person is in a position to or does exercise more than
minimal influence over the contents of the accounting records or anyone who prepares them.

(ii) Financial reporting oversight role means a roie in which a person is in a position to or does exercise
influence over the contents of the financial statements or anyone who prepares them, such as when the
person is a member of the board of directors or similar management or governing body, chief executive

offcer, president, chief financial offcer, chief operating offcer, general counsel, chief accounting offcer,
controller, director of intemal audit, director of

financial reporting, treasurer, or any equivalent position.

(4) Affilate of the audit client means:
(i) An entity that has control over the audit client, or over which the audit client has control, or which is
under common control with the audit client, including the audit client's parents and subsidiaries;
(ii) An entity over which the audit client has significant influence, unless the entity is not material to the
audit client;

(ii) An entity that has significant influence over the audit client, unless the audit client is not material to

the entity; and

(iv) Each entity in the investment company complex when the audit client is an entity that is part of an
investment company complex.
(5) Audit and professional engagement period includes both:

(i) The period covered by any financial statements being audited or reviewed (the "audit period"); and
(ii) The period of the engagement to audit or review the audit client's financial statements or to prepare a
report fied with the Commission (the "professional engagement period"):

(A) The professional engagement period begins when the accountant either signs an initial engagement
letter (or other agreement to review or audit a client's financial statements) or begins audit, review, or
attest procedures, whichever is earlier; and
(B) The professional engagement period ends when the audit client or the accountant notifies the
Commission that the client is no longer that accountant's audit client.
(iii) For audits of the financial statements of foreign private issuers, the "audit and professional
engagement period" does not include periods ended prior to the first day of the last fiscal year before the
foreign private issuer first filed, or was required to fie, a registration statement or report with the
Commission, provided there has been full compliance with home country independence standards in all
prior periods covered by any registration statement or report filed with the Commission.
(6) Audit client means the entity whose financial statements or other information is being audited,
reviewed, or attested and any affliates of the audit client, other than, for purposes of paragraph (c)(1 )(i)
of this section, entitiés that are affliates of the audit client only by virtue of paragraph (f)(4)(ii) or (f)(4)(ii)

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of this section.

(7)(i) Audit engagement team means all partners, principals, shareholders and professional employees
participating in an audit, review, or attestation engagement of an audit client, including audit partners
and all persons who consult with others on the audit engagement team during the audit, review, or
attestation engagement regarding technical or industry-specific issues, transactions, or events.
(ii) Audit partner means a partner or persons in an equivalent position, other than a partner who consults
with others on the audit engagement team during the audit, review, or attestation engagement regarding
technical or industry-specific issues, transactions, or events, who is a member of the audit engagement
team who has responsibility for decision-making on significant auditing, accounting, and reporting
matters that affect the financial statements, or who maintains regular contact with management and the
audit committee and includes the following:
(A) The lead or coordinating audit partner having primary responsibility for the audit or review (the "lead

partnet');

(8) The partner performing a second level of review to provide additional assurance that the financial
statements subject to the audit or review are in conformity with generally accepted accounting principles
and the audit or review and any associated report are in accordance with generally accepted auditing
standards and rules promulgated by the Commission or the Public Company Accounting Oversight
Board (the "concurring or reviewing partner");
(C) Other audit engagement team partners who provide more than ten hours of audit, review, or attest
services in connection with the annual or interim consolidated financial statements of the issuer or an
investment company registered under section 8 of
the Investment Company Act of 1940 (15 U.S.C.

80a-8); and
(D) Other audit engagement team partners who serve as the "lead partner" in connection with any audit
or review related to the annual or interim financial statements of a subsidiary of the issuer whose assets
or revenues constitute 20% or more of the assets or revenues of the issuer's respective consolidated
assets or revenues.
(8) Chain of command means all persons who:

(i) Supervise or have direct management responsibility for the audit, including at all successively senior
levels through the accounting firm's chief executive;
(H) Evaluate the performance or recommend the compensation of the audit engagement partner; or
(Hi) Provide quality control or other oversight of the audit.

(9) Close family members means a person's spouse, spousal equivalent, parent, dependent,
nondependent child, and sibling.

(10) Contingent fee means, except as stated in the next sentence, any fee established for the sale of a
product or the performance of any service pursuant to an arrangement in which no fee will be charged
unless a specified finding or result is attained, or in which the amount of the fee is otherwise dependent
upon the finding or result of such product or service. Solely for the purposes of this section, a fee is not a
"contingent fee" if it is fixed by courts or other public authorities, or, in tax matters, if determined based
on the results of judicial proceedings or the findings of governmental agencies. Fees may vary
depending, for example, on the complexity of services rendered.

(11) Covered persons in the firm means the following partners, principals, shareholders, and employees
of an accounting firm:
(i) The "audit engagement team";

(ii) The "chain of command";

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(iii) Any other partner, principal, shareholder, or managerial employee of the accounting firm who has
provided ten or more hours of non-audit services to the audit client for the period beginning on the date
such services are provided and ending on the date the accounting firm signs the report on the financial
statements for the fiscal year during which those services are provided, or who expects to provide ten or
more hours of non-audit services to the audit client on a recurring basis; and

(iv) Any other partner, principal, or shareholder from an "offce" of the accounting firm in which the lead
audit engagement partner primarily practices in connection with the audit.
(12) Group means two or more persons who act together for the purposes of acquiring, holding, voting,

or disposing of securities of a registrant.

(13) Immediate family members means a person's spouse, spousal equivalent, and dependents.
(14) Investment company complex. (i) "Investment company complex" includes:
(A) An investment company and its investment adviser or sponsor;

(B) Any entity controlled by or controllng an investment adviser or sponsor in paragraph (f)(14)(i)(A) of
this section, or any entity under common control with an investment adviser or sponsor in paragraph (f)
this section if
the entity:
(14)(i)(A) of
( 1 ) Is an investment adviser or sponsor; or
( 2 ) Is engaged in the business of providing administrative, custodian, underwriting, or transfer agent

services to any investment company, investment adviser, or sponsor; and

(C) Any investment company or entity that would be an investment company but for the exclusions
provided by section 3(c) of
the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)) that has an
investment adviser or sponsor included in this definition by either paragraph (f)(14)(i)(A) or (f)(14)(i)(B) of

this section.
(ii) An investment adviser, for purposes of this definition, does not include a sub-adviser whose role is
primarily portolio management and is subcontracted with or overseen by another investment adviser.
(iii) Sponsor, for purposes of this definition, is an entity that establishes a unit investment trust.
(15) Office means a distinct sub-group within an accounting firm, whether distinguished along
geographic or practice lines.

(16) Rabbi trust means an irrevocable trust whose assets are not accessible to the accounting firm until
all benefi obligations have been met, but are subject to the claims of creditors in bankruptcy or
insolvency.
(17) Audit committee means a committee (or equivalent body) as defined in section 3(a)(58) of

the

Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(58)).

(37 FR 14594, July 21, 1972, as amended at 48 FR 9521, Mar. 7, 1983; 65 FR 76082, Dec. 5, 2000; 68
FR 6044, Feb. 5, 2003; 70 FR 1593, Jan. 7,2005)

§ 210.2-02 Accountants' reports and attestation reports.

(¡tQP
(a) Technical requirements for accountants' reports. The accountant's report:
(1) Shall be dated;

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(2) Shall be signed manually;
(3) Shall indicate the city and State where issued; and

(4) Shall identify without detailed enumeration the financial statements covered by the report.

(b) Representations as to the audit included in accountants'reports. The accountant's report:
(1) Shall state whether the audit was made in accordance with generally accepted auditing standards;

and

(2) Shall designate any auditing procedures deemed necessary by the accountant under the
circumstances of the particular case, which have been omitted, and the reasons for their omission.
Nothing in this rule shall be construed to imply authority for the omission of any procedure which
independent accountants would ordinarily employ in the course of an audit made for the purpose of
expressing the opinions required by paragraph (c) of

this section.

(c) Opinions to be expressed in accountants'reports. The accountant's report shall state clearly:
(1) The opinion of the accountant in respect of the financial statements covered by the report and the

accounting principles and practices reflected therein; and

(2) the opinion of the accountant as to the consistency of the application of the accounting principles, or
as to any changes in such principles which have a material effect on the financial statements.
(d) Exceptions identified in accountants' reports. Any matters to which the accountant takes exception
shall be clearly identified, the exception thereto specifically and clearly stated, and, to the extent
practicable, the effect of each such exception on the related financial statements given. (See section
101 of
the Codification of Financial Reporting Policies.)

(e) Paragraph (e) of this section applies only to registrants that are providing financial statements in a
filing for a period with respect to which Arthur Andersen LLP or a foreign affliate of Arthur Andersen LLP
("Andersen") issued an accountants' report. Notwithstanding any other Commission rule or regulation, a
registrant that cannot obtain an accountants' report that meets the technical requirements of paragraph
(a) of

this section after reasonable efforts may include in the document a copy of

the latest signed and

dated accountants' report issued by Andersen for such period in satisfaction of that requirement, if
prominent disclosure that the report is a copy of the previously issued Andersen accountants' report and
that the report has not been reissued by Andersen is set forth on such copy.
(f) Attestation report on internal control over financial reporting. Every registered public accounting firm
that issues or prepares an accountant's report for a registrant, other than an investment company
registered under section 8 of the Investment Company Act of 1940 (15 U.S.C. 80a-8), that is included in
an annual report required by section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C.
78a et seq. ) containing an assessment by management of the effectiveness of the registrant's internal
control over financial reporting must clearly state the opinion of the accountant, either unqualified or
adverse, as to whether the registrant maintained, in all material respects, effective internal control over
financial reporting, except in the rare circumstance of a scope limitation that cannot be overcome by the
registrant or the registered public accounting firm which would result in the accounting firm disclaiming
an opinion. The attestation report on internal control over financial reporting shall be dated, signed
manually, identify the period covered by the report and indicate that the accountant has audited the
effectiveness of internal control over financial reporting. The attestation report on internal control over
financial reporting may be separate from the accountant's report.
(g) Attestation report on assessment of compliance with servicing criteria for asset-backed securities.
The attestation report on assessment of compliance with servicing criteria for asset-backed securities,
as required by §240.13a-18(c) or 240.15d-18(c) of
this chapter, shall be dated, signed manually,
identify the period covered by the report and clearly state the opinion of the registered public accounting
firm as to whether the asserting party's assessment of compliance with the servicing criteria is fairly
stated in all material respects, or must include an opinion to the effect that an overall opinion cannot be
expressed. If an overall opinion cannot be expressed, explain why.

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(37 FR 14594, July 21, 1972, as amended at 41 FR 35479, Aug. 23, 1976; 45 FR 63668, Sept. 25,
1980; 50 FR 25215, June 18, 1985; 67 FR 13533, Mar. 22, 2002; 68 FR 36660, June 18,2003; 70 FR
1593, Jan. 7,2005; 72 FR35321, June 27,2007)

§ 210.2-02T Accountants' reports and attestation reports on internal control over

financial reporting.

(¡top
(a) (Reserved)

(b) Paragraph (a) of this temporary section wil expire on December 31,2007.
(c) The requirements of §210.2-Q2(f) shall not apply to a registered public accounting firm that issues or

prepares an accountant's report that is included in an annual report fied by a registrant that is neither a
this
chapter, for a fiscal year ending on or after December 15, 2007 but before December 15, 2008.
"large accelerated filet' nor an "accelerated filer," as those terms are defined in §240.12b-2 of

(d) Paragraph (c) of this temporary section will expire on June 30, 2009.

(71 FR 47059, Aug. 15,2006, as amended at 71 FR 76594, Dec. 21,2006)

Effective Date Note: At 71 FR 47059, Aug. 15,2006, Temporary §210.2-Q2T was added, effective
Sept. 14,2006 to Dec. 31,2007. At 71 FR 76581, 76594, Dec. 21,2006, paragraph (a) remained
effective Sept. 14,2006 to Dec. 31,2007, and paragraph (c) was added, effective Feb. 20, 2007 to June
30,2009. At 72 FR 35321, June 27, 2007, the section heading was revised, effective Aug. 27, 2007 to
June 30, 2009.

§ 210.2-03 Examination of financial statements by foreign government auditors.
(¡ top

Notwithstanding any requirements as to examination by independent accountants, the financial
statements of any foreign governmental agency may be examined by the regular and customary auditing
staff of the respective government if public financial statements of such governmental agency are
customarily examined by such auditing staff.

§ 210.2-04 Examination of financial statements of persons other than the registrant.

(¡tQP
If a registrant is required to file financial statements of any other person, such statements need not be
examined if examination of such statements would not be required if such person were itself a registrant.

§ 210.2-05 Examination of financial statements by more than one accountant.

(¡top
If, with respect to the examination of the financial statements, part of the examination is made by an
independent accountant other than the principal accountant and the principal accountant elects to place
reliance on the work of the other accountant and makes reference to that effect in his report, the
separate report of the other accountant shall be filed. However, notwithstanding the provisions of this
section, reports of other
accountants which may otherwise be required in filings need not be presented
in annual reports to security holders furnished pursuant to the proxy and information statement rules

under the Securities Exchange Act of 1934 (§§240.14a-3 and 240.14c-3).

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(46 FR 40872, Aug. 13, 1981)

§ 210.2-06 Retention of audit and review records.

(¡JoP
(a) For a period of seven years after an accountant concludes an audit or review of an issuer's financial
statements to which section 10A(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-1 (a)) applies,
or of the financial statements of any investment company registered under section 8 of the Investment
Company Act of 1940 (15 U.S.C. 80a-8), the accountant shall retain records relevant to the audit or
review, including workpapers and other documents that form the basis of
the audit or review, and
memoranda, correspondence, communications, other documents, and records (including electronic
records), which:

(1) Are created, sent or received in connection with the audit or review, and
(2) Contain conclusions, opinions, analyses, or financial data related to the audit or review.
the purposes of paragraph (a) of
this section, workpapers means documentation of auditing or
review procedures applied, evidence obtained, and conclusions reached by the accountant in the audit
or review engagement, as required by standards established or adopted by the Commission or by the
(b) For

Public Company Accounting Oversight Board.
(c) Memoranda, correspondence, communications, other documents, and records (including electronic
records) described in paragraph (a) of this section shall be retained whether they support the auditor's
final conclusions regarding the audit or review, or contain information or data, relating to a significant
matter, that is inconsistent with the auditor's final conclusions regarding that matter or the audit or
review. Significance of a matter shall be determined based on an objective analysis of the facts and
circumstances. Such documents and records include, but are not limited to, those documenting a
consultation on or resolution of differences in professional judgment.
(d) For the purposes of paragraph (a) of this section, the term issuer means an issuer as defined in
section 10A(f) of
the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f)).
(68 FR 4872, Jan. 30, 2003)

§ 210.2-07 Communication with audit committees.

(¡JoP
(a) Each registered public accounting firm that performs for an audit client that is an issuer (as defined in
section 10A(f) of
the Securities Exchange Act of 1934 (15 U.S.C. 78j-1(f))), other
than an issuer
that is
an Asset~Backed Issuer as defined in §229.11 01 of this chapter, or an investment company registered
under section 8 of
the Investment Company Act of 1940 (15 U.S.C. 80a-8), other than a unit investment
trust as defined by section 4(2) of
the Investment Company Act of 1940 (15 U.S.C. 80a-4(2)), any audit
required under the securities laws shall report, prior to the fiing of such audit report with the Commission
the annual communication is not
(or in the case of a registered investment company, annually, and if
within 90 days prior to the filing, provide an update, in the 90 day period prior to the filing, of any
changes to the previously reported information), to the audit committee of the issuer or registered
investment company:
(1) All critical accounting policies and practices to be used;

(2) All alternative treatments within Generally Accepted Accounting Principles for policies and practices
related to material items that have been discussed with management of the issuer or registered
investment company, including:
(i) Ramifications of the use of such alternative disclosures and treatments; and

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(ii) The treatment preferred by the re~istered public accounting firm;

(3) Other material written communications between the registered public accounting firm and the
management of
the issuer or registered investment company, such as any management letter or
schedule of unadjusted differences;
the audit client is an investment company, all non-audit services provided to any entity in an
investment company complex, as defined in §210.2-01 (f)(14), that were not pre-approved by the
registered investment company's audit committee pursuant to §210.2-o1 (c)(7).

(4) If

(b) (Reserved)
(68 FR 6048, Feb. 5, 2003, as amended at 70 FR 1593, Jan. 7, 2005)
General

Instructions as to Financial Statements

(!JQP
Source: Sections 210.3-01 through 210.3-16 appear at 45 FR 63687, Sept. 25,1980,
unless otherwise noted.

Note: These instructions specify the balance sheets and statements of income and cash flows
to be included in disclosure documents prepared in ,accordance with Regulation S-X. Other
portions of Regulation S-X govern the examination, form and content of such financial
statements, including the basis of consolidation and the schedules to be filed. The financial
statements described below shall be audited unless otherwise indicated.

For filings under the Securities Act of 1933, attention is directed to §230.411 (b) regarding
incorporation by reference to financial statements and to section 10(a)(3) of

the Act regarding

information required in the prospectus.

For filings under the Securities Exchange Act of 1934, attention is directed to §240.12b-23
regarding incorporation by reference and §240 .12b-36 regarding use of financial statements
filed under other acts.
(45 FR 63687, Sept. 25, 1980, as amended at 57 FR 45292, Oct. 1, 1992)

§ 210.3-01 Consolidated balance sheets.

(!JQP
(a) There shall be filed, for the registrant and its subsidiaries consolidated, audited balance sheets as of
the end of each of the two most recent fiscal years. If the registrant has been in existence for less than
one fiscal
year, there shall be filed an audited balance sheet as of a date within 135 days of the date of
filing the registration statement.

(b) If the filing, other than a filing on Form 10-K or Form 10, is made within 45 days after the end of the
registrant's fiscal year and audited financial statements for the most recent fiscal year are not available,
the balance sheets may be as of the end of the two preceding fiscal years and the filing shall include an
additional balance sheet as of an interim date at least as current as the end of the registrant's third fiscal
quarter of the most recently completed fiscal year.
(c) The instruction in paragraph (b) of

this section is also applicable to filings, other than on Form 10-K

or Form 10, made after 45 days but within the number of days of the end of the registrant's fiscal year
specified in paragraph (i) of this section: Provided, that the following conditions are met:

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(1) The registrant files annual, quarterly and other reports pursuant to section 13 or 15( d) of the
Securities Exchange Act of 1934 and all reports due have been filed;

(2) For the most recent fiscal year for which audited financial statements are not yet available the
registrant reasonably and in good faith expects to report income, after taxes but before extraordinary
items and cumulative effect of a change in accounting principle; and
(3) For at least one of the two fiscal years immediately preceding the most recent fiscal year the
registrant reported income, after taxes by before extraordinary items and cumulative effect of a change
in accounting principle.
(d) For filings made after 45 days but within the number of days of the end of the registrant's fiscal year
specified in paragraph (i) of

this section where the conditions set forth in paragraph (c) of

not met, the filing must include the audited balance sheets required by paragraph (a) of

this section are
this section.

(e) For fiings made after the number of days specified in paragraph (i)(2) of this section, the fiing shall
also include a balance sheet as of an interim date within the following number of days of the date of
filing:

(1) 130 days for large accelerated fiers and accelerated filers (as defined in §240.12b-2 of this chapter);

and

(2) 135 days for all other registrants.
(f) Any interim balance sheet provided in accordance with the requirements of this section may be
unaudited and need not be presented in greater detail than is required by §210.10-01. Notwithstanding
the requirements of this section, the most recent interim balance sheet included in a filing shall be at
least as current as the most recent balance sheet filed with the Commission on Form 10-0.

(g) For fiings by registered management investment companies, the requirements of §21 0.3-18 shall
apply in lieu of the requirements of this section.
(h) Any foreign private issuer, other than a registered management investment company or an employee
plan, may fie the financial statements required by Item 8.A of Form 20-F (§249.220 of this chapter) in
lieu of the financial statements specified in this rule.
(i)( 1) For purposes of paragraphs (c) and (d) of this section, the number of days shall be:

(i) 60 days (75 days for fiscal years ending before December 15, 2006) for large accelerated filers (as
defined in §240.12b-2 of

this chapter);

(ii) 75 days for accelerated filers (as defined in §240.12b-2 of this chapter); and
(iii) 90 days for all other registrants.
(2) For purposes of paragraph (e) of this section, the number of days shall be:

(i) 129 days subsequent to the end of the registrant's most recent fiscal year for large accelerated fiers
and accelerated filers (as defined in §240.12b-2 of

this chapter); and

(ii) 134 days subsequent to the end of the registrant's most recent fiscal year for all other registrants.
(45 FR 63687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17, 1981; 46 FR 36124, July 14, 1981;
50 FR 49531, Dec. 3, 1985; 56 FR 30053, July 1,1991; 64 FR 53908, Oct. 5,1999; 67 FR 58503, Sept.

16,2002; 68 FR 17880, Apr. 14,2003; 69 FR 68235, Nov. 23, 2004; 70 FR 76640, Dec. 27, 2005; 73
FR 952, Jan. 4, 2008)

§ 210.3-02 Consolidated statements of income and changes in financial positions.

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(¡JQP
(a) There shall be filed, for the registrant and its subsidiaries consolidated and for its predecessors,
audited statements of income and cash flows for each of the three fiscal years preceding the date of the
most recent audited balance sheet being fied or such shorter period as the registrant (including
predecessors) has been in existence.
(b) In addition, for any interim period between the latest audited balance sheet and the date of the most
recent interim balance sheet being filed, and for the corresponding period of the preceding fiscal year,
statements of income and cash flows shall be provided. Such interim financial statements may be
unaudited and need not be presented in greater detail than is required by §21 0.1 0-01.

(c) For filings by registered management investment companies, the requirements of §210.3-18 shall
apply in lieu of the requirements of this section.
(d) Any foreign private issuer, other than a registered management investment company or an employee
plan, may file the financial statements required by Item 8.A of Form 20-F (§249.220 of this chapter) in
lieu of the financial statements specified in this rule.

(45 FR 63687, Sept. 25,1980, as amended at46 FR 12491, Feb. 17, 1981; 46 FR 36125, July 14,1981;
50 FR 49531, Dec. 3, 1985; 56 FR 30053, July 1, 1991; 57 FR 45292, Oct. 1, 1992; 64 FR 53908, Oct.
5, 1999)

§ 210.3-03 Instructions to income statement requirements.
(¡-tQQ
(a) The statements required shall be prepared in compliance with the applicable requirements of this

regulation.

(b) If the registrant is engaged primarily (1) in the generation, transmission or distribution of electricity,
the manufacture, mixing, transmission or distribution of gas, the supplying or distribution of water, or the
furnishing of telephone or telegraph service; or (2) in holding securities of companies engaged in such
businesses, it may at its option include statements of income and cash flows (which may be unaudited)
for the twelve-month period ending on the date of the most recent balance sheet being fied, in lieu of
the statements of income and cash flows for the interim periods specified.

(c) If a period or periods reported on include operations of a business prior to the date of acquisition, or
for other reasons differ from reports previously issued for any period, the statements shall be reconciled
as to sales or revenues and net income in the statement or in a note thereto with the amounts previously

reported: Provided, however, That such reconcilations need not be made (1) if they have been made in
filings with the Commission in prior years or (2) the financial statements which are being retroactively
adjusted have not previously been fied with the Commission or otherwise made public.
(d) Any unaudited interim financial statements furnished shall reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the results for the interim periods presented. A
statement to that effect shall be included. Such adjustments shall include, for example, appropriate
estimated provisions for bonus and profit sharing arrangements normally determined or settled at yearend. If all such adjustments are of a normal recurring nature, a statement to that effect shall be made;
otherwise, there shall be furnished information describing in appropriate detail the nature and amount of
any adjustments other than normal recurring adjustments entering into the determination of the results

shown.
(e) Disclosures regarding segments required by generally accepted accounting principles shall be
provided for each year for which an audited statement of income is provided. To the extent that the
segment information presented pursuant to this instruction complies with the provisions of Item 101 of
Regulation S-K, the disclosures may be combined by cross referencing to or from the financial

statements.
(45 FR 63687, Sept. 25, 1980. Redesignated at 47 FR 29836, July 9,1982, and amended at 50 FR

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25215, June 18,1985; 50 FR 49532, Dec. 3,1985; 57 FR 45292, Oct. 1, 1992; 64 FR 1734, Jan 12,
1999)

§ 210.3-04 Changes in other stockholders' equity.

(¡top
An analysis of the changes in each caption of other stockholders' equity presented in the balance sheets
shall be given in a note or separate statement. This analysis shall be presented in the form of a
reconciliation of the beginning balance to the ending balance for each period for which an income
statement is required to be filed with all significant reconciling items described by appropriate captions.
State separately the adjustments to the balance at the beginning of the earliest period presented for
items which were retroactively applied to periods prior to that period. With respect to any dividends, state
the amount per share and in the aggregate for each class of shares.

the Securities Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); secs. 12, 13, 14, 15(d), and
the Securities Exchange Act of 1934,15 U.S.C. 78/, 78m, 78n, 78o(d), 78w(a), secs. 5(b), 10

(Secs. 7 and 19a of
23(a) of

(a), 14, 20(a) of
31(c), 38(a) of

the Public Utility Holding Company Act, 15 U.S.C. 7ge(a), 79n, 79t(a); secs. 8, 20, 30,
the Investment Company Act of 1940,15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c),

80a-37(a))
(47 FR 29836, July 9,1982)

§ 210.3-05 Financial statements of businesses acquired or to be acquired.

(¡JOP
(a) Financial statements required. (1) Financial statements prepared and audited in accordance with this
regulation should be furnished for the periods specified in paragraph (b) below if any of the following
conditions exist:
(i) Consummation of a business combination accounted for as a purchase has occurred or is probable
(for purposes of this rule, the term purchase encompasses the purchase of an interest in a business
accounted for by the equity method); or
(ii) Consummation of a business combination to be accounted for as a pooling of interests is probable.

(2) For purposes of determining whether the provisions of this rule apply, the determination of whether a
business has been acquired should be made in accordance with the guidance set forth in §21 0.11-01
(d).
(3) Acquisitions of a group of related businesses that are probable or that have occurred subsequent to
the latest fiscal year-end for which audited financial statements of the registrant have been filed shall be
treated under this section as if they are a single business combination. The required financial statements
of related businesses may be presented on a combined basis for any periods they are under common
control or management. For purposes of this section, businesses shall be deemed to be related if:
(i) They are under common control or management;
(ii) The acquisition of one business is conditional on the acquisition of each other business; or

(iii) Each acquisition is conditioned on a single common event.
(4) This rule shall not apply to a business which is totally held by the registrant prior to consummation of
the transaction.

(b) Periods to be presented. (1) If securities are being registered to be offered to the security holders of
the business to be acquired, the financial statements specified in §§21

0.3-01 and 210.3-02 shall be

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furnished for the business to be acquired, except as provided otherwise for filings on Form N-14, S-4 or
F-4 (§§239.23, 239.25 or 239.34 of this chapter). The financial statements covering fiscal years shall be
audited except as provided in Item 14 of Schedule 14A (§240.14a-101 of
this chapter) with respect to
certain proxy statements or in registration statements filed on Forms N-14, S-4 or F-4 (§§239.23,
239.25 or 239.34 of this chapter).
this section, financial statements of
the business
acquired or to be acquired shall be fied for the periods specified in this paragraph (b)(2) or such shorter

(2) In all cases not specified in paragraph (b)(1) of

period as the business has been in existence. 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-D2(w) as follows:
(i) If none of the conditions exceeds 20 percent, financial statements are not required. However, if the
aggregate impact of the individually insignificant businesses acquired since the date of the most recent
audited balance sheet filed for the registrant exceeds 50%, financial statements covering at least the
substantial majority of the businesses acquired shall be furnished. Such financial statements shall be for

at least the most recent fiscal year and any interim periods specified in §§210.3-01 and 210.3-02.
(ii) If any of the conditions exceeds 20 percent, but none exceed 40 percent, financial statements shall

be fumished for at least the most recent fiscal year and any interim periods specified in §§210.3-01 and
210.3-02.
(iii) If any of the conditions exceeds 40 percent, but none exceed 50 percent, financial statements shall

0.3-01

be furnished for at least the two most recent fiscal years and any interim periods specified in §§21

and 210.3-02.
(iv) If any of the conditions exceed 50 percent, the full financial statements specified in §§210.3-o1 and
210.3-02 shall be furnished. However, financial statements for the earliest of the three fiscal years
required may be omitted if net revenues reported by the acquired business in its most recent fiscal year
are less than $50 millon.
(3) The determination shall be made by comparing the most recent annual financial statements of each
such business, or group of related businesses on a combined basis, to the registrant's most recent
annual consolidated financial statements filed at or prior to the date of acquisition. However, if the
registrant made a significant acquisition subsequent to the latest fiscal year-end and fied a report on
Form 8-K (§249.308 of this chapter) which included audited financial statements of such acquired
business for the periods required by this section and the pro forma financial information required by
§21 0.11, such determination may be made by using pro forma amounts for the latest fiscal year in the

report on Form 8-K (§249.308 of this chapter) rather than by using the historical amounts of the
registrant. The tests may not be made by "annualizing" data.
(4) Financial statements required for

the periods specified in paragraph (b)(2) of

this section may be

omitted to the extent specified as follows:

(i) Registration statements not subject to the provisions of §230.419 of this chapter (Regulation C) and
proxy statements need not include separate financial statements of the acquired or to be acquired
business if it does not exceed any of the conditions of significance in the definition of significant

subsidiary in §210.1-02 at the 50 percent level, and either:
(A) The consummation of the acquisition has not yet occurred; or
(B) The date of

the final prospectus or prospectus supplement relating to an offering as fied with the
this chapter, or mailing date in the case of a proxy statement, is
days after consummation of
the business combination, and the financial statements

Commission pursuant to §230.424(b) of
no more than 74

have not previously been fied by the registrant.
(ii) An issuer, other than a foreign private issuer required to fie reports on Form 6-K, that omits from its

initial registration statement financial statements of a recently consummated business combination
pursuant to paragraph (b)( 4 )(i) of this section shall furnish those financial statements and any pro forma
information specified by Article 11 of this chapter under cover of Form 8-K (§249.308 of this chapter) no
later than 75 days after consummation of the acquisition.

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(iii) Separate financial statements of the acquired business need not be presented once the operating
results of the acquired business have been reflected in the audited consolidated financial statements of
the registrant for a complete fiscal year unless such financial statements have not been previously filed
or unless the acquired business is of such significance to the registrant that omission of such financial
statements would materially impair an investor's abilty to understand the historical financial results of
the registrant. For example, if, at the date of acquisition, the acquired business met at least one of the
conditions in the definition of significant subsidiary in §210.1-Q2 at the 80 percent level, the income
statements of the acquired business should normally continue to be furnished for such periods prior to
the purchase as may be necessary when added to the time for which audited income statements after
the purchase are fied to cover the equivalent of the period specified in §210.3-02.
(iv) A separate audited balance sheet of the acquired business is not required when the registrant's most

recent audited balance sheet required by §21 0.3-01 is for a date after the date the acquisition was
consummated.
(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
(§249.220f of this chapter) will satisfy this section.

(Secs. 7 and 19a of the Securities Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); secs. 12, 13, 14, 15(d), and
23(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78/, 78m, 78n, 780(d), 78w(a), secs. 5(b), 10
the Public Utility Holding Company Act, 15 U.S.C. 7ge(a), 79n, 79t(a); secs. 8, 20, 30,
(a), 14, 20(a) of
31(c), 38(a) of

the Investment Company Act of 1940,15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c),

80a-37(a))
(47 FR 29836, July 9,1982, as amended at 50 FR 49532, Dec. 3,1985; 51 FR 42056, Nov. 20,1986;

59 FR 65636, Dec. 20,1994; 61 FR 54514, Oct. 18, 1996; 73 FR 952, Jan. 4, 2008)

§ 210.3-06 Financial statements covering a period of nine to twelve months.

(¡jQR
Except with respect to registered investment companies, the filing of financial statements covering a
period of 9 to 12 months shall be deemed to satisfy a requirement for filing financial statements for a.

period of 1 year where:
(a) The issuer has changed its fiscal year;

(b) The issuer has made a significant business acquisition for which financial statements are required
under §210.3-Q5 of
this chapter and the financial statements covering the interim period pertain to the
business being acquired; or
(c) The Commission so permits pursuant to §210.3-13 of

this chapter.

Where there is a requirement for filing financial statements for a time period exceeding one year but not
exceeding three consecutive years (with not more than 12 months included in any period reported
upon), the filing of
financial statements covering a period of nine to 12 months shall satisfy a filing
requirement of financial statements for one year of that time period only if the conditions described in
either paragraph (a), (b), or (c) of this section exist and financial statements are filed that cover the full
fiscal year or years for all other years in the time period.

(54 FR 10315, Mar. 13, 1989)
§§ 210.3-07--210.3-08 (Reserved)

(¡_lQR

§ 210.3-09 Separate financial statements of subsidiaries not consolidated and 50

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percent or less owned persons.
(¡ top

(a) If any of the conditions set forth in §210.1-Q2(w), substituting 20 percent for 10 percent in the tests
used therein to determine a significant subsidiary, are met for a majority-owned subsidiary not
consolidated by the registrant or by a subsidiary of the registrant, separate financial statements of such
subsidiary shall be filed. 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) Insofar as practicable, the separate financial statements required by this section shall be as of the
same dates and for the same periods as the audited consolidated financial statements required by

§§210.3-01 and 3-02. 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 §21 0.1-02(w), substituting 20
percent for 10 percent, is met. For purposes of a filing on Form 10-K (§249.310 of

this chapter):

(1) If the registrant is an accelerated filer (as defined in §240.12b-2 of this chapter) but the 50 percent or
less owned person is not an accelerated filer, the required financial statements may be fied 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 the registrant's fiscal year.
(2) If the fiscal year of any 50 percent or less owned person ends within the registrant's number of filing
days before the date of the fiing, or if the fiscal year ends after the date of the fiing, the required
financial

fiing

statements may be filed as an amendment to the report within the subsidiary's number of

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.
(3) The term registrant's number of

filing days means:

~i) 60 days (75 days for fiscal years ending before December 15, 2006) if the registrant is a large
accelerated filer;
(ii) 75 days if the registrant is an accelerated filer; and
(iii) 90 days for all other registrants.
(4) The term subsidiary's number of

fiing days means:

(i) 60 days (75 days for fiscal years ending before December 15, 2006) if the 50 percent or less owned

person is a large accelerated fier;

(ii) 75 days if the 50 percent or less owned person is an accelerated fier; and
(iii) 90 days for all other 50 percent or less owned persons.

(c) Notwithstanding the requirements for separate financial statements in paragraph (a) of this section,
where financial statements of two or more majority-owned subsidiaries not consolidated are required,
combined or consolidated statements of such subsidiaries may be filed subject to principles of inclusion
and exclusion which clearly exhibit the financial position, cash flows and results of operations of the
combined or consolidated group. Similarly, where financial statements of
two or more 50 percent or less

owned persons are required, combined or consolidated statements of such persons may be fied subject
to the same principles of inclusion or exclusion referred to above.
(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.
(46 FR 56179, Nov. 16, 1981, as amended at 47 FR 29837, July 9, 1982; 57 FR 45292, Oct. 1, 1992; 59

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FR 65636, Dec. 20,1994; 67 FR 58504, Sept. 16,2002; 69 FR 68235, Nov. 23, 2004; 70 FR 76640,
Dec. 27, 2005)

§ 210.3-10 Financial statements of guarantors and issuers of guaranteed securities
registered or being registered.

(tJoP
(a)(1) General rule. Every issuer of a registered security that is guaranteed and every guarantor of a
registered security must fie the financial statements required for a registrant by Regulation S-X.

this section are exceptions to the general
these paragraphs can apply to a single issuer or
guarantor. Paragraph (g) of this section is a special rule for recently acquired issuers or guarantors that
overrides each of these exceptions for a specific issuer or guarantor. Paragraph (h) of this section
defines the following terms used in this section: 100% owned, full and unconditional, annual report,
quarterly report, no independent assets or operations, minor, finance subsidiary and operating
subsidiary. Paragraph (i) of this section states the requirements for preparing the condensed
(2) Operation of

this rule. Paragraphs (b), (c), (d), (e) and (f) of

rule of paragraph (a)(1) of

this section. Only one of

consolidating financial information required by paragraphs (c), (d), (e) and (f) of

this section.

Note to paragraph(a)(2). Where paragraphs (b), (c),
this section specify the
(d), (e) and (f) of
fiing of financial statements of the parent company, the financial statements of an entiy that
is not an issuer or guarantor of the registered security cannot be substituted for those of the
parent company.

(3) Foreign private issuers. Where any provision of

this section requires compliance with §§21

0.3-01

and 3-02, a foreign private issuer may comply by providing financial statements for the periods specified
by Item 8.A of Form 20-F (§249.220f of this chapter).
(b) Finance subsidiary issuer of securities guaranteed by its parent company. When a finance subsidiary
issues securities and its parent company guarantees those securities, the registration statement, parent
company annual report, or parent company quarterly report need not include financial statements of the
issuer if:

(1) The issuer is 100% owned by the parent company guarantor;
(2) The guarantee is full and unconditional;
(3) No other subsidiary of

the parent company guarantees the securities; and

(4) The parent company's financial statements are fied for the periods specified by §§21

0.3-01 and

210.3-02 and include a footnote stating that the issuer is a 100%-owned finance subsidiary of the parent
. company and the parent company has fully and unconditionally guaranteed the securities. The footnote
also must include the narrative disclosures specified in paragraphs (i)(9) and (i)(10) of

this section.

Note to paragraph(b). Paragraph (b) is available if a subsidiary issuer satisfies the
requirements of this paragraph but for the fact that, instead of the parent company
guaranteeing the security, the subsidiary issuer co-issued the security, jointly and severally,
with the parent company. In this situation, the narrative information required by paragraph (b)
(4) must be modified accordingly.
(c) Operating subsidiary issuer of securities guaranteed by its parent company. When an operating
subsidiary issues securities and its parent company guarantees those securities, the registration
statement, parent company annual report, or parent company quarterly report need not include financial
statements of the issuer if:

(1) The issuer is 100% owned by the parent company guarantor;

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(2) The guarantee is full and unconditional;
(3) No other subsidiary of

the parent company guarantees the securities; and

(4) The parent company's financial statements are fied for the periods specified by §§21 0.3-01 and
210.3-02 and include, in a footnote, condensed consolidating financial information for the same periods
with a separate column for:
(i) The parent company;

(ii) The subsidiary issuer;

(iii) Any other subsidiaries of the parent company on a combined basis;
(iv) Consolidating adjustments; and
(v) The total consolidated amounts.

Notes to paragraph(c). 1. Instead of the condensed consolidating financial information
required by paragraph (c)(4), the parent company's financial statements may include a
footnote stating, if true, that the parent company has no independent assets or operations, the
guarantee is full and unconditional, and any subsidiaries of the parent company other than the
subsidiary issuer are minor. The footnote also must include the narrative disclosures specified
in paragraphs (i)(9) and (i)(10) of this section.

2. If the alternative disclosure permitted by Note 1 to this paragraph is not applicable because
the parent company has independent assets or operations, the condensed consolidating
financial information described in paragraph (c)(4) may omit the column for "any other
subsidiaries of the parent company on a combined basis" if those other subsidiaries are
minor.
3. Paragraph (c) is available if a subsidiary issuer satisfies the requirements of this paragraph
but for the fact that, instead of the parent company guaranteeing the security, the subsidi,ary
issuer co-issued the security, jointly and severally, with the parent company. In this situation,
the narrative information required by paragraph (i)(8) of this section must be modified

accordingly.
(d) Subsidiary issuer of securites guaranteed by its parent company and one or more other subsidiaries
of that parent company. When a subsidiary issues securities and both its parent company and one or
more other subsidiaries of that parent company guarantee those securities, the registration statement,
parent company annual report, or parent company quarterly report need not include financial statements
of the issuer or any subsidiary guarantor if:
(1) The issuer and all subsidiary guarantors are 100% owned by the parent company guarantor;
(2) The guarantees are full and unconditional;
(3) The guarantees are joint and several; and

(4) The parent company's financial statements are filed for the periods specified by §§210.3-o1 and
210.3-02 and include, in a footnote, condensed consolidating financial information for the same periods
with a separate column for:
(i) The parent company;
(ii) The subsidiary issuer;

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(iii) The guarantor subsidiaries of the parent company on a combined basis;
(iv) Any other subsidiaries of the parent company on a combined basis;
(v) Consolidating adjustments; and
(vi) The total consolidated amounts.

Notes to paragraph(d). 1. Paragraph (d) applies in the same manner whether the issuer is a
finance subsidiary or an operating subsidiary.
2. The condensed consolidating financial information described in paragraph (d)(4) may omit
the columo for "any other subsidiaries of the parent company on a combined basis" if those
other subsidiaries are minor.

3. Paragraph (d) is available if a subsidiary issuer satisfies the requirements of this paragraph
but for the fact that, instead of the parent company guaranteeing the security, the subsidiary
issuer co-issued the security, jointly and severally, with the parent company. In this situation,
the narrative information required by paragraph (i)(8) of this section must be modified

accordingly.
4. If all of the requirements in paragraph (d) are satisfied except that the guarantee of a
subsidiary is not joint and several with, as applicable, the parent company's guarantee or the
guarantees of the parent company and the other subsidiaries, then each subsidiary guarantor
whose guarantee is not joint and sev.eral need not include separate financial statements, but
the condensed consolidating financial information should include a separate column for each
guarantor whose guarantee is not joint and severaL.
5. Instead of the condensed consolidating financial information required by paragraph (d)(4),
the parent company's financial statements may include a footnote stating, if true, that the
parent company has no independent assets or operations, the subsidiary issuer is a 100%
owned finance subsidiary of the parent company, the parent company has guaranteed the
securities, all of the parent company's subsidiaries other than the subsidiary issuer have
guaranteed the securities, all of the guarantees are full and unconditional, and all of the
guarantees are joint and severaL. The footnote also must include the narrative disclosures
specified in paragraphs (i)(9) and (i)(1 0) of this section.
(e) Single subsidiary guarantor of securities issued by the parent company of that subsidiary. When a
parent company issues securities and one of its subsidiaries guarantees those securities, the
registration statement, parent company annual report, or parent company quarterly report need not
include financial statements of the subsidiary guarantor if:

(1) The subsidiary guarantor is 100% owned by the parent company issuer;
(2) The guarantee is full and unconditional;

(3) No other subsidiary of that parent guarantees the securities; and
(4) The parent company's financial statements are fied for the periods specified by §§21

0.3-01 and

210.3-02 and include, in a footnote, condensed consolidating financial information for the same periods
with a separate column for:
(i) The parent company;
(ii) The subsidiary guarantor;

(iii) Any other subsidiaries of the parent company on a combined basis;

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(iv) Consolidating adjustments; and
(v) The total consolidated amounts.

Notes to paragraph(e). 1. Paragraph (e) applies in the same manner whether the guarantor is
a finance subsidiary or an operating subsidiary.
2. Instead of the condensed consolidating financial information required by paragraph (e)(4),
the parent company's financial statements may include a footnote stating, if true, that the
parent company has no independent assets or operations, the guarantee is full and
unconditional, and any subsidiaries of the parent company other than the subsidiary guarantor
are minor. The footnote also must include the narrative disclosures specified in paragraphs (i)
(9) and (i)(10) of this section.

3. If the alternative disclosure permitted by Note 2 to this paragraph is not applicable because
the parent company has independent assets or operations, the condensed consolidating
financial information described in paragraph (e)(4) may omit the column for "any other
subsidiaries of the parent company on a combined basis" if those other subsidiaries are
minor.

4. If, instead of guaranteeing the subject security, a subsidiary co-issues the security jointly
and severally with its parent company, this paragraph (e) does not apply. Instead, the
appropriate financial information requirement would depend on whether the subsidiary is a
finance subsidiary or an operating subsidiary. If the subsidiary is a finance subsidiary,
paragraph (b) applies. If the subsidiary is an operating company, paragraph (c) applies.
(f) Multple subsidiary guarantors of securities issued by the parent company of those subsidiaries.
When a parent company issues securities and more than one of its subsidiaries guarantee those
securities, the registration statement, parent company annual report, or parent company quarterly report
need not include financial statements of the subsidiary guarantors if:
(1) Each of the subsidiary guarantors is 100% owned by the parent company issuer;
(2) The guarantees are full and unconditional;

(3) The guarantees are joint and several; and

0.3-01 and

(4) The parent company's financial statements are filed for the periods specified by §§21

210.3-02 and include, in a footnote, condensed consolidating financial information for the same periods
with a separate column for:
(i) The parent company;

(ii) The subsidiary guarantors on a combined basis;

(ii) Any other subsidiaries of the parent company on a combined basis;
(iv) Consolidating adjustments; and
(v) The total consolidated amounts.

Notes to paragraph(f). 1. Instead ofthe condensed consolidating financial information
required by paragraph (f)(4), the parent company's financial statements may include a
footnote stating, if true, that the parent company has no independent assets or operations, the
guarantees are full and unconditional and joint and several, and any subsidiaries of the parent
company other than the subsidiary guarantors are minor. The footnote also must include the
narrative disclosures specified in paragraphs (i)(9) and (i)(10) of

this section.

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2. If the alternative disclosure permitted by Note 1 to this paragraph is not applicable because
the parent company has independent assets or operations, the condensed consolidating
financial information described in paragraph (f)(4) may omit the column for "any other
subsidiaries of the parent company on a combined basis" if those other subsidiaries are
minor.

3. If any of the subsidiary guarantees is not joint and several with the guarantees of the other
subsidiaries, then each subsidiary guarantor whose guarantee is not joint and several need
not include separate financial statements, but the condensed consolidating financial
information must include a separate column for each subsidiary guarantor whose guarantee is
not joint and severaL.
(g) Recently acquired subsidiary issuers or subsidiary guarantors. (1) The Securities Act registration
statement of
the parent company must include the financial statements specified in paragraph (g)(2) of
this section for any subsidiary that otherwise meets the conditions in paragraph (c), (d), (e) or (f) of this
section for omission of separate financial statements if:

(i) The subsidiary has not been included in the audited consolidated results of the parent company for at
least nine months of the most recent fiscal year; and
(ii) The net book value or purchase price, whichever is greater, of the subsidiary is 20% or more of the
principal amount of the securities being registered.
(2) Financial statements required.

(i) Audited financial statements for a subsidiary described in paragraph (g)(1) of this section must be
fied for the subsidiary's most recent fiscal year preceding the acquisition. In addition, unaudited financial
statements must be filed for any interim periods specified in §§21

0.3-01 and 210.3-02.

(ii) The financial statements must conform to the requirements of Regulation S-X (§§21 0.1-01 through
12-29), except that supporting schedules need not be filed. If the subsidiary is a foreign business,
financial statements of
the subsidiary meeting the requirements of Item 17 of Form 20-F (§249.220f) will
satisfy this item.
(3) Instructions to paragraph (g).
(i) The significance test of paragraph (g)(1 )(ii) of this section should be computed using net book value
of the subsidiary as of the most recent fiscal year end preceding the acquisition.

(ii) Information required by this paragraph (g) is not required to be included in an annual report or

quarterly report.

(iii) Acquisitions of a group of subsidiary issuers or subsidiary guarantors that are related prior to their
acquisition shall be aggregated for purposes of applying the 20% test in paragraph (g)( 1 )(ii) of this
section. Subsidiaries shall be deemed to be related prior to their acquisition if:
(A) They are under common control or management;

(8) The acquisition of one subsidiary is conditioned on the acquisition of each subsidiary; or
(C) The acquisition of each subsidiary is conditioned on a single common event.
(h) Definitions. For the purposes of this section:

(1) A subsidiary is "100% owned" if all of its outstanding voting shares are owned, either directly or
indirectly, by its parent company. A subsidiary not in corporate form is 100% owned if
the sum of all
interests are owned, either directly or indirectly, by its parent company other than:

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(i) Securities that are guaranteed by its parent and, if applicable, other 100%-owned subsidiaries of its

parent; and

(ii) Securities that guarantee securities issued by its parent and, if applicable, other 100%-owned
subsidiaries of its parent.
(2) A guarantee is "full and unconditional," if, when an issuer of a guaranteed security has failed to make
a scheduled payment, the guarantor is obligated to make the scheduled payment immediately and, if it
doesn't, any holder of the guaranteed security may immediately bring suit directly against the guarantor
for payment of all amounts due and payable.

this

(3) Annual report refers to an annual report on Form 10-K or Form 20-F (§249.310 or 249.220f of

chapter).
(4) Quarterly report refers to a quarterly report on Form 10-Q (§249.308a of

this chapter).

(5) A parent company has no independent assets or operations if each of its total assets, revenues,
income from continuing operations before income taxes, and cash flows from operating activities
(excluding amounts related to its investment in its consolidated subsidiaries) is less than 3% of the

corresponding consolidated amount.

(6) A subsidiary is minor if each of its total assets, stockholders' equity, revenues, income from
continuing operations before income taxes, and cash flows from operating activities is less than 3% of
the parent company's corresponding consolidated amount.

Note to paragraph(h)(6). When considering a group of subsidiaries, the definition applies to
each subsidiary in that group individually and to all subsidiaries in that group in the aggregate.
(7) A subsidiary is a finance subsidiary if it has no assets, operations, revenues or cash flows other than
those related to the issuance, administration and repayment of the security being registered and any
other securities guaranteed by its parent company.
(8) A subsidiary is an operating subsidiary if it is not a finance subsidiary.

(i) Instructions for preparation of condensed consolidating financial information required by paragraphs
(c), (d), (e) and (f) of

this section.

(1) Follow the general guidance in §21 0.1 0-01 for the form and content for condensed financial
statements and present the financial information in suffcient detail to allow investors to determine the
assets, results of operations and cash flows of each of the consolidating groups;

(2) The financial information should be audited for the same periods that the parent company financial
statements are required to be audited;
(3) The parent company column should present investments in all subsidiaries under the equity method;
(4) The parent company's basis shall be "pushed down" to the applicable subsidiary columns to the
extent that push down would be required or permitted in separate financial statements of the subsidiary;

(5) All subsidiary issuer or subsidiary guarantor columns should present the following investments in
subsidiaries under the equity method:
(i) Non-guarantor subsidiaries;

(ii) Subsidiary issuers or subsidiary guarantors that are not 100% owned or whose guarantee is not full
and unconditional;
(Hi) Subsidiary guarantors whose guarantee is not joint and several with the guarantees of the other

subsidiaries; and

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(iv) Subsidiary guarantors with differences in domestic or foreign laws that affect the enforceability of the

guarantees;

(6) Provide a separate column for each subsidiary issuer or subsidiary guarantor that is not 100%
owned, whose guarantee is not full and unconditional, or whose guarantee is not joint and several with
the guarantees of other subsidiaries. Inclusion of a separate column does not relieve that issuer or
guarantor from the requirement to file separate financial statements under paragraph (a) of this section.
However, paragraphs (b) through (f) of this section will provide this relief if the particular paragraph is
satisfied except that the guarantee is not joint and several;
(7) Provide separate columns for each guarantor by legal jurisdiction if differences in domestic or foreign
laws affect the enforceability of the guarantees;
(8) Include the following disclosure, if true:

(i) Each subsidiary issuer or subsidiary guarantor is 100% owned by the parent company;
(ii) All guarantees are full and unconditional; and

(iii) Where there is more than one guarantor, all guarantees are joint and several;
(9) Disclose any significant restrictions on the ability of the parent company or any guarantor to obtain
funds from its subsidiaries by dividend or loan;
(10) Provide the disclosures prescribed by §21 0.4-08( e )(3) with respect to the subsidiary issuers and
subsidiary guarantors;

(11) The disclosure:
(i) May not omit any financial and narrative information about each guarantor if the information would be
matenal for investors to evaluate the suffciency of the guarantee;

(ii) Shall include suffcient information so as to make the financial information presented not misleading;

and

(iii) Need not repeat information that would substantially duplicate disclosure elsewhere in the parent
company's consolidated financial statements; and
(12) Where the parent company's consolidated financial statements are prepared on a comprehensive
basis other than U.S. Generally Accepted Accounting Principles or International Financial Reporting
Standards as issued by the International Accounting Standards Board, reconcile the information in each
column to U.S. Generally Accepted Accounting Pnnciples to the extent necessary to allow investors to
evaluate the suffciency of the guarantees. The reconcilation may be limited to the information specified
by Item 17 of Form 20-F (§249.220f of this chapter). The reconcilng information need not duplicate
information included elsewhere in the reconciliation of the consolidated financial statements.
(65 FR 51707, Aug. 24, 2000, as amended at 73 FR 952, Jan. 4, 2008; 73 FR 1009, Jan. 4, 2008)

§ 210.3-11 Financial statements of an inactive registrant.
II top

If a registrant is an inactive entity as defined below, the financial statements required by this regulation
for purposes of reports pursuant to the Securities Exchange Act of 1934 may be unaudited. An inactive
entity is one meeting all of the following conditions:

(a) Gross receipts from all sources for the fiscal year are not in excess of $100,000;

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(b) The registrant has not purchased or sold any of its own stock, granted options therefor, or levied
assessments upon outstanding stock,
(c) Expenditures for all purposes for the fiscal year are not in excess of $100,000;
(d) No material change in the business has occurred during the fiscal year, including any bankruptcy,
reorganization, readjustment or succession or any matenal acquisition or disposition of plants, mines,
mining equipment, mine rights or leases; and
(e) No exchange upon which the shares are listed, or governmental authority having jurisdiction,
requires the furnishing to it or the publication of audited financial statements.

§ 210.3-12 Age offinancial statements at effective date of registration statement or at
mailing date of proxy statement.

IItop
(a) If the financial statements in a fiing are as of a date the number of days specified in paragraph (g) of
this section or more before the date the fiing is expected to become effective, or proposed mailing date
in the case of a proxy statement, the financial statements shall be updated, except as specified in the
following paragraphs, with a balance sheet as of an intenm date within the number of days specified in
paragraph (g) of this section and with statements of income and cash flows for the interim period
between the end of the most recent fiscal year and the date of the interim balance sheet provided and
for the corresponding period of the preceding fiscal year. Such interim financial statements may be
unaudited and need not be presented in greater detail than is required by §21 0.1 0--1. Notwithstanding
the above requirements, the most recent interim financial statements shall be at least as current as the
most recent financial statements filed with the Commission on Form 10-Q.
(b) Where the anticipated effective date of a filing, or in the case of a proxy statement the proposed
mailing date, falls within the number of days subsequent to the end of the fiscal year specified in
paragraph (g) of this section, the filing need not include financial statements more current than as of the
end of the third fiscal quarter of the most recently completed fiscal year unless the audited financial
statements for such fiscal year are available or unless the anticipated effective date or proposed mailing
date falls after 45 days subsequent to the end of the fiscal year and the registrant does not meet the

conditions prescribed under paragraph ( c) of §21 0.3--1. If the anticipated effective date or proposed
mailing date falls after 45 days subsequent to the end of the fiscal year and the registrant does not meet
the conditions prescribed under paragraph (c) of §210.3-01, the filing must include audited financial
statements for the most recently completed fiscal year.

(c) Where a fiing is made near the end of a fiscal year and audited financial statements for that fiscal
year are not included in the fiing, the filing shall be updated with such audited financial statements if
they become available prior to the anticipated effective date, or proposed mailing date in the case of a
proxy statement.

(d) The age of the registrant's most recent audited financial statements included in a registration
statement fied under the Securities Act of 1933 or fied on Form 10 (17 CFR 249.210) under the
Securities Exchange Act of 1934 shall not be more than one year and 45 days old at the date the
registration statement becomes effective if the registration statement relates to the security of an issuer
that was not subject, immediately before the time of filing the registration statement, to the reporting
requirements of section 13 or 15( d) of the Securities Exchange Act of 1934.

(e) For fiings by registered management investment companies, the requirements of §210.3-18 shall

apply in lieu of the requirements of this section.

(f) Any foreign private issuer may file financial statements whose age is specified in Item 8.A of Form

20-F (§249.220f of this chapter). Financial statements of a foreign business which are furnished
pursuant to §§21
0.3-05 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 Item 8.A of Form 20-F.
(g)(1) For purposes of paragraph (a) of this section, the number of days shall be:

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(i) 130 days for large accelerated filers and accelerated filers (as defined in §240.12b-2 of this chapter);

and

(ii) 135 days for all other registrants.

(2) For purposes of paragraph (b) of this section, the number of days shall be:

(i) 60 days (75 days for fiscal years ending before December 15, 2006) for large accelerated filers (as
defined in §240.12b-2 of

this chapter);

(ii) 75 days for accelerated filers (as defined in §240.12b-2 of

this chapter); and

(iii) 90 days for all other registrants.

(45 FR 62687, Sept. 25, 1980, as amended at 46 FR 12491, Feb. 17, 1981; 46 FR 36125, July 14, 1981;
47 FR 54767, Dec. 6, 1982; 54 FR 10316, Mar. 13, 1989; 56 FR 30053, July 1, 1991; 57 FR 45292, Oct.
1, 1992; 59 FR 65636, Dec. 20, 1994; 64 FR 53909, Oct. 5, 1999; 67 FR 58504, Sept. 16, 2002; 68 FR

17881, Apr. 14,2003; 69 FR 68235, Nov. 23, 2004; 70 FR 76640, Dec. 27, 2005; 73 FR 952, Jan. 4,
2008)

§ 210.3-13 Filing of other financial statements in certain cases.

(¡top
The Commission may, upon the informal written request of the registrant, and where consistent with the
protection of investors, permit the omission of one or more of the financial statements herein required or
the filing in substitution therefor of appropriate statements of comparable character. The Commission
may also by informal written notice require the filing of other financial statements in addition to, or in
substitution for, the statements herein required in any case where such statements are necessary or
appropriate for an adequate presentation of the financial condition of any person whose financial
statements are required, or whose statements are otherwise necessary for the protection of investors.

§ 210.3-14 Special instructions for real estate operations to be acquired.
(¡JQP
which income statements are required, the registrant has acquired one or
(a) If, during the period for
more properties which in the aggregate are significant, or since the date of the latest balance sheet
required has acquired or proposes to acquire one or more properties which in the aggregate are
significant, the following shall be furnished with respect to such properties:
(1) Audited income statements (not including earnings per unit) for the three most recent fiscal years,
which shall exclude items not comparable to the proposed future operations of the property such as
mortgage interest, leasehold rental, depreciation, corporate expenses and Federal and state income
taxes: Provided, however, That such audited statements need be presented for only the most recent
fiscal year if

(i) The propert is not acquired from a related part;
(ii) Material factors considered by the registrant in assessing the propert are described with specificity
in the fiing with regard to the property, including sources of revenue (including, but not limited to,
competition in the rental market, comparative rents, occupancy rates) and expense (including, but not
limited to, utilty rates, ad valorem tax rates, maintenance expenses, capital improvements anticipated);

and
(ii) The registrant indicates in the appropriate filing that, after reasonable inquiry, the registrant is not

aware of any material factors relating to that specific property other than those discussed in response to
paragraph (a)( 1 )(ii) of this section that would cause the reported financial information not to be

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necessarily indicative of future operating results.

Note: The discussion of material factors considered should be combined with that required by
Item 15 of Form 5-11.
(2) If the property is to be operated by the registrant, there shall be furnished a statement showing the
estimated taxable operating results of the registrant based on the most recent twelve month period
including such adjustments as can be factually supported. If the propert is to be acquired subject to a
net lease the estimated taxable operating results shall be based on the rent to be paid for the first year
of the lease. In either case, the estimated amount of cash to be made available by operations shall be
shown. There shall be stated in an introductory paragraph the principal assumptions which have been
made in preparing the statements of estimated taxable operating results and cash to be made available
by operations.

(3) If appropriate under the circumstances, there shall be given in tablular form for a limited number of
years the estimated cash distribution per unit showing the portion thereof reportable as taxable income
and the portion representing a return of capital together with an explanation of annual variations, if any.
If taxable net income per unit wil become greater than the cash available for distribution per unit, that
fact and approximate year of occurrence shall be stated, if significant.

(b) Information required by this section is not required to be included in a filing on Form 10-K.

(45 FR 63687, Sept. 25,1980, as amended at 47 FR 25122, June 10,1982; 73 FR 953, Jan. 4, 2008)

§ 210.3-15 Special provisions as to real estate investment trusts.

IIJoP
(a)(1) The income statement prepared pursuant to §210.5-03 shall include the following additional
captions between those required by §21 0.5-03.15 and 16: (i) Income or loss before gain or loss on sale
of properties, extraordinary items and cumulative effects of accounting changes, and (ii) gain or loss on
sale of properties, less applicable income tax.
(2) The balance sheet required by §210.5-02 shall set forth in lieu of

the captions required by §210.5-

02.31(a)(3): (i) The balance of undistributed income from other than gain or loss on sale of properties
and (ii) accumulated undistributed net realized gain or loss on sale of properties. The information
specified in §210.3-04 shall be modified similarly.
(b) The trust's status as a real estate investment trust under applicable provisions of the Internal
Revenue Code as amended shall be stated in a note referred to in the appropriate statements. Such
note shall also indicate briefly the principal present assumptions on which the trust has relied in making
or not making provisons for Federal income taxes.

(c) The tax status of distributions per unit shall be stated (e.g., ordinary income, capital gain, return of
capital).

(45 FR 63687, Sept. 25,1980, as amended at 50 FR 49532, Dec. 3,1985)

§ 210.3-16 Financial statements of affilates whose securities collateralize an issue
registered or being registered.

IIJoP
(a) For each of the registrant's affliates whose securities constitute a substantial portion of the collateral
for any class of securities registered or being registered, there shall be fied the financial statements that
would be required if the affliate were a registrant and required to file financial statements. However,
financial statements need not be filed pursuant to this section for any person whose statements are
otherwise separately included in the filing on an individual basis or on a basis consolidated with its

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subsidiaries.

(b) For the purposes of this section, securities of a person shall be deemed to constitute a substantial
portion of collateral if the aggregate principal amount, par value, or book value of the securities as
carried by the registrant, or the market value of such securities, whichever is the greatest, equals 20
percent or more of the principal amount of the secured class of securities.
(65 FR 51710, Aug. 24, 2000)

§ 210.3-17 Financial statements of natural persons.

lItQP
(a) In lieu of the financial statements otherwise required, a natural person may fie an unaudited balance
sheet as of a date within 90 days of date of filing and unaudited statements of income for each of the
three most recent fiscal years.
(b) Financial statements conforming with the instructions as to financial statements of subsidiaries not

consolidated and 50 percent or less owned persons under §210.3-o9(a) shall be separately presented
for: (1) Each business owned as a sole proprietor, (2) each partnership, business trust, unincorporated
association, or similar business organization of which the person holds a controllng interest and (3)
each corporation of
which the person, directly or indirectly, owns securities representing more than 50
percent of the voting power.
(c) Separate financial statements may be omitted, however, for each corporation, business trust,
unincorporated association, or similar business organization if
the person's total investment in such
entity does not exceed 5 percent of his total assets and the person's total income from such entity does
not exceed 5 percent of his gross income; Provided, that the person's aggregate investment in and
income from all such omitted entities shall not exceed 15 percent of his total assets and gross income,

respectively.
(46 FR 12491, Feb. 17, 1981, as amended at 50 FR 25215, June 18, 1985)

§ 210.3-18 Special provisions as to registered management investment companies
and companies required to be registered as management investment companies.

fied: .

IItop

(a) For filings by registered management investment companies, the following financial statements shall
be

(1) An audited balance sheet or statement of assets and liabilities as of the end of the most recent fiscal

year;

(2) An audited statement of operations for the most recent fiscal year conforming to the requirements of

§210.6-07.

(3) An audited statement of cash flows for the most recent fiscal year if necessary to comply with
generally accepted accounting principles. (Further references in this rule to the requirement for such
statement are likewise applicable only to the extent that they are consistent with the requirements of
generally accepted accounting principles.)

(4) Audited statements of changes in net assets conforming to the requirements of §210.6-o9 for the

two most recent fiscal years.

(b) If the filing is made within 60 days after the end of the registrant's fiscal year and audited financial
statements for the most recent fiscal year are not available, the balance sheet or statement of assets
and liabilties may be as of the end of the preceding fiscal year and the fiing shall include an additional

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balance sheet or statement of assets and liabilties as of an interim date within 245 days of the date of
filing. In addition, the statements of operations and cash flows (if required by generally accepted
accounting principles) shall be provided for the preceding fiscal year and the statement of changes in net
assets shall be provided for the two preceding fiscal years and each of the statements shall be provided
for the interim p'eriod between the end of the preceding fiscal year and the date of the most recent
balance sheet or statement of assets and liabilities being filed. Financial statements for the
corresponding period of the preceding fiscal year need not be provided.
the most current balance sheet or statement of assets and liabilities in a filing is as of a date 245
days or more prior to the date the fiing is expected to become effective, the financial statements shall be
updated with a balance sheet or statement of assets and liabilities as of an interim date within 245 days.
In addition, the statements of operations, cash flows, and changes in net assets shall be provided for the
interim period between the end of the most recent fiscal year for which a balance sheet or statement of
assets and liabilties is presented and the date of the most recent interim balance sheet or statement of
assets and liabilties fied.
(c) If

(d) Interim financial statements provided in accordance with these requirements may be unaudited but
0.6-01 to 210.6-10. When unaudited financial
shall be presented in the same detail as required by §§21
statements are presented in a registration statement, they shall include the statement required by

§210.3-03(d).
the Securities Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); secs. 12, 13, 14, 15(d), and
23(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78/, 78m, 78n, 780(d), 78w(a), secs. 5(b), 10
the Public Utility Holding Company Act, 15 U.S.C. 7ge(a), 79n, 79t(a); secs. 8, 20, 30,
(a), 14, 20(a) of

(Secs. 7 and 19a of

31(c), 38(a) of

the Investment Company Act of 1940,15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c),

80a-37(a))
(46 FR 36125, July 14,1981; 46 FR 46795, Sept. 22,1981, as amended at 47 FR 29837, July 9,1982;
47 FR 56838, Dec. 21,1982; 57 FR 45292, Oct. 1, 1992)
§ 210.3-19 (Reserved)

(¡jQP
§ 210.3-20 Currency for financial statements of foreign private issuers.

(¡JQP
this chapter, shall state amounts in its primary
(a) A foreign private issuer, as defined in §230A05 of
financial statements in the currency which it deems appropriate.
(b) The currency in which amounts in the financial statements are stated shall be disclosed prominently
on the face of the financial statements. If dividends on publicly-held equity securities will be declared in a
currency other than the reporting currency, a note to the financial statements shall identify that currency.
If there are material exchange restrictions or controls relating to the issuer's reporting currency, the
currency of the issuer's domicile, or the currency in which the issuer will pay dividends, prominent
disclosure of this fact shall be made in the financial statements. If the reporting currency is not the U.S.
dollar, dollar-equivalent financial statements or convenience translations shall not be presented, except
a translation may be presented of the most recent fiscal year and any subsequent interim period
presented using the exchange rate as of the most recent balance sheet included in the filing, except that
a rate as of the most recent practicable date shall be used if materially different.

(c) If the financial statements of a foreign private issuer are stated in a currency of a country that has
experienced
cumulative inflationary effects exceeding a total of 100 percent over the most recent three
year period, and have not been recast or otherwise supplemented to include information on a historical
cost/constant currency or current cost basis prescribed or permitted by appropriate authoritative
standards, the issuer shall present supplementary information to quantify the effects of changing prices
upon its financial position and results of operations.
(d) Notwithstanding the currency selected for reporting purposes, the issuer shall measure separately its

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own transactions, and those of each of its material operations (e.g., branches, divisions, subsidiaries,
joint ventures, and similar entities) that is included in the issuer's consolidated financial statements and
not located in a hyperinflationary environment, using the particular currency of the primary economic
environment in which the issuer or the operation conducts its business. Assets and liabilities so
determined shall be translated into the reporting currency at the exchange rate at the balance sheet
date; all revenues, expenses, gains, and losses shall be translated at the exchange rate existing at the
time of the transaction or, if appropriate, a weighted average of the exchange rates during the period;
and all translation effects of exchange rate changes shall be included as a separate component
("cumulative translation adjustment" of shareholder's equity. For purposes of this paragraph, the
currency of an operation's primary economic environment is normally the currency in which cash is
primarily generated and expended; a hyperinflationary environment is one that has cumulative inflation
of approximately 100% or more over the most recent three year period. Departures from the
methodology presented in this paragraph shall be quantified pursuant to Item 17( c)(2) of Form 20-F

(§249.220f of this chapter).
(e) The issuer shall state its primary financial statements in the same currency for all periods for which
financial information is presented. If the financial statements are stated in a currency that is different
from that used in financial statements previously filed with the Commission, the issuer shall recast its
financial statements as if the newly adopted currency had been used since at least the earliest period
presented in the fiing. The decision to change and the reason for the change in the reporting currency
shall be disclosed in a note to the financial statements in the period in which the change occurs.
(59 FR 65631, Dec. 20, 1994, as amended at 64 FR 53908, Oct. 5, 1999)

Consolidated and Combined Financial Statements

I!top
§ 210.3A-01 Application of §21 O.3A-01 to §210.3A-05.

I!top
Sections 210.3A-01 to 210.3A-05 shall govern the presentation of consolidated and combined financial

statements.
(44 FR 19386, Apr. 3,1979. Redesignated at 45 FR 63687, Sept. 25,1980, and amended at 50 FR
25215, June 18, 1985)

§ 210.3A-02 Consolidated financial statements of the registrant and its subsidiaries.
i! toP

In deciding upon consolidation policy, the registrant must consider what financial presentation is most
meaningful in the circumstances and should follow in the consolidated financial statements principles of
inclusion or exclusion which wil clearly exhibit the financial position and results of operations of the
registrant. There is a presumption that consolidated statements are more meaningful than separate
statements and that they are usually necessary for a fair presentation when one entity directly or
indirectly has a controllng financial interest in another entity. Other particular facts and circumstances
may require combined financial statements, an equity method of accounting, or valuation allowances in

order to achieve a fair presentation. In any case, the disclosures required by §210.3A-03 should clearly
explain the accounting policies followed by the registrant in this area, including the circumstances
involved in any departure from the normal practice of consolidating majority owned subsidiaries and not
consolidating entities that are less than majority owned. Among the factors that the registrant should
consider in determining the most meaningful presentation are the following:
(a) Majority ownership: Generally, registrants shall consolidate entities that are majority owned and shall
not consolidate entities that are not majority owned. The determination of majority ownership requires a
careful analysis of the facts and circumstances of a particular relationship among entities. In rare
situations, consolidation of a majority owned subsidiary may not result in a fair presentation, because the

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registrant, in substance, does not have a controllng financial interest (for example, when the subsidiary
is in legal reorganization or in bankruptcy, or when control is likely to be.temporary). In other situations,
consolidation of an entity, notwithstanding the lack of technical majority ownership, is necessary to
present fairly the financial position and results of operations of the registrant, because of the existence of
a parent-subsidiary relationship by means other than record ownership of voting stock.
(b) Different fiscal periods: Generally, registrants shall not consolidate any entity whose financial
statements are as ora date or for periods substantially different from those of the registrant. Rather, the
eamings or losses of such entities should be reflected in the registrant's financial statements on the
equity method of accounting. However:
(1) A difference in fiscal periods does not of itself justify the exclusion of an entity from consolidation. It
ordinarily is feasible for such entity to prepare, for consolidation purposes, statements for a period which
corresponds with or closely approaches the fiscal year of the registrant. Where the difference is not
more than 93 days, it is usually acceptable to use, for consolidation purposes, such entity's statemerits
for its fiscal period. Such difference, when it exists, should be disclosed as follows: the closing date of
the entity should be expressly indicated, and the necessity for the use of different closing dates should
be.briefly explained. Furthermore, recognition should be given by disclosure or otherwise to the effect of

intervening events which materially affect the financial position or results of operations.
this section, in connection with
(2) Notwithstanding the 93-day provision specified in paragraph (b)(1) of
the retroactive combination of financial statements of entities following a pooling of interests, the
financial statements of the constituents may be combined even if their respective fiscal periods do not
end within 93 days, except that the financial statements for the latest fiscal year shall be recast to dates
which do not differ by more than 93 days, if practicable. Disclosure shall be made of the periods
combined and of the sales or revenues, net income before extraordinary items and net income of any
interim periods excluded from or included more than once in results of operations as a result of such

recasting.
(c) Bank Holding Company Act: Registrants shall not consolidate any subsidiary or group of subsidiaries
of a registrant subject to the Bank Holding Company Act of 1956 as amended as to which (1) a decision
requiring divestiture has been made, or (2) there is substantial
likelihood that divestiture wil be
necessary in order to comply with provisions of the Bank Holding Company Act.

(d)'Foreign subsidiaries: Due consideration shall be given to the propriety of consolidating with domestic
corporations foreign subsidiaries which are operated under political, economic or currency restrictions. If
consolidated, disclosure should be made as to the effect, insofar as this can reasonably be determined,
of foreign exchange restrictions upon the consolidated financial position and operating results of the
registrant and its subsidiaries.

(51 FR 17330, May 12, 1986)

§ 210.3A-03 Statement as to principles of consolidation or combination followed.
(!. top

the principles followed in consolidating or combining the separate financial
statements, including the principles followed in determining the inclusion or exclusion of (1) subsidiaries
in consolidated or combined financial statements and (2) companies in consolidated or combined
. financial statements, shall be stated in the notes to the respective financial statements.
(a) A brief description of

(b) As to each consolidated financial statement and as to each combined financial statement, if there
has been a change in the persons included or excluded in the corresponding statement for the
preceding fiscal period filed with the Commission which has a material effect on the financial statements,
the persons included and the persons excluded shall be disclosed. If there have been any changes in
the respective fiscal periods of the persons included made during the periods of the report which have a
material effect on the financial statements, indicate clearly such changes and the manner of treatment.

(37 FR 14597, July 21,1972. Redesignated at 45 FR 63687, Sept. 25,1980, and 46 FR 56179, Nov. 16,
1981)

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§ 210.3A-04 Intercompany items and transactions.

I!top
In general, there shall be eliminated intercompany items and transactions between persons included in
the (a) consolidated financial statements being filed and, as appropriate, (b) unrealized intercompany
profis and losses on transactions between persons for which financial statements are being filed and
persons the investment in which is presented in such statements by the equity method. If such
eliminations are not made, a statement of the reasons and the methods of treatment shall be made.

(37 FR 14597, July 21,1972. Redesignated at 46 FR 56179, Nov. 16, 1981)

§ 210.3A-05 Special requirements as to public utility holding companies.

I!top
There shall be shown in the consolidated balance sheet of a public utility holding company the difference
between the amount at which the parent's investment is carried and the underlying book equity of
subsidiaries as at the respective dates of acquisition.
(37 FR 14597, July 21, 1972. Redesignated at 45 FR 63687, Sept. 25, 1980, and 46 FR 56179, Nov. 16,
1981 )

Rules of General Application

I!top
Source: Sections 210.4-01 through 210.4-10 appear at 45 FR 63669, Sept. 25,1980,
unless otherwise noted.

§ 210.4-01 Form, order, and terminology.

I!top
(a) Financial statements should be filed in such form and order, and should use such generally accepted
terminology, as wil best indicate their significance and character in the light of the provisions applicable
thereto. The information required with respect to any statement shall be furnished as a minimum
requirement to which shall be added such further material information as is necessary to make the
required statements, in the light of the circumstances under which they are made, not misleading.
(1) Financial statements filed with the Commission which are not prepared in accordance with generally

accepted accounting principles wil be presumed to be misleading or inaccurate, despite footnote or
other disclosures, unless the Commission has otherwise provided. This article and other articles of
Regulation S-X provide clarification of certain disclosures which must be included in any event, in
financial statements fied with the Commission.

this chapter), except as stated otherwise in
(2) In all filings offoreign private issuers (see §230A05 of
the applicable form, the financial statements may be prepared according to a comprehensive set of
accounting principles, other than those generally accepted in the United States or International Financial
Reporting Standards as issued by the International Accounting Standards Board, if a reconciliation to
U.S. Generally Accepted Accounting Principles and the provisions of Regulation S-X of the type
specified in Item 18 of Form 20-F (§249.220f of this chapter) is also filed as part of the financial
statements. Alternatively, the financial statements may be prepared according to U.S. Generally
Accepted Accounting Principles or International Financial Reporting Standards as issued by the
International Accounting Standards Board.

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(3)(i) Notwithstanding the effective dates set forth in Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payment ("Statement No. 123R"), financial statements shall be
prepared in accordance with Statement No. 123R beginning with:

(A) The first interim or annual reporting period of the registrant's first fiscal year beginning on or after
June 15, 2005, provided the registrant does not fie as a smaller reporting company; and
(B) The first interim or annual reporting period of the registrant's first fiscal year beginning on or after
December 15, 2005, provided the registrant files as a smaller reporting company.
(ii) For periods prior to the effective dates set forth in this paragraph, both Statement No. 123R and
Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation
(October 1995), shall be considered to be generally accepted accounting principles.

(b) All money amounts required to be shown in financial statements may be expressed in whole dollars
or multiples thereof, as appropriate: Provided, That, when stated in other than whole dollars, an
indication to that effect is inserted immediately beneath the caption of the statement or schedule, at the
top of the money columns, or at an appropriate point in narrative materiaL.
(c) Negative amounts (red figures) shall be shown in a manner which clearly distinguishes the negative
attribute. When determining methods of display, consideration should be given to the limitations of
reproduction and microfilming processes.

(45 FR 63669, Sept. 25,1980, as amended at 47 FR 54767, Dec. 6,1982; 70 FR 20719, Apr. 21, 2005;
73 FR 953, Jan. 4, 2008; 73 FR 1009, Jan. 4, 2008)

§ 210.4-02 Items not materiaL.

(¡JoP
If the amount which would otherwise be required to be shown with respect to any item is not material, it
need not be separately set forth. The combination of insignificant amounts is permitted.

§ 210.4-03 Inapplicable captions and omission of unrequired or inapplicable financial

statements.

(¡JoP
(a) No caption should be shown in any financial statement as to which the items and conditions are not

present.

(b) Financial statements not required or inapplicable because the required matter is not present need not
be filed.
(c) The reasons for the omission of any required financial statements shall be indicated.

§ 210.4-04 Omission of substantially identical notes.

(¡tQP
If a note covering substantially the same subject matter is required with respect to two or more
financial
statements relating to the same or affliated persons, for which separate sets of notes are presented, the
required information may be shown in a note to only one of such statements: Provided, That a clear and
specific reference thereto is made in each of the other statements with respect to which the note is

required.

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§§ 210.4-05--210.04-06 (Reserved)

(¡jOP
§ 210.4-07 Discount on shares.

(¡jOP
Discount on shares, or any unamortized balance thereof, shall be shown separately as a deduction from
the applicable account(s) as circumstances require.

§ 210.4-08 General notes to financial statements.
(¡JOP
If applicable to the person for which the financial statements are filed, the following shall be set forth on
the face of the appropriate statement or in appropriately captioned notes. The information shall be
provided for each statement required to be fied, except that the information required by paragraphs (b),
(c), (d), (e) and (f) shall be provided as of

the most recent audited balance sheet being fied and for

paragraph ü) as specified therein. When specific statements are presented separately, the pertinent
notes shall accompany such statements unless cross-referencing is appropriate.
(a) Principles of consolidation or combination. With regard to consolidated or combined financial

statements, refer to §§21 0.3A-01 to 3A-08 for requirements for supplemental information in notes to the
financial statements.

(b) Assets subject to lien. Assets mortgaged, pledged, or otherwise subject to lien, and the approximate
amounts thereof, shall be designated and the obligations collateralized briefly identified.

(c) Defaults. The facts and amounts concerning any default in principal, interest, sinking fund, or
redemption provisions with respect to any issue of securities or credit agreements, or any breach of
covenant of a related indenture or agreement, which default or breach existed at the date of the most
recent balance sheet being filed and which has not been subsequently cured, shall be stated in the
notes to the financial statements. If a default or breach exists but acceleration of the obligation has been
waived for a stated period of time beyond the date of the most recent balance sheet being filed, state the
amount of the obligation and the period of the waiver.
(d) Preferred shares. (1) Aggregate preferences on involuntary liquidation, if other than par or stated
value, shall be shown parenthetically in the equity section of the balance sheet.
(2) Disclosure shall be made of any restriction upon retained earnings that arises from the

fact that upon

involuntary liquidation the aggregate preferences of the preferred shares exceeds the par or stated
value of such shares.

(e) Restrictions which limit the payment of dividends by the registrant. (1) Describe the most significant
restrictions, other than as reported under paragraph (d) of this section, on the payment of dividends by
the registrant, indicating their sources, their pertinent provisions, and the amount of retained earnings or
net income restricted or free of restrictions.
(2) Disclose the amount of consolidated retained earnings which represents undistributed earnings of 50
percent or less owned persons accounted for by the equity method.

(3) The disclosures in paragraphs (e)(3) (i) and (ii) in this sèction shall be provided when the restricted
net assets of consolidated and unconsolidated subsidiaries and the parent's equity in the undistributed
earnings of 50 percent or less owned persons accounted for by the equity method together exceed 25
percent of consolidated net assets as of the end of the most recently completed fiscal year. For
purposes of this test, restricted net assets of subsidiaries shall mean that amount of the registrant's
proportionate share of net assets (after intercompany eliminations) reflected in the balance sheets of its

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consolidated and unconsolidated subsidiaries as of the end of the most recent fiscal year which may not
be transferred to the parent company in the form of loans, advances or cash dividends by the

subsidiaries without the consent of a third part ( i.e. , lender, regulatory agency, foreign government,
limitations on transferability of assets are considered to be restrictions for purposes of this
etc.). Not all
test, which considers only specific third party restrictions on the ability of subsidiaries to transfer funds
outside of the entity. For example, the presence of subsidiary debt which is secured by certain of the
subsidiary's assets does not constitute a restriction under this rule. However, if there are any loan
provisions prohibiting dividend payments, loans or advances to the parent by a subsidiary, these are
considered restrictions for purposes of computing restricted net assets. When a loan agreement requires
that a subsidiary maintain certain working capital, net tangible asset, or net asset levels, or where formal
compensating
arrangements exist, there is considered to be a restriction under the rule because the
lender's intent is normally to preclude the transfer by dividend or otherwise offunds to the parent
company. Similarly, a provision which requires that a subsidiary reinvest all of its earnings is a
restriction, since this precludes loans, advances or dividends in the amount of such undistributed
earnings by the entity. Where restrictions on the amount of funds which may be loaned or advanced
differ from the amount restricted as to transfer in the form of cash dividends, the amount least restrictive
to the subsidiary shall be used. Redeemable preferred stocks (§21 0.5-02.28) and minority interests
shall be deducted in computing net assets for purposes of this test.
(i) Describe the nature of any restrictions on the ability of consolidated subsidiaries and unconsolidated
subsidiaries to transfer funds to the registrant in the form of cash dividends, loans or advances ( i.e. ,
borrowing arrangements, regulatory restraints, foreign government, etc.).
(ii) Disclose separately the amounts of such restricted net assets for unconsolidated subsidiaries and
consolidated subsidiaries as of the end of the most recently completed fiscal year.
(f) Significant changes in bonds, mortgages and similar debt. Any significant changes in the authorized
or issued amounts of bonds, mortgages and similar debt since the date of the latest balance sheet being
filed for a particular person or group shall be stated.

(g) Summarized financial information of subsidiaries not consolidated and 50 percent or less owned
persons. (1) The summarized information as to assets, liabilties 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 §21 0.1-02(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 §21 0.1-02(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.
(h) Income tax expense. (1) Disclosure shall be made in the income statement or a note thereto, of (i)
the components of income (loss) before income tax expense (benefi) as either domestic or foreign; (ii)
the components of income tax expense, including (A) taxes currently payable and (B) the net tax effects,
as applicable, of timing differences (indicate separately the amount of the estimated tax effect of each of
the various types of timing differences, such as depreciation, warranty costs, etc., where the amount of
each such tax effect exceeds five percent of the amount computed by multiplying the income before tax
by the applicable statutory Federal income tax rate; other differences may be combined.)

Note: Amounts applicable to United States Federal income taxes, to foreign income taxes and
the other income taxes shall be stated separately for each major component. Amounts
applicable to foreign income (loss) and amounts applicable to foreign or other income taxes
which are less than five percent of the total of income before taxes or the component of tax

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expense, respectively, need not be separately disclosed. For purposes of this rule, foreign
income (loss) is defined as income (loss) generated from a registrant's foreign operations, i.e.
, operations that are located outside of the registrant's home country.
(2) Provide a reconcilation between the amount of reported total income tax expense (benefi) and the
amount computed by multiplying the income (loss) before tax by the applicable statutory Federal income
tax rate, showing the estimated dollar amount of each of the underlying causes for the difference. If no
individual reconciling item amounts to more than five percent of the amount computed by multiplying the

income before tax by the applicable statutory Federal income tax rate, and the total difference to be
reconciled is less than five percent of such computed amount, no reconciliation need be provided unless
it would be significant in appraising the trend of earnings. Reconciling items that are individually less
than five percent of the computed amount may be aggregated in the reconciliation. The reconciliation
may be presented in percentages rather than in dollar amounts. Where the reporting person is a foreign
entity, the income tax rate in that person's country of domicile should normally be used in making the
above computation, but different rates should not be used for subsidiaries or other segments of a
reporting entity. When the rate used by a reporting person is other than the United States Federal
corporate income tax rate, the rate used and the basis for using such rate shall be disclosed.
(3) Paragraphs (h) (1) and (2) of this section shall be applied in the following manner to financial
statements which reflect the adoption of Statement of Financial Accounting Standards 109, Accounting

for Income Taxes.
(i) The disclosures required by paragraph (h)( 1 )(ii) of this section and by the parenthetical instruction at
the end of paragraph (h)(1) of this section and by the introductory sentence of paragraph (h)(2) of this
section shall not apply.

(ii) The instructional note between paragraphs (h) (1) and (2) of this section and the balance of the
requirements of paragraphs (h) (1) and (2) of this section shall continue to apply.

(i) Warrants or rights outstanding. Information with respect to warrants or rights outstanding at the date
of the related balance sheet shall be set forth as follows:
(1) Title of issue of securities called for by warrants or rights.
(2) Aggregate amount of securities called for by warrants or rights outstanding.
(3) Date from which warrants or rights are exercisable.

(4) Price at which warrant or right is exercisable.
U) (Reserved)

(k) Related party transactions which affect the financial statements. (1) Related part transactions
should be identified and the amounts stated on the face of the balance sheet, income statement, or
statement of cash flows.
(2) In cases where separate financial statements are presented for the registrant, certain investees, or
subsidiaries, separate disclosure shall be made in such statements of the amounts in the related
consolidated financial statements which are (i) eliminated and (ii) not eliminated. Also, any intercompany
profis or losses resulting from transactions with related parties and not eliminated and the effects

thereof shall be disclosed.
(I) (Reserved)

(m) Repurchase and reverse repurchase agreements -(1) Repurchase agreements (assets sold under
agreements to repurchase). (i) If, as of the most recent balance sheet date, the carrying amount (or
market value, if higher than the carrying amount or if there is no carrying amount) of the securities or
other assets sold under agreements to repurchase ( repurchase agreements) exceeds 10% of total
assets, disclose separately in the balance sheet the aggregate amount of liabilties incurred pursuant to
repurchase agreements including accrued interest payable thereon.

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(ii)(A) If, as of the most recent balance sheet date, the carrying amount (or market value, if higher than
the carrying amount) of securities or other assets sold under repurchase agreements, other than
securities or assets specified in paragraph (m)(1 )(ii)(B) of this section, exceeds 10% of total assets,
disclose in an appropriately captioned footnote containing a tabular presentation, segregated as to type
of such securities or assets sold under agreements to repurchase (e.g., U.S. Treasury obligations, U.S.
Government agency obligations and loans), the following information as of
the balance sheet date for
each such agreement or group of agreements (other than agreements involving securities or assets
specified in paragraph (rn)(1 )(ii)(B) of this section) maturing ( 1 ) overnight; ( 2) term up to 30 days; ( 3 )
term of 30 to 90 days; ( 4 ) term over 90 days and ( 5 ) demand:

( i) The carring amount and market value of the assets sold under agreement to repurchase, including
accrued interest plus any cash or other assets on deposit under the repurchase agreements; and

( ii ) The repurchase liabilty associated with such transaction or group of transactions and the interest
rate(s) thereon.
(B) For purposes of paragraph (m)( 1 )(ii)(A) of this section only, do not include securities or other assets
for which unrealized changes in market value are reported in current income or which have been
obtained under reverse repurchase agreements.

(iii) If, as of the most recent balance sheet date, the amount at risk under repurchase agreements with
any individual counterpart or group of related counterparties exceeds 10% of stockholders' equity (or in
the case of investment companies, net asset value), disclose the name of each such counterparty or
group of related counterparties, the amount at risk with each, and the weighted average maturity of the
repurchase agreements with each. The amount at risk under repurchase agreements is defined as the
excess of carrying amount (or market value, if higher than the carrying amount or if there is no carrying
amount) of the securities or other assets sold under agreement to repurchase, including accrued interest
plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the
repurchase liability (adjusted for accrued interest). (Cash deposits in connection with repurchase

agreements shall not be reported as unrestricted cash pursuant to rule 5-02.1.)
(2) Reverse repurchase agreements (assets purchased under agreements to resell). (i) If, as of the most
recent balance sheet date, the aggregate carrying amount of reverse repurchase agreements (securities
or other assets purchased under agreements to resell) exceeds 10% of
total assets: (A) Disclose
separately such amount in the balance sheet; and (B) disclose in an appropriately captioned footnote:
( 1 ) The registrant's policy with regard to taking possession of securities or other assets purchased
under agreements to resell; and ( 2 ) whether or not there are any provisions to ensure that the market
value of the underlying assets remains suffcient to protect the registrant in the event of default by the
counterparty and if so, the nature of those provisions.
(ii) If, as of the most recent balance sheet date, the amount at risk under reverse repurchase
agreements with any individual counterpart or group of related counterparties exceeds 10% of
stockholders' equity (or in the case of investment companies, net asset value), disclose the name of
each such counterparty or group of related counterparties, the amount at risk with each, and the
weighted average maturity of the reverse repurchase agreements with each. The amount at risk under
reverse repurchase agreements is defined as the excess of the carrying amount of the reverse
repurchase agreements over the market value of assets delivered pursuant to the agreements by the
counterpart to the registrant (or to a third party agent that has affrmatively agreed to act on behalf of
the registrant) and not returned to the counterparty, exept in exchange for their approximate market
value in a separate transaction.
(n) Accounting policies for certain derivative instruments. Disclosures regarding accounting policies shall
include descriptions of the accounting policies used for derivative financial instruments and derivative
commodity instruments and the methods of applying those policies that materially affect the
determination of financial position, cash flows, or results of operation. This description shall include, to
the extent material, each of the following items:
(1) A discussion of each method used to account for derivative financial instruments and derivative

commodity instruments;

(2) The types of derivative financial instruments and derivative commodity instruments accounted for
under each method; (3) The criteria required to be met for each accounting method used, including a
discussion of the criteria required to be met for hedge or deferral accounting and accrual or settement

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accounting (e.g., whether and how risk reduction, correlation, designation, and effectiveness tests are

applied);
(4) The accounting method used if

the criteria specified in paragraph (n)(3) of this section are not met;

(5) The method used to account for terminations of derivatives designated as hedges or derivatives used
to affect directly or indirectly the terms, fair values, or cash flows of a designated item;

(6) The method used to account for derivatives when the designated item matures, is sold, is
extinguished, or is terminated. In addition, the method used to account for derivatives designated to an
anticipated transaction, when the anticipated transaction is no longer likely to occur; and

(7) Where and when derivative financial instruments and derivative commodity instruments, and their
related gains and losses, are reported in the statements of financial position, cash flows, and results of

operations.

Instructions to paragraph (n): 1. For purposes of this paragraph (n), derivative financial
instruments and derivative commodity instruments (collectively referred to as "derivatives")
are defined as follows:
(i) Derivative financial instruments have the same meaning as defined by generally accepted
accounting principles (see, e.g., Financial Accounting Standards Board ("FASB"), Statement
of Financial Accounting Standards No. 119, "Disclosure about Derivative Financial
Instruments and Fair Value of Financial

Instruments, "("FAS 119") paragraphs

5-7, (October

1994)), and include futures, forwards, swaps, options, and other financial instruments with
similar characteristics.

(ii) Derivative commodity instruments include, to the extent such instruments are not

derivative financial instruments, commodity futures, commodity forwards, commodity swaps,
commodity options, and other commodity instruments with similar characteristics that are
permitted by contract or business custom to be setted in cash or with another financial
instrument. For purposes of this paragraph, settement in cash includes settement in cash of
the net change in value of the derivative commodity instrument (e.g., net cash settlement
based on changes in the price of the underlying commodity).
2. For purposes of paragraphs (n)(2), (n)(3), (n)(4), and (n)(7), the required disclosures should
address separately derivatives entered into for trading purposes and derivatives entered into
for purposes other than trading. For purposes of this paragraph, trading purposes has the
same meaning as defined by generally accepted accounting principles (see, e.g., FAS 119,
paragraph 9a (October 1994)).
3. For purposes of paragraph (n)(6), anticipated transactions means transactions (other than
transactions involving existing assets or liabilities or transactions necessitated by existing firm
commitments) an enterprise expects, but is not obligated, to carry out in the normal course of
business (see, e.g., FASB, Statement of Financial Accounting Standards No. 80, "Accounting
for Futures Contracts," paragraph 9, (August 1984)).

4. Registrants should provide disclosures required under paragraph (n) in fiings with the
Commission that include financial statements of fiscal periods ending after June 15, 1997.
(45 FR 63669, Sept. 25, 1980, as amended at 46 FR 56179, Nov. 16, 1981; 50 FR 25215, June 18,
1985; 50 FR 49532, Dec. 3, 1985; 51 FR 3770, Jan. 30, 1986; 57 FR 45293, Oct. 1, 1992; 59 FR 65636,
Dec. 20, 1994; 62 FR 6063, Feb. 10, 1997)
§ 210.4-9 (Reserved)

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§ 210.4-10 Financial accounting and reporting for oil and gas producing activities
pursuant to the Federal securities laws and the Energy Policy and Conservation Act of
1975.
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This section prescribesfinancial accounting and reporting standards for registrants with the Commission
engaged in oil and gas producing activities in fiings under the Federal securities laws and for the
preparation of accounts by persons engaged, in whole or in part, in the production of crude oil or natural
gas in the United States, pursuant to section 503 of the Energy Policy and Conservation Act of 1975 (42
U.S.C. 6383) ( EPCA ) and section 11(c) of the Energy Supply and Environmental Coordination
Act of
1974 (15 U.S.C. 796) (ESECA), as amended by section 505 of EPCA. The application ofthis section to
those oil and gas producing operations of companies regulated for ratemaking purposes on an
individual-company-cost-of-service basis may, however, give appropriate recognition to differences
arising because of the effect of the ratemaking process.
Exemption. Any person exempted by the Department of Energy from any record-keeping or reporting
requirements pursuant to section 11 (c) of ESECA, as amended, is similarly exempted from the related
provisions of this section in the preparation of accounts pursuant to EPCA. This exemption does not

affect the applicabilty of this section to fiings pursuant to the Federal securities laws.
Definitions
(a) Definitions. The following definitions apply to the terms listed below as they are used in this section:
(1) Oil and gas producing activities. (i) Such activities include:

(A) The search for crude oil, including condensate and natural gas liquids, or natural gas ( oil and gas)
in their natural states and original

locations.

(8) The acquisition of property rights or properties for the purpose of further exploration andlor for the
purpose of removing the oil or gas from existing reservoirs on those properties.

(C) The construction, drillng and production activities necessary to retrieve oil and gas from its natural

reservoirs, and the acquisition, construction, installation, and maintenance of field gathering and storage

systems-including lifting the oil and gas to the surface and gathering, treating, field processing (as in
the case of processing gas to extract liquid hydrocarbons) and field storage. For purposes of this
section, the oil and gas production function shall normally be regarded as terminating at the outlet valve
on the lease or field storage tank; if unusual physical or operational circumstances exist, it may be
appropriate to regard the production functions as terminating at the first point at which oil, gas, or gas
liquids are delivered to a main pipeline, a common carrier, a refinery, or a marine terminaL.
(ii) Oil and gas producing activities do not include:
(A) The transporting, refining and marketing of oil and gas.

(8) Activities relating to the production of natural resources other than oil and gas.
(C) The production of geothermal steam or the extraction of hydrocarbons as a by-product of the
production of geothermal steam or associated geothermal resources as defined in the Geothermal
Steam Act of 1970.
(D) The extraction of hydrocarbons from shale, tar sands, or coaL.

(2) Proved oil and gas reserves. Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing economic and operating
conditions, i.e. , prices and costs as of
the date the estimate is made. Prices include consideration of
changes in existing prices provided only by contractual arrangements, but not on escalations based

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upon future conditions.

(i) Reservoirs are considered proved if economic producibility is supported by either actual production or
conclusive formation test. The area of a reservoir considered proved includes (A) that portion delineated
by drillng and defined by gas-oil andlor oil-water contacts, if any, and (8) the immediately adjoining
portions not yet driled, but which can be reasonably judged as economically productive on the basis of
available geological and engineering data. In the absence of information on fluid contacts, the lowest
known structural occurrence of hydrocarbons controls the lower proved limit of the reservoir.
(ii) Reserves which can be produced economically through application of improved recovery techniques
(such as fluid injection) are included in the proved classification when successful testing by a pilot
project, or the operation of an installed program in the reservoir, provides support for the engineering
analysis on which the project or program was based.
(iii) Estimates of proved reserves do not include the following: (A) Oil that may become available from
known reservoirs but is classified separately as indicated additional reserves; (8) crude oil, natural gas,
and natural gas liquids, the recovery of which is subject to reasonable doubt because of uncertainty as
to geology, reservoir characteristics, or economic factors; (C) crude oil, natural gas, and natural gas
liquids, that may occur in undriled prospects; and (0) crude oil, natural gas, and natural gas liquids, that
may be recovered from oil shales, coal, gilsonite and other such sources.

(3) Proved developed oil and gas reserves. Proved developed oil and gas reserves are reserves that
can be expected to be recovered through existing wells with existing equipment and operating methods.
Additional oil and gas expected to be obtained through the application of fluid injection or other improved
recovery techniques for supplementing the natural forces and mechanisms of primary recovery should
be included as proved developed reserves only after testing by a pilot project or after the operation of an
installed program has confirmed through production response that increased recovery wil be achieved.
(4) Proved undeveloped reserves. Proved undeveloped oil and gas reserves are reserves that are
expected to be recovered from new wells on undriled acreage, or from existing wells where a relatively
major expenditure is required for recompletion. Reserves on undriled acreage shall be limited to those
drillng units offsetting productive units that are reasonably certain of production when driled. Proved
reserves for other undrilled units can be claimed only where it can be demonstrated with certainty that
there is continuity of production from the existing productive formation. Under no circumstances should
estimates for proved undeveloped reserves be attributable to any acreage for which an application of
fluid injection or other improved recovery technique is contemplated, unless such techniques have been
proved effective by actual tests in the area and in the same reservoir.

(5) Proved properties. Properties with proved reserves.
(6) Unproved properties. Properties with no proved reserves.

(7) Proved area. The part of a property to which proved reserves have been specifically attributed.

(8) Field. An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the
same individual geological structural feature andlor stratigraphic condition. There may be two or more
reservoirs in a field that are separated vertically by intervening impervious, strata, or laterally by local
geologic barriers, or by both. Reservoirs that are associated by being in overlapping or adjacent fields
may be treated as a single or common operational field. The geological terms structural feature and
stratigraphic condition are intended to identify localized geological features as opposed to the broader
terms of basins, trends, provinces, plays, areas-of-interest, etc.

(9) Reservoir. A porous and permeable underground formation containing a natural accumulation of
producible oil andlor gas that is confined by impermeable rock or water barriers and is individual and
separate from other reservoirs.
(10) Exploratory well. A well drilled to find and produce oil or gas in an unproved area, to find a new
reservoir in a field previously found to be productive of oil or gas in another reservoir, or to extend a
known reservoir. Generally, an exploratory well is any well that is not a development well, a service well,
or a stratigraphic
test well as those items are defined below.

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(11) Development well. A well drilled within the proved area of an oil or gas reservoir to the depth of a
stratigraphic horizon known to be productive.

(12) Service well. A well driled or completed for the purpose of supporting production in an existing field.
Specific purposes of service wells include gas injection, water injection, steam injection, air injection, .

salt-water disposal, water supply for injection, observation, or injection for in-situ combustion.

(13) Stratigraphic test well. A drillng effort, geologically directed, to obtain information pertaining to a
specific geologic condition. Such wells customarily are driled without the intention of being completed
for hydrocarbon production. This classification also includes tests identified as core tests and all types of
expendable holes related to hydrocarbon exploration. Stratigraphic test wells are classified as (i)
exploratory-type, if not driled in a proved area, or (ii) development-type, if driled in a proved area.
(14) Acquisition of properties. Costs incurred to purchase, lease or otherwise acquire a property,
including costs of lease bonuses and options to purchase or lease properties, the portion of costs
applicable to minerals when land including mineral rights is purchased in fee, brokers' fees, recording
fees, legal costs, and other costs incurred in acquiring properties.
(15) Exploration costs. Costs incurred in identifying areas that may warrant examination and in
examining specific areas that are considered to have prospects of containing oil and gas reserves,
including costs of drillng exploratory wells and exploratory-type stratigraphic test wells. Exploration costs
may be incurred both before acquiring the related propert (sometimes referred to in part as prospecting
costs) and after acquiring the property. Principal types of exploration costs, which include depreciation
and applicable operating costs of support equipment and facilties and other costs of exploration

activities, are:
(i) Costs of topographical, geographical and geophysical studies, rights of access to properties to
conduct those studies, and salaries and other expenses of geologists, geophysical crews, and others
conducting those studies. Collectively, these are sometimes referred to as geological and geophysical or
G&G costs.
(ii) Costs of carrying and retaining undeveloped properties, such as delay rentals, ad valorem taxes on
properties, legal costs for title defense, and the maintenance of land and lease records.
(iii) Dry hole contributions and bottom hole contributions.

(iv) Costs of drillng and equipping exploratory wells.

(v) Costs of drillng exploratory-type stratigraphic test wells.
(16) Development costs. Costs incurred to obtain access to proved reserves and to provide facilities for
extracting, treating, gathering and storing the oil and gas. More specifically, development costs,
including depreciation and applicable operating costs of support equipment and facilities and other costs
of development activities, are costs incurred to:

(i) Gain access to and prepare well locations for drillng, including surveying well locations for the
purpose of determining specific development drillng sites, clearing
ground, draining, road building, and
relocating public roads, gas lines, and power lines, to the extent necessary in developing the proved

reserves.
(ii) Drill and equip development wells, development-type stratigraphic test wells, and service wells,
including the costs of platforms and of
well equipment such as casing, tubing, pumping equipment, and

the wellhead assembly.
(ii) Acquire, construct, and install production facilities such as lease flow lines, separators, treaters,
heaters, manifolds, measuring devices, and production storage tanks, natural gas cycling and
processing plants, and central utility and waste disposal systems.
(iv) Provide improved recovery systems.

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(17) Production costs. (i) Costs incurred to operate and maintain wells and related equipment and

facilties, including depreciation and applicable operating costs of support equipment and facilties and
other costs of operating and maintaining those wells and related equipment and facilties. They become
part of the cost of oil and gas produced. Examples of production costs (sometimes called lifting costs)

are:
(A) Costs of labor to operate the wells and related equipment and facilities.

(8) Repairs and maintenance.
(C) Materials, supplies, and fuel consumed and supplies utilized in operating the wells and related

equipment and facilties.

(D) Propert taxes and insurance applicable to proved properties and wells and related equipment and
facilities.
(E) Severance taxes.

(ii) Some support equipment or facilities may serve two or more oil and gas producing activities and may
also serve transportation, refining, and marketing activities. To the extent that the support equipment
and facilities are used in oil and gas producing activities, their depreciation and applicable operating
costs become exploration, development or production costs, as appropriate. Depreciation, depletion,
and amortization of capitalized acquisition, exploration, and development costs are not production costs
but also become part of the cost of oil and gas produced along with production (lifting) costs identified

above.
Successful Efforts Method

(b) A reporting entity that follows the successful efforts method shall comply with the accounting and
financial reporting disclosure requirements of Statement of Financial Accounting Standards No. 19, as

amended.
Full Cost Method

(c) Application of the full cost method of accounting. A reporting entity that follows the full cost method
shall apply that method to all of its operations and to the operations of its subsidiaries, as follows:
(1) Determination of cost centers. Cost centers shall be established on a country-by-country basis.

(2) Costs to be capitalized. All costs associated with propert acquisition, exploration, and development
activities (as defined in paragraph (a) of this section) shall be capitalized within the appropriate cost
center. Any internal costs that are capitalized shall be limited to those costs that can be directly identified
with acquisition, exploration, and development activities undertaken by
the reporting entity for its own
account, and shall not include any costs related to production, general corporate overhead, or similar
activities.
(3) Amortization of capitalized costs. Capitalized costs within a cost center shall be amortized on the
unit-of-production basis using proved oil and gas reserves, as follows:
(i) Costs to be amortized shall include (A) all capitalized costs, less accumulated amortization, other than
the cost of properties described in paragraph (ii) below; (8) the estimated future expenditures (based on
current costs) to be incurred in developing proved reserves; and (C) estimated dismantlement and
abandonment costs, net of estimated salvage values.
(ii) The cost of investments in unproved properties and major development projects may be excluded
from capitalized costs to be amortized, subject to the following:
(A) All costs directly associated with the acquisition and evaluation of unproved properties may be
excluded from the amortization computation until it is determined whether or not proved reserves can be
assigned to the properties, subject to the following conditions:

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( 1 ) Until such a determination is made, the properties shall be assessed at least annually to ascertain
whether impairment has occurred. Unevaluated properties whose costs are individually significant shall
be assessed individually. Where it is not practicable to individually assess the amount of impairment of
properties for which costs are not individually significant, such properties may be grouped for purposes
of assessing impairment. Impairment may be estimated by applying factors based on historical
experience and other data such as primary lease terms of the properties, average holding periods of
unproved properties, and geographic and geologic data to groupings of individually insignificant
properties and projects. The amount of impairment assessed under either of these methods shall be
added to the costs to be amortized.

( 2 ) The costs of drillng exploratory dry holes shall be included in the amortization base immediately
upon determination that the well is dry.
( 3 ) If geological and geophysical costs cannot be directly associated with specific unevaluated
properties, they shall be included in the amortization base as incurred. Upon complete evaluation of a
propert, the total remaining excluded cost (net of any impairment) shall be included in the full cost
amortization base.

(B) Certain costs may be excluded from amortization when incurred in connection with major
development projects expected to entail significant costs to ascertain the quantities of proved reserves
attributable to the properties under development (e.g., the installation of an offshore drillng platform from
which development wells are to be drilled, the installation of improved recovery programs, and similar
major projects undertaken in the expectation of significant additions to proved reserves). The amounts
which may be excluded are applicable portions of ( 1 ) the costs that relate to the major development
project and have not previously been included in the amortization base, and ( 2 ) the estimated future
expenditures associated with the development project. The excluded portion of any common costs
associated with the development project should be based, as is most appropriate in the circumstances,
on a comparison of either ( i ) existing proved reserves to total proved reserves expected to be
established upon completion of the project, or ( ii ) the number of wells to which proved reserves have
been assigned and total number of wells expected to be drilled. Such costs may be excluded from costs
to be amortized until the earlier determination of whether additional reserves are proved or impairment

occurs.
(C) Excluded costs and the proved reserves related to such costs shall be transferred into the
amortization base on an ongoing (well-by-well or property-by-propert) basis as the project is evaluated
and proved reserves established or impairment determined. Once proved reserves are established,
there is no further justification for continued exclusion from the full cost amortization base even if other
factors prevent immediate production or marketing.
(iii) Amortization shall be computed on the basis of physical units, with oil and gas converted to a
common unit of measure on the basis of their approximate relative energy content, unless economic
circumstances (related to the effects of regulated prices) indicate that use of units of revenue is a more
appropriate basis of computing amortization. In the latter case, amortization shall be computed on the
basis of current gross revenues (excluding royalty payments and net profits disbursements) from
production in relation to future gross revenues, based on current prices (including consideration of
changes in existing prices provided only by contractual arrangements), from estimated production of
proved oil and gas reserves. The effect of a significant price increase during the year on estimated future
gross revenues shall be reflected in the amortization provision only for the period after the price increase

occurs.
(iv) In some cases it may be more appropriate to depreciate natural gas cycling and processing plants
by a method other than the unit-of-production method.

(v) Amortization computations shall be made on a consolidated basis, including investees accounted for
on a proportionate consolidation basis. Investees accounted for on the equity method shall be treated

separately.
(4) Limitation on capitalized costs. (i) For each cost center, capitalized costs, less accumulated
amortization and related deferred income taxes, shall not exceed an amount (the cost center ceiling)
equal to the sum of:
(A) The present value of estimated future net revenues computed by applying current prices of oil and
gas reserves (with consideration of price changes only to the extent provided by contractual

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arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest
balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in
developing and producing the proved reserves computed using a discount factor of ten percent and
assuming continuation of existing economic conditions; plus
(B) the cost of properties not being amortized pursuant to paragraph (i)(3)(ii) of this section; plus
(C) the lower of cost or estimated fair value of unproven properties included in the costs being
amortized; less
(D) income tax effects related to differences between the book and tax basis of

the properties referred to

in paragraphs (i)(4)(i) (B) and (C) of this section.

(ii) If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the
cost center ceiling, the excess shall be charged to expense and separately disclosed during the period
in which the excess occurs. Amounts thus required to be written off shall not be reinstated for any

subsequent increase in the cost center ceilng.
(5) Production costs. All costs relating to production activities, including workover costs incurred solely to
maintain or increase levels of production from an existing completion interval, shall be charged to
expense as incurred.
(6) Other transactions. The provisions of paragraph (h) of this section, "Mineral property conveyances
and related transactions if
the successful efforts method of accounting is followed," shall apply also to
those reporting entities following the full cost method except as follows:

(i) Sales and abandonments of oil and gas properties. Sales of oil and gas properties, whether or not
being amortized currently, shall be accounted for as adjustments of capitalized costs, with no gain or
loss recognized, unless such adjustments would significantly alter the relationship between capitalized
costs and proved reserves of oil and gas attributable to a cost center. For instance, a significant
alteration would not ordinarily be expected to occur for sales involving less than 25 percent of the
reserve quantities of a given cost center. If gain or loss is recognized on such a sale, total capitalization
costs within the cost center shall be allocated between the reserves sold and reserves retained on the
same basis used to compute amortization, unless there are substantial economic differences between
the properties sold and those retained, in which case capitalized costs shall be allocated on the basis of
the relative fair values of the properties. Abandonments of oil and gas properties shall be accounted for
as adjustments of capitalized costs; that is, the cost of abandoned properties shall be charged to the full
cost center and amortized (subject to the limitation on capitalized costs in paragraph (b) of this section).
(ii) Purchases of reserves. Purchases of oil and gas reserves in place ordinarily shall be accounted for
as additional capitalized costs within the applicable cost center; however, significant purchases of
production payments or properties with lives substantially shorter than the composite productive life of
the cost center shall be accounted for separately.

(iii) Partnerships, joint ventures and drillng arrangements. (A) Except as provided in paragraph (i)(6)(i) of
this section, all consideration received from sales or transfers of properties in connection with
partnerships, joint venture operations, or various other forms of drillng arrangements involving oil and
gas exploration and development activities (e.g., carried interest, tumkey wells, management fees, etc.)
shall be credited to the full cost account, except to the extent of amounts that represent reimbursement
of organization, offering, general and administrative expenses, etc., that are identifiable with the
transaction, if such amounts are currently incurred and charged to expense.
(B) Where a registrant organizes and manages a limited partnership involved only in the purchase of
proved developed properties and subsequent distribution of income from such properties, management
fee income may be recognized provided the properties involved do not require aggregate development
expenditures in connection with production of existing proved reserves in excess of 10% of the
partnership's recorded cost of such properties. Any income not recognized as a result of this limitation
would be credited to the full cost account and recognized through a lower amortization provision as
reserves are produced.
(iv) Other services. No income shall be recognized in connection with contractual services performed
(e.g. drilling, well service, or equipment supply services, etc.) in connection with properties in which the

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registrant or an affliate (as defined in §210.1-02(b)) holds an ownership or other economic interest,
except as follows:

(A) Where the registrant acquires an interest in the properties in connection with the service contract,
income may be recognized to the extent the cash consideration received exceeds the related contract
costs plus the registrant's share of costs incurred and estimated to be incurred in connection with the
properties. Ownership interests acquired within one year of the date of such a contract are considered to
be acquired in connection with the service for purposes of applying this rule. The amount of any
guarantees or similar arrangements undertaken as part of this contract should be considered as part of
the costs related to the properties for purposes of applying this rule.

(8) Where the registrant acquired an interest in the properties at least one year before the date of the
service contract through transactions unrelated to the service contract, and that interest is unaffected by
the service contract, income from such contract may be recognized subject to the general provisions for
elimination of inter-company profi under generally accepted accounting principles.

(C) Notwithstanding the provisions of paragraphs (i)(6)(iv) (A) and (8) of this section, no income may be
recognized for contractual services performed on behalf of investors in oil and gas producing activities
managed by the registrant or an affliate. Furthermore, no income may be recognized for contractual
services to the extent that the consideration received for such services represents an interest in the

underlying property.
(D) Any income not recognized as a result of these rules would be credited to the full cost account and
recognized through a lower amortization provision as reserves are produced.
(7) Disclosures. Reporting entities that follow the full cost method of accounting shall disclose all of the
information required by paragraph (k) of this section, with each cost center considered as a separate
geographic area, except that reasonable groupings may be made of cost centers that are not significant
in the aggregate. In addition:

(i) For each cost center for each year that an income statement is required, disclose the total amount of
amortization expense (per equivalent physical unit of production if amortization is computed on the basis
of physical units or per dollar of gross revenue from production if amortization is computed on the basis
of gross revenue).
(ii) State separately on the face of the balance sheet the aggregate of the capitalized costs of unproved
properties and major development projects that are excluded, in accordance with paragraph (i)(3) of

this

section, from the capitalized costs being amortized. Provide a description in the notes to the financial
statements of the current status of the significant properties or projects involved, including the
anticipated timing of
the inclusion of
the costs in the amortization computation. Present a table that
shows, by category of cost, (A) the total costs excluded as of the most recent fiscal year; and (8) the
amounts of such excluded costs, incurred ( 1 ) in each of the three most recent fiscal years and ( 2 ) in
the aggregate for any earlier fiscal years in which the costs were incurred. Categories of cost to be
disclosed include acquisition costs, exploration costs, development costs in the case of significant
development projects and capitalized interest.
Income Taxes

(d) Income taxes. Comprehensive interperiod income tax allocation by a method which complies with
generally accepted accounting principles shall be followed for intangible drillng and development costs
and other costs incurred that enter into the determination of taxable income and pretax accounting

income in different periods.
(Secs. 6, 7, 8, 10, and 19(a) (15 U.S.C. 77f, 77g, 77h, 77j, 77s) of

(b), 14, and 20(a) (15 U.S.C. 7ge, 79n, 79t) of

the Securities Act of 1933; secs. 12,
the Securities Exchange Act of 1934; secs. 5

13, 15(d) and 23(a) (15 U.S.C. 781, 78m, 78o(d), 78w), of

the Public Utiity Holding Company Act of 1935; secs. 8,
the Investment CompanyAct of

30, 31(c) and 38(a) (15 U.S.C. 80a-8, 80a-29, 80a-30(c), 80a-37(a)) of

the Energy Policy and Conservation Act of 1975; secs. 5, 6, 7, 8, 10,
19(a) and Schedule A e(25) and (26) (15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77s(a) and 77aa (25) and (26))
of the Securities Act of 1933; secs. 12, 13, 14, 15(d) and 23(a) (15 U.S.C. 78/, 78m, 78n, 78o(d), 78w
(a)) of the Securities Exchange Act of 1934; secs. 5(b), 14 and 20(a) (15 U.S.C. 7ge(b), 79n, 79t(a)) of
the Public Utilty Holding Company Act of 1935 and sec. 503 (42 U.S.C. 6383) of
the Energy Policy and
1940; sec. 503 (42 U.S.C. 6383) of

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Conservation Act of 1975)
(43 FR 60405, Dec. 27,1978, as amended at 43 FR 60417, Dec. 27,1978; 44 FR 57036, 57038, Oct. 9,
1979; 45 FR 27749, Apr. 24,1980. Redesignated and amended at 45 FR 63669, Sept. 25,1980; 47 FR
57913, Dec. 29, 1982; 48 FR 44200, Sept. 28, 1983; 49 FR 18473, May 1, 1984; 57 FR 45293, Oct. 1,
1992; 61 FR 30401, June 14, 1996)

Commercial and Industrial Companies

I!JQ
0.5-01 to 210.5-04.

§ 210.5-01 Application of §§21

I!JoP
Sections 210.5-01 to 210.5-04 shall be applicable to financial statements filed for all persons except-

0.6-01 to 210.6-10).

(a) Registered investment companies (see §§21

(b) Employee stock purchase, savings and similar plans (see §§210.6A-01 to 210.6A-05).
(c) Insurance companies (see §§21

0.7-01 to 210.7-05).

(d) Bank holding companies and banks (see §§21

0.9-01 to 210.9-07).

(e) Brokers and dealers when fiing Form X-17A-5 (249.617) (see §§240.17a-5 and 240.17a-10 under
the Securities Exchange Act of 1934).
(50 FR 49533, Dec. 3, 1985)

§ 210.5-02 Balance sheets.
I! toP

The purpose of this rule is to indicate the various line items and certain additional disclosures which, if
applicable, and except as otherwise permitted by the Commission, should appear on the face of the
balance sheets or related notes filed for the persons to whom this article pertains (see §210A-01 (a)).
Assets and Other Debits

Current Assets, when appropriate

(See §210.4-05)
1. Cash and cash items. Separate disclosure shall be made of the cash and cash items which
are restricted as to withdrawal or usage. The provisions of any restrictions shall be described
in a note to the financial statements. Restrictions may include legally restricted deposits held
as compensating balances against short-term borrowing arrangements, contracts entered into
with others, or company statements of intention with regard to particular deposits; however,
time deposits and short-term certificates of deposit are not generally included in legally
restricted deposits. In cases where compensating balance arrangements exist but are not
agreements which legally restrict the use of cash amounts shown on the balance sheet,
describe in the notes to the financial statements these arrangements and the amount
involved, if determinable, for the most recent audited balance
sheet required and for any
subsequent unaudited balance sheet required in the notes to the financial statements.

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Compensating balances that are maintained under an agreement to assure future credit
availability shall be disclosed in the notes to the financial statements along with the amount
and terms of such agreement.
2. Marketable securities. The accounting and disclosure requirements for current marketable
equity securities are specified by generally accepted accounting principles. With respect to all
other current marketable securities, state, parenthetically or otherwise, the basis of
determining the aggregate amount shown in the balance sheet, along with the alternatives of
the aggregate cost or the aggregate market value at the balance sheet date.
3. Accounts and notes receivable. (a) State separately amounts receivable from (1)

customers (trade); (2) related parties (see §210A-08(k)); (3) underwriters, promoters, and
employees (other than related parties) which arose in other than the ordinary course of
business; and (4) others.

(b) If the aggregate amount of notes receivable exceeds 1 0 percent of the aggregate amount
of receivables, the above information shall be set forth separately, in the balance sheet or in a
note thereto, for accounts receivable and notes receivable.

(c) If receivables include amounts due under long-term contracts (see §21 0.5-02.6(d)), state
separately in the balance sheet or in a note to the financial statements the following amounts:
(1) Balances billed but not paid by customers under retainage provisions in contracts.

(2) Amounts representing the recognized sales value of penormance and such amounts that

had not been biled and were not bilable to customers at the date of the balance sheet.
Include a general description of the prerequisites for biling.

(3) Biled or unbiled amounts representing claims or other similar items subject to uncertainty

concerning their determination or ultimate realization. Include a description of the nature and
status of the principal items comprising such amount.

(4) With respect to (1) through (3) above, also state the amounts included in each item which
are expected to be collected after one year. Also state, by year, if practicable, when the
amounts of retainage (see (1) above) are expected to be collected.

4. Allowances for doubtful accounts and notes receivable. The amount is to be set forth
separately in the balance sheet or in a note thereto.
5. Unearned income.

6. Inventories. (a) State separately in the balance sheet or in a note thereto, if practicable, the
amounts of major classes of inventory such as: (1) Finished goods; (2) inventoried costs

relating to long-term contracts or programs (see (d) below and §210A-05);(3) work in
process (see §210A-05); (4) raw materials; and (5) supplies. If
the method of calculating a
LIFO inventory does not allow for the practical determination of amounts assigned to major
classes of inventory, the amounts of those classes may be stated under cost flow
assumptions other that LIFO with the excess of such total amount over the agggregate LIFO.
amount shown as a deduction to arrive at the amount of the LIFO inventory.

(b) The basis of determining the amounts shall be stated.

If cost is used to determine any portion of the inventory amounts, the description bf this
method shall include the nature ofthe cost elements included in inventory. Elements of cost
include, among other items, retained costs representing the excess of manufacturing or
production costs over the amounts charged to cost of sales or delivered or in-process units,

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initial tooling or other deferred startup costs, or general and administrative costs.

The method by which amounts are removed from inventory (e.g., average cost, first-in, firstout, last-in, first-out, estimated average cost per unit) shall be described. If the estimated
average cost per unit is used as a basis to determine amounts removed from inventory under
a total program or similar basis of accounting, the principal assumptions (including, where
meaningful, the aggregate number of units expected to be delivered under the program, the
number of units delivered to date and the number of units on order) shall be disclosed.
If any general and administrative costs are charged to inventory, state in a note to the
financial statements the aggregate amount of the general and administrative costs incurred in
each period and the actual or estimated amount remaining in inventory at the date of each

balance sheet.
(c) If the LIFO inventory method is used, the excess of replacement or current cost over
stated LIFO value shall, if material, be stated parenthetically or in a note to the financial

statements.
(d) For purposes of §§21 0.5-02.3 and 210.5-02.6, long-term contracts or programs include
(1) all contracts or programs for which gross profits are recognized on a percentage-of-

completion method of accounting or any variant thereof (e.g., delivered unit, cost to cost,

physical completion), and (2) any contracts or programs accounted for on a completed
contract basis of accounting where, in either case, the contracts or programs have associated
with them material amounts of inventories or unbilled receivables and where such contracts or
programs have been or are expected to be performed over a period of more than twelve
months. Contracts or programs of shorter duration may also be included, if deemed

appropriate.
For all
long-term contracts or programs, the following information, if applicable, shall be stated
in a note to the financial statements:

(i) The aggregate amount of manufacturing or production costs and any related deferred costs
(e.g., initial tooling costs) which exceeds the aggregate estimated cost of all in-process and
delivered units on the basis of the estimated average cost of all units expected to be produced
under long-term contracts and programs not yet complete, as well as that portion of such
amount which would not be absorbed in cost of sales based on existing firm orders at the
latest balance sheet date. In addition, if practicable, ,disclose the amount of deferred costs by
type of cost (e.g., initial tooling, deferred production, etc.).

(ii) The aggregate amount representing claims or other similar items subject to uncertainty

concerning their determination or ultimate realization, and include a description of the nature
and status of the principal items comprising such aggregate amount.
(iii) The amount of progress payments netted against inventory at the date of the balance

sheet.

7. Prepaid expenses.
8. Other current assets. State separately, in the balance sheet or in a note thereto, any
amounts in excess of five percent of total current assets.
9. Total current assets, when appropriate.

10. Securites of related parties. (See §21 0 A-08(k).)
11. Indebtedness of related parties-not current. (See §21 OA-08(k).)

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12. Other investments. The accounting and disclosure requirements for non-current
marketable equity securities are specified by generally accepted accounting principles. With
respect to other security investments and any other investment, state, parenthetically or
otherwise, the basis of determining the aggregate amounts shown in the balance sheet, along
with the alternate of the aggregate cost or aggregate market value at the balance sheet date.
13. Property, plant and equipment.

(a) State the basis of determining the amounts.

(b) Tangible and intangible utility plant of a public utility company shall be segregated so as to
show separately the original cost, plant acquisition adjustments, and plant adjustments, as
required by the system of accounts prescribed by the applicable regulatory authorities. This
rule shall not be applicable in respect to companies which are not required to make such a

classification.
14. Accumulated depreciation, depletion, and amortization of property, plant and equipment.
The amount is to be set forth separately in the balance sheet or in a note thereto.

15. Intangible assets. State separately each class of such assets which is in excess of five
percent of the total assets, along with the basis of determining the respective amounts. Any
significant addition or deletion shall be explained in a note.

16. Accumulated depreciation and amortization of intangible assets. The amount is to be set
forth separately in the balance sheet or in a note thereto.
17. Other assets. State separately, in the balance sheet or in a note thereto, any other item
not properly classed in one of the preceding asset captions which is in excess of five percent
to total assets. Any significant addition or deletion should be explained in a note. With respect
to any significant deferred charge, state the policy for deferral and amortization.
18. Total assets.

Liabilities and Stockholders' Equity

Current Liabilties, When Appropriate (See §210.4-05)
19. Accounts and notes payable. (a) State separately amounts payable to (1) banks for
borrowings; (2) factors or other financial institutions for borrowings; (3) holders of commercial
paper; (4) trade creditors; (5) related parties (see §210A-08(k)); (6) underwriters, promoters,
and employees (other than related parties); and (7) others. Amounts applicable to (1), (2) and
(3) may be stated separately in the balance sheet or in a note thereto.
(b) The amount and terms (including commitment fees and the conditions under which lines
may be withdrawn) of unused lines of credit for short-term financing shall be disclosed, if
significant, in the notes to the financial statements. 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. The amount of these lines of credit which support a commercial paper
borrowing arrangement or similar arrangements shall be separately identified.

20. Other current liabilties. State separately, in the balance sheet or in a note thereto, any
item in excess of 5 percent of total current liabilties. Such items may include, but are not
limited to, accrued payrolls, accrued interest, taxes, indicating the current portion of deferred
income taxes, and the current portion of long-term debt. Remaining items may be shown in
one amount.

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21. Total current liabilties, when appropriate.
Long- Term Debt

22. Bonds, mortgages and other long-term debt, including capitalized leases. (a) State
separately, in the balance sheet or in a note thereto, each issue or type of obligation and such
information as will indicate (see §210.4-06):

(1) The general character of each type of debt including the rate of interest; (2) the date of
maturity, or, if maturing serially, a brief indication of the serial maturities, such as "maturing
serially from 1980 to 1990"; (3) if the payment of principal or interest is contingent, an
appropriate indication of such contingency; (4) a brief indication of priority; and (5) if

convertible, the basis. For amounts owed to related parties, see §210.4-08(k).
(b) Theamount and terms (including commitment fees and the conditions under which
commitments may be withdrawn) of unused commitments for long-term financing
arrangements that would be disclosed under this rule if used shall be disclosed in the notes to
the financial statements if significant.
23. Indebtedness to related parties-noncurrent. Include under this caption indebtedness to

related parties as required under §210.4-08(k).

24. Other liabilties. State separately, in the balance sheet or in a note thereto, any item not
properly classified in one of the preceding liability captions which is in excess of 5 percent of
liabilities.

total

25. Commitments and contingent liabilties.
26. Deferred credits. State separately in the balance sheet amounts for (a) deferred income
taxes, (b) deferred tax credits, and (c) material items of deferred income.
Minority Interests

27. Minority interests in consolidated subsidiaries. State separately in a note the amounts
represented by preferred stock and the applicable dividend requirements if the preferred stock
is material in relation to the consolidated stockholders' equity.
Redeemable Preferred Stocks

28. Preferred stocks subject to mandatory redemption requirements or whose redemption is
outside the control of the issuer. (a) Include under this caption amounts applicable to any
class of stock which has any of the following characteristics: (1) it is redeemable at a fixed or
determinable price on a fixed or determinable date or dates, whether by operation of a sinking
fund or otherwise; (2) it is redeemable at the option of the holder; or (3) it has conditions for
redemption which are not solely within the control of the issuer, such as stocks which must be
redeemed out of future earnings. Amounts attributable to preferred stock which is not
redeemable or is redeemable solely at the option of the issuer shall be included under
§210.5-02.29 unless it meets one or more of the above criteria.
(b) State on the face of the balance sheet the title of each issue, the carrying amount, and
redemption amount. (If there is more than one issue, these amounts may be aggregated on
the face of the balance sheet and details concerning each issue may be presented in the note
required by paragraph (c) below.) Show also the dollar amount of any shares subscribed but
unissued, and show the deduction of subscriptions receivable therefrom. If the carrying value
is different from the redemption amount, describe the accounting treatment for such difference
in the note required by paragraph (c) below. Also state in this note or on the face of the

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balance sheet, for each issue, the number of shares authorized and the number of shares
issued or outstanding, as appropriate (See §21004-o7).
(c) State in a separate note captioned "Redeemable Preferred Stocks" (1) a general
description of each issue, including its redemption features (e.g. sinking fund, at option of
holders, out of future earnings) and the rights, if any, of holders in the event of default,
including the effect, if any, on junior securities in the event a required dividend, sinking fund,
or other redemption payment(s) is not made; (2) the combined aggregate amount of
redemption requirements for all issues each year for the five years following the date of the
latest balance sheet; and (3) the changes in each issue for each period for which an income
statement is required to be filed. (See also §21004-08(d).)

(d) Securities reported under this caption are not to be included under a general heading
"stockholders' equity" or combined in a total with items described in captions 29, 30 or 31
which follow.

Non-Redeemable Preferred Stocks
29. Preferred stocks which are not redeemable or are redeemable solely at the option of the
issuer. State on the face of the balance sheet, or if more than one issue is outstanding state in
a note, the title of each issue and the dollar amount thereof. Show also the dollar amount of
any shares subscribed but unissued, and show the deduction of subscriptions receivable
therefrom. State on the face of the balance sheet or in a note, for each issue, the number of
shares authorized and the number of shares issued or outstanding, as appropriate (see
§21 004-07). Show in a note or separate statement the changes in each class of preferred
shares reported under this caption for each period for which an income statement is required
to be fied. (See also §21004-08(d).)
Gammon Stocks

30. Gammon stocks. For each class of common shares state, on the face of the balance
sheet, the number of shares issued or outstanding, as appropriate (see §21 004-07), and the
dollar amount thereof. If convertible, this fact should be indicated on the face of the balance
sheet For each class of common shares state, on the face of the balance sheet or in a note,
the title of the issue, the number of shares authorized, and, if convertible, the basis of
conversion (see also §21004-08(d)). Show also the dollar amount of any common shares
subscribed but unissued, and show the deduction of subscriptions receivable therefrom. Show
in a note or statement the changes in each class of common shares for each period for which
an income statement is required to be filed.
Other Stockholders' Equity

31. Other stockholders' equity. (a) Separate captions shall be shown for (1) additional paid-in
capital, (2) other additional capital and (3) retained earnings (i) appropriated and (ii)
unappropriated. (See §21004-08(e).) Additional paid-in capital and other additional capital
may be combined with the stock caption to which it applies, if appropriate.

of a quasireorganization, any description of retained earnings shall indicate the point in time from which
the new retained earnings dates and for a period of at least three years shall indicate, on the
face of the balance sheet, the total amount of the deficit eliminated.
(b) For a period of at least 10 years subsequent to the effective date

32. Totalliabílties and stockholders' equity.
(Sees. 7 and 19a of
23(a) of

the Securities

Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); sees.

12, 13, 14, 15(d), and

the Securities Exchange Act of 1934,15 U.S.C. 78/, 78m, 78n, 78o(d), 78w(a), sees. 5(b), 10

(a), 14, 20(a) ofthe Public Utility Holding Company Act, 15 U.S.C. 7ge(a), 79n, 79t(a); sees. 8, 20, 30,

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the Investment Company Act of 1940,15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c),

80a-37(a))
(45 FR 63671, Sept. 25, 1980, as amended at 46 FR 43412, Aug. 28, 1981; 47 FR 29837, July 9, 1982;

50 FR 25215, June 18, 1985; 50 FR 49533, Dec. 3,1985; 59 FR 65636, Dec. 20,1994)

§ 210.5-03 Income statements.

(¡JoP
(a) The purpose of this rule is to indicate the various line items which, if applicable, and except as
otherwise permitted by the Commission, should appear on the face of the income statements fied for

the persons to whom this article pertains (see §210A-01(a)).
(b) If income is derived from more than one of the subcaptions described under §21 0.5-03.1, each class
which is not more than 10 percent of the sum of the items may be combined with another class. If these
items are combined, related costs and expenses as described under §21 0.5-03.2 shall be combined in
the same manner.

1. Net sales and gross revenues. State separately:

(a) Net sales of tangible products (gross sales less discounts, returns and allowances), (b)
operating revenues of public utilities or others; (c) income from rentals; (d) revenues from
services; and (e) other revenues. Amounts earned from transactions with related parties shall
be disclosed as required under §210A-08(k). A public utiliy company using a uniform system
of accounts or a form for annual report prescribed by federal or state authorities, or a similar
system or report, shall follow the general segregation of operating revenues and operating
expenses reported under §21 0.5-03.2 prescribed by such system or report. If the total of
sales and revenues reported under this caption includes excise taxes in an amount equal to 1
percent or more of such total, the amount of such excise taxes shall be shown on the face of
the statement parenthetically or othewise.
2. Costs and expenses applicable to sales and revenues.

State separately the amount of (a) cost of tangible goods sold, (b) operating expenses of
public utilties or others, (c) expenses applicable to rental income, (d) cost of services, and (e)
expenses applicable to other revenues. Merchandising organizations, both wholesale and
retail, may include occupancy and buying costs under caption 2(a). Amounts of costs and
expenses incurred from transactions with related parties shall be disclosed as required under

§210A-08(k).
3. Other operating costs and expenses. State separately any material amounts not included

under caption 2 above.

4. Sellng, general and administrative expenses.
5. Provision for doubtful accounts and notes.

6. Other general expenses. Include items not normally included in caption 4 above. State
separately any material item.

7. Non-operating income.
State separately in the income statement or in a note thereto amounts earned from (a)
dividends, (b) interest on securities, (c) profits on securities (net of losses), and (d)
miscellaneous other income. Amounts earned from transactions in securities of related parties

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shall be disclosed as required under §210.4-08(k). Material amounts included under
miscellaneous other income shall be separately stated in the income statement or in a note
thereto, indicating clearly the nature of the transactions out of which the items arose.
8. Interest and amortization of debt discount and expense.
9. Non-operating expenses.

State separately in the income statement or in a note thereto amounts of (a) losses on
securities (net of profits) and (b) miscellaneous income deductions. Material amounts included
under miscellaneous income deductions shall be separately stated in the income statement or
in a note thereto, indicating clearly the nature of the transactions out of which the items arose.
10. Income or loss before income tax expense and appropriate items below.

11. Income tax expense. Include under this caption only taxes based on income (see §21 0.408(h)).
12. Minority interest in income of consolidated subsidiaries.

13. Equity in earnings of unconsolidated subsidiaries and 50 percent or less owned persons.
State, parenthetically or in a note, the amount of dividends received from such persons. If
justified by the circumstances, this item may be presented in a different position and a
different manner (see §21 0.4-01 (a)).
14. Income or loss from continuing operations.

15. Discontinued operations.
16. Income or loss before" extraordinary items and cumulative effects of changes in
accounting principles.

17. Extraordinary items, less applicable tax.

18. Cumulative effects of changes in accounting principles.

19. Net income or loss.
20. Earnings per share data.
(45 FR 63671, Sept. 25, 1980, as amended at 45 FR 76977, Nov. 21, 1980; 50 FR 25215, June 18,
1985)

§ 210.5-04 What schedules are to be filed.

(¡top
(a) Except as expressly provided otherwise in the applicable form:

(1) The schedules specified below in this Section as Schedules II and i II shall be fied 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.

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the date and for periods specified in the schedule.

(b) When information is required in schedules for both the registrant and the registrant and its
subsidiaries consolidated it may be presented in the form of a single schedule: Provided, That items
pertaining to the registrant
are separately shown and that such single schedule affords a properly
summarized presentation of the facts. If the information required by any schedule (including the notes
thereto) may be shown in the related financial statement or in a note thereto without making such
statement unclear or confusing, that procedure may be followed and the schedule omitted.
(c) The schedules shall be examined by the independent accountant if the related financial statements
are so examined.

Schedule I-Condensed financial information of registrant. The schedule prescribed by
§210.12-04 shall be filed when the restricted net assets (§210A-08(e)(3)) of consolidated
subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently
completed fiscal year. For purposes of the above test, restricted net assets of consolidated
subsidiaries shall mean that amount of the registrant's proportionate share of net assets of
consolidated subsidiaries (after intercompany eliminations) which as of the end of the most
recent fiscal year may not be transferred to the parent company by subsidiaries in the form of
loans, advances or cash dividends without the consent of a third party ( i.e. , lender,
regulatory agency, foreign government, etc.). Where restrictions on the amount of funds which
may be loaned or advanced differ from the amount restricted as to transfer in the form of cash
dividends, the amount least restrictive to the subsidiary shall be used. Redeemable preferred
stocks (§21 0.5-02.28) and minority interests shall be deducted in computing net assets for
purposes of this test.

Schedule II-Valuation and qualifying accounts. The schedule prescribed by §210.12-09
shall be filed in support of valuation and qualifying accounts included in each balance sheet

but not included in Schedule Vi. (See §210A-02.)
Schedule II-Real estate and accumulated depreciation. The schedule prescribed by

§210.12-28 shall be filed for real estate (and the related accumulated depreciation) held by
persons a substantial portion of whose business is that of acquiring and holding for
investment real estate or interests in real estate, or interests in other persons a substantial
portion of whose business is that of acquiring and holding real estate or interests in real estate
for investment. Real estate used in the business shall be excluded from the schedule.

Schedule IV-Mortgage loans on real estate. The schedule prescribed by §21 0.12-29 shall
be filed by persons specified under Schedule Xi for investments in mortgage loans on real

estate.
Schedule V-Supplemental
Information Concerning Property-casualty Insurance Operations.
The schedule prescribed by §210.12-18 shall be filed when a registrant, its subsidiaries or
50%-or-less-owned equity basis investees, have liabilities for property-casualty ("PIC")
insurance claims. The required information shall be presented as of the same dates and for
the same periods for which the information is reflected in the audited consolidated financial
statements required by §§210.3-01 and 3-02. The schedule may be omitted if reserves for
unpaid PIC claims and claims adjustment expenses of the registrant and its consolidated
subsidiaries, its unconsolidated subsidiaries and its 50%-or-less-owned equity basis investees
did not, in the aggregate, exceed one-half of common stockholders' equity of the registrant
and its consolidated subsidiaries as of the beginning of the fiscal year. For purposes of this
test only the proportionate share of the registrant and its other subsidiaries in the reserves for
unpaid claims and claim adjustment expenses of 50%-or-less-owned equity basis investees
taken in the aggregate after intercompany eliminations shall be taken into account.

(45 FR 63671, Sept. 25, 1980, as amended at 46 FR 48137, Oct. 1, 1981; 46 FR 56180, Nov. 16, 1981;
49 FR 47598, Dec. 6, 1984; 50 FR 25215, June 18, 1985; 59 FR 65636, Dec. 20,1994)

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Registered Investment Companies

(¡top
Source: Sections 210.6-01 through 210.6-10 appear at 47 FR 56838, Dec. 21,1982,
unless otherwise noted.

0.6-01 to 210.6-10.

§ 210.6-01 Application of §§21

(¡jOP
Sections 210.6-01 to 210.6-10 shall be applicable to financial statements filed for registered investment

companies.

§ 210.6-02 Definition of certain terms.
(¡ top

The following terms shall have the meaning indicated in this rule unless the context otherwise requires.
(Also see §210.1-02 of

this part.)

(a) Affilate. The term affiliate means an affilated person as defined in section 2(a)(3) of the Investment
Company Act of 1940 unless otherwise indicated. The term control has the meaning in section 2(a)(9) of
that Act.

(b) Value. As used in §§210.6-D1 to 210.6-10, the term value shall have the meaning given in section 2
(a)(41 )(8) of

the Investment Company Act of 1940.

(c) Balance sheets; statements of net assets. As used in §§210.6-D1 to 210.6-10, the term balance
sheets shall include statements of assets and liabilities as well as statements of net assets unless the
context clearly indicates the contrary.
(d) Qualified assets. (1) For companies issuing face-amount certificates subsequent to December 31,
1940 under the provisions of section 28 of the Investment Company Act of 1940, the term qualified
assets means qualified investments as that term is defined in section 28(b) of the Act. A statement to
that effect shall be made in the balance sheet.

(2) For other companies, the term qualified assets means cash and investments which such companies
do maintain or are required, by applicable governing legal instruments, to maintain in respect of
outstanding face-amount certificates.

(3) Loans to certificate holders may be included as qualified assets in an amount not in excess of
certificate reserves carried on the books of account in respect of each individual certificate upon which

the loans were made.

§ 210.6-03 Special rules of general application to registered investment companies.

(¡JoP
The financial statements filed for persons to which §§21

0.6-01 to 210.6-10 are applicable shall be

prepared in accordance with the following special rules in addition to the general rules in §§210.1-D1 to

210.4-10 (Articles 1,2,3, and 4). Where the requirements of a special rule differ from those prescribed
in a general rule, the requirements of the special rule shall be met.

(a) Content offinancíal statements. The financial statements shall be prepared in accordance with the
requirements of this part (Regulation S-X) notwithstanding any provision of the articles of incorporation,

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trust indenture or other governing legal instruments specifying certain accounting procedures
inconsistent

with those required in §§210.6-G1 to 210.6-10.

(b) Audited financial statements. Where, under Article 3 of this part, financial statements are required to
be audited, the independent accountant shall have been selected and ratified in accordance with section
32 of the Investment Company Act of 1940.

(c) Consolidated and combined statements. (1) Consolidated and combined statements filed for

registered investment companies shall be prepared in accordance with §§210.3A-01 to 210.3A-05

(Article 3A) except that (i) statements of the registrant may be consolidated only with the statements of
subsidiaries which are investment companies; (ii) a consolidated statement of the registrant and any of

its investment company subsidiaries shall not be filed unless accompanied by a consolidating statement
which sets forth the individual statements of each significant subsidiary included in the consolidated
statement: Provided, however, That a consolidating statement need not be filed if all included
subsidiaries are totally held; and (iii) consolidated or combined statements filed for subsidiaries not
consolidated with the registrant shall not include any investment companies unless accompanied by
consolidating or combining statements which set forth the individual statements of each included
investment company which is a significant subsidiary.

(2) If consolidating or combining statements are fied, the amounts included under each caption in which

financial data pertaining to affliates is required to be furnished shall be subdivided to show separately
the amounts: (i) Eliminated in consolidation; and (ii) not eliminated in consolidation.

(d) Valuation of assets. The balance sheets of registered investment companies, other than issuers of
face-amount certificates, shall reflect all investments at value, with the aggregate cost of each category
of investment reported under §§21 0.6-04.1, 6-04.2 and 6-04.3 and of the total investments reported

under §210.6-04.4 or §210.6-05.1 shown parenthetically. State in a note the methods used in
determining value of investments. As required by section 28(b) of the Investment Company Act of 1940,
qualified assets of face-amount certificate companies shall be valued in accordance with certain
provisions of the Code of the District of Columbia. For guidance as to valuation of securities, see
§§404.03 to 404.05 of the Codification of Financial Reporting Policies.

(e) Qualified assets. State in a note the nature of any investments and other assets maintained or

required to be maintained, by applicable legal instruments, in respect of outstanding face-amount

certificates. If the nature of the qualifying assets and amount thereof are not subject to the provisions of

section 28 of the Investment Company Act of 1940, a statement to that effect shall be made.
(f) Restricted securities. State in a note unlass disclosed elsewhere the following information as to
investment securities which cannot be offered for public sale without first being registered under the
Securities Act of 1933 (restricted securities):
(1) The policy of the person with regard to acquisition of restricted securities.
(2) The policy of the person with regard to valuation of restricted securities. Specific comments shall be
given as to the valuation of an investment in one or more issues of securities of a company or group of

affliated companies if any part of such investment is restricted and the aggregate value of the
investment in all issues of such company or affliated group exceeds five percent of the value of total
assets. (As used in this paragraph, the term affliated shall have the meaning given in §210.6-G2(a) of
this part.)

(3) A description of the person's rights with regard to demanding registration of any restricted securities
held at the date of the latest balance sheet.
(g) Income recognition. Dividends shall be included in income on the ex-dividend date; interest shall be
accuredon a daily basis. Dividends declared on short positions existing on the record date shall be
recorded on the ex-dividend date and included as an expense of the period.
(h) Federal income taxes. The company's status as a regulated investment company as defined in
subtitle A, chapter 1, subchapter M of the Internal Revenue Code, as amended, shall be stated in a note
referred to in the appropriate statements. Such note shall also indicate briefly the principal assumptions
on which the company relied in making or not making provisions for income taxes. However, a company
which retains realized capital gains and designates such gains as a distribution to shareholders in

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accordance with section 852(b )(3)(0) of the Internal Revenue Code shall, on the last day of its taxable
year (and not earlier), make provision for taxes on such undistributed capital gains realized during such

year.
a registered investment company of its own securities. Disclose for each
class of the company's securities:
(i) Issuance and repurchase by

(1) The number of shares, units, or principal amount of bonds sold during the period of report, the
amount received therefor, and, in the case of shares sold by closed-end management investment
companies, the difference, if any, between the amount received and the net asset value or preference in
involuntary liquidation (whichever is appropriate) of securities of the same class prior to such sale; and

(2) The number of shares, units, or principal amount of bonds repurchased during the period of report
and the cost thereof. Closed-end management investment companies shall furnish the following
additional information as to securities repurchased during the period of report:
(i) As to bonds and preferred shares, the aggregate difference between cost and the face amount or
preference in involuntary liquidation and, if applicable net assets taken at value as of the date of
repurchase were less than such face amount or preference, the aggregate difference between cost and
such net asset value;
(ii) As to common shares, the weighted average discount per share, expressed as a percentage,
between cost of repurchase and the net asset value applicable to such shares at the date of

repurchases.
The information required by paragraphs (h)(i)(2) (i) and (ii) of this section may be based on reasonable
estimates if it is impracticable to determine the exact amounts involved.
u) Series companies. (1) The information required by this part shall, in the case of a person which in
essence is comprised of more than one separate investment company, be given as if each. class or
series of such investment company were a separate investment company; this shall not prevent the
inclusion, at the option of such person, of information applicable to other classes or series of such
person on a comparative basis, except as to footnotes which need not be comparative.

(2) If the particular class or series for which information is provided may be affected by other classes or
series of such investment company, such as by the offset of realized gains in one series with realized
losses in another, or through contingent liabilities, such situation shall be disclosed.
(k) Certificate reserves. (1) For companies issuing face-amount certificates subsequent to December 31,
1940 under the provisions of section 28 of the Investment Company Act of 1940, balance sheets shall
reflect reserves for outstanding certificates computed in accordance with the provisions of section 28(a)
of the Act.

(2) For other companies, balance sheets shall reflect reserves for outstanding certificates determined as
follows:
(i) For certificates of the installment type, such amount which, together with the lesser of future
payments by certificate holders as and when accumulated at a rate not to exceed 31/2per centum per
annum (or such other rate as may be appropriate under the circumstances of a particular case)
compounded annually, shall provide the minimum maturity or face amount of the certificate when due.
(ii) For certificates of the fully-paid type, such amount which, as and when accumulated at a rate not to
exceed 31/2per centum per annum (or such other rate as may be appropriate under the circumstances
of a particular case) compounded annually, shall provide the amount or amounts payable when due.

(iii) Such amount or accrual therefor, as shall have been credited to the account of any certificate holder
in the form of any credit, or any dividend, or any interest in addition to the minimum maturity or face
amount specified in the certificate, plus any accumulations on any amount so credited or accrued at
rates required under the terms of the certificate.
(iv) An amount equal to all advance payments made by certificate holders, plus any accumulations

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thereon at rates required under the terms of the certificate.
(v) Amounts for other appropriate contingency reserves, for death and disabilty benefis or for

reinstatement rights on any certificate providing for such benefits or rights.
(I) Inapplicable captions. Attention is directed to the provisions of §§21

0.4-02 and 210.4-03 which

permit the omission of separate captions in financial statements as to which the items and conditions are
not present, or the amounts involved not significant. However, amounts involving directors, offcers, and
affliates shall nevertheless be separately set forth except as otherwise specifically permitted under a

particular caption.

§ 210.6-04 Balance sheets.
(l top

This rule is applicable to balance sheets fied by registered investment companies except for persons
who substitute a statement of net assets in accordance with the requirements specified in §210.6-05,
and issuers of face-amount certificates which are subject to the special provisions of §21 0.6-06 of this
part. Balance sheets fied under this rule shall comply with the following provisions:

Assets
1. Investments in securites of unaffilated issuers.
2. Investments in and advances to affilates. State separately investments in and advances to:
(a) Controlled companies and (b) other affiliates.
3. Investments-other than securites. State separately each major category.

4. Total investments.

5. Cash. Include under this caption cash on hand and demand deposits. Provide in a note to
the financial statements the information required under §21 0.5-02.1 regarding restrictions and

compensating balances.
6. Receivables. (a) State separately amounts receivable from (1) sales of investments; (2)
subscriptions to capital shares; (3) dividends and interest; (4) directors and offcers; and (5)

others.
(b) If the aggregate amount of notes receivable exceeds 10 percent of the aggregate amount
of receivables, the above information shall be set forth separately, in the balance sheet or in a
note thereto, for accounts receivable and notes receivable.

7. Deposits for securites sold short and open option contracts. State separately amounts held
by others in connection with: (a) Short sales and (b) open option contracts.
8. Other assets. State separately (a) prepaid and deferred expenses; (b) pension and other
special funds; (c) organization expenses; and (d) any other significant item not properly
classified in another asset caption.
9. Total assets.

Liabilities

10. Accounts payable and accrued liabilties. State separately amounts payable for: (a)

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Securities sold short; (b) open option contracts written; (c) other purchases of securities; (d)
capital shares reedeemed; (e) dividends or other distributions on capital shares; and (f)
others. State separately the amount of any other liabiliies which are materiaL. Securities sold
short and open option contracts written shall be stated at value.

11. Deposits for securites loaned. State the value of securities loaned and indicate the nature
of the collateral received as security for the loan, including the amount of any cash received.
12. Other liabilities. State separately (a) amounts payable for investment advisory,
management and service fees; and (b) the total amount payable to: (1) Officers and directors;
(2) controlled companies; and (3) other affliates, excluding any amounts owing to
noncontrolled affiliates which arose in the ordinary course of business and which are subject
to usual trade terms.

13. Notes payable, bonds and similar debt. (a) State separately amounts payable to: (1)
Banks or other financial institutions for borrowings; (2) controlled companies; (3) other
affiliates; and (4) others, showing for each category amounts payable within one year and

amounts payable after one year.
(b) Provide in a note the information required under §21 0.5-02.19(b) regarding unused lines
of credit for short-term financing and §21 0.5-02.22(b) regarding unused commitments for
long-term financing arrangements.
14. Total liabilities.

15. Commitments and contingent liabílties.
Net Assets

16. Units of capital. (a) Disclose the title of each class of capital shares or other capital units,
the number authorized, the number outstanding, and the dollar amount thereof.

(b) Unit investment trusts, including those which are issuers of periodic payment plan
certificates, also shall state in a note to the financial statements: (1) The total cost to the
investors of each class of units or shares; (2) the adjustment for market depreciation or
appreciation; (3) other deductions from the total cost to the investors

for fees, loads and other

charges, including an explanation of such deductions; and (4) the net amount applicable to
the investors.

17. Accumulated undistributed income (Joss). Disclose:
(a) The accumulated undistributed investment income-net,

(b) accumulated undistributed net realized gains (losses) on investment transactions, and (c)
net unrealized appreciation (depeciation) in value of investments at the balance sheet date.
18. Other elements of capital. Disclose any other elements of capital or residual interests
appropriate to the capital structure of the reporting entity.
19. Net assets applicable to outstanding units of capital. State the net asset value per share.

§ 210.6-05 Statements of net assets.
II top

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In lieu of the balance sheet otherwise required by §210.6-04 of this part, persons may substitute a
statement of net assets if at least 95 percent of the amount of the person's total assets are represented
by investments in securities of unaffliated issuers. If presented in such instances, a statement of net
assets shall consist of the following:

Statements of Net Assets

1. A schedule of investments in securities of unaffiliated issuers as prescribed in §210.12-12.
2. The excess (or deficiency) of other assets over (under) total

liabiliies stated in one amount,

except that any amounts due from or to officers, directors, controlled persons, or other
affiliates, excluding any amounts owing to noncontrolled affiliates which arose in the ordinary

course of business and which are subject to usual trade terms, shall be stated separately.
3. Disclosure shall be provided in the notes to the financial statements for any item required
under §§21 0.6-04.1 0 to 210.6-04.13.
4. The balance of the amounts captioned as net assets. The number of outstanding shares
and net asset value per share shall be shown parenthetically.
5. The information required by (i) §21 0.6-04.16, (ii) §21 0.6-04.17 and (Hi) §21 0.6-04.18 shall
be furnished in a note to the financial statements.

§ 210.6-06 Special provisions applicable to the balance sheets of issuers offaceamount certificates.

I!JQP
Balance sheets filed by issuers of face-amount certificates shall comply with the following provisions:

Assets
1. Investments. State separately each major category: such as, real estate owned, first
mortgage loans on real estate, other mortgage loans on real estate, investments in securities
of unaffiliated issuers, and investments in and advances to affiliates.

2. Cash. Include under this caption cash on hand and demand deposits. Provide in a note to

the financial statements the information required under §210.5-02.1 regarding restrictions and
compensating balances.
3. Receivables. (a) State separately amounts receivable from (1) sales of investments; (2)
dividendsand interest; (3) directors and officers; and (4) others.
(b) If the aggregate amount of notes receivable exceeds 10 percent of the aggregate amount
of receivables, the above information shall be set forth separately, in the balance sheet or in a
note thereto, for accounts receivable and notes receivable.
4. Total qualified assets. State in a note to the financial statements the amount of qualified
assets on deposit classified as to general categories of assets and as to general types of
depositories, such as banks and states, together with a statement as to the purpose of the

deposits.
5. Other assets. State separately: (a) Investments in securities of unaffiliated issuers not
included in qualifying assets in item 1 above; (b) investments in and advances to affiliates not
included in qualifying assets in item 1 above; and (c) any other significant item not properly

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classified in another asset caption.
6. Total assets.

Liabilities

7. Certificate reserves. Issuers of face-amount certificates shall state separately reserves for:
(a) Certificates of the installment type; (b) certificates of the fully-paid type; (c) advance
payments; (d) additional amounts accrued for or credited to the account of certificate holders
in the form of any credit, dividend, or interest in addition to the minimum amount specified in
the certificate; and (e) other certificate reserves. State in an appropriate manner the basis
used in determining the reserves, including the rates of interest of accumulation.

8. Notes payable, bonds and similar debt. (a) State separately amounts payable to: (1) Banks
or other financial institutions for borrowings; (2) controlled companies; (3) other affiliates; and
(4) others, showing for each category amounts payable within one year and amounts payable

after one year.

(b) Provide in a note the information required under §21 0.5-02.19(b) regarding unused lines
of credit for short-term financing and §210.5-02.22(b) regarding unused commitments for
long-term financing arrangements.

9. Accounts payable and accrued liabilties. State separately (a) amounts payable for
investment advisory, management and service fees; and (b) the total amount payable to: (1)
Officers and directors; (2) controlled companies; and (3) other affiliates, excluding any
amounts owing to noncontrolled affliates which arose in the ordinary course of business and
which are subject to usual trade terms. State separately the amount of any other liabilities
which are material.
10. T otalliabilties.

11. Commitments and contingent liabilties.
Stockholders' Equity

12. Capital shares. Disclose the title of each class of capital shares or other capital units, the
number authorized, the number outstanding and the dollar amount thereof. Show also the
dollar amount of any capital shares subscribed but unissued, and show the deduction for
subscriptions receivable therefrom.

13. Other elements of capital. (a) Disclose any other elements of capital or residual interests
appropriate to the capital structure of the reporting entity.

(b) A summary of each account under this caption settng forth the information prescribed in
§21 0.3-04 shall be given in a note or separate statement for each period in which a statement

of operations is presented.
14. Total

liabilties and stockholders' equity.

§ 210.6-07 Statements of operations.
l!.tQR
Statements of operations fied by registered investment companies, other than issuers of face-amount
certificates subject to the special provisions of §21 0.6-08 of this part, shall comply with the following

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provisions:

Statements of Operations

1. Investment income. State separately income from: (a) dividends; (b) interest on securities;
and (c) other income. If income from investments in or indebtedness of affiliates is included
hereunder, such income shall be segregated under an appropriate caption subdivided to show
separately income from: (1) Controlled companies; and (2) other affiliates. If non-cash
dividends are included in income, the bases of recognition and measurement used in respect
to such amounts shall be disclosed. Any other category of income which exceeds five percent
of the total shown under this caption shall be stated separately.

2. Expenses. (a) State separately the total amount of investment advisory,management and
service fees, and expenses in connection with research, selection, supervision, and custody
of investments. Amounts of expenses incurred from transactions with affiliated persons shall
be disclosed together with the identity of and related amount applicable to each such person
accounting for five percent or more of the total expenses shown under this caption together
with a description of the nature of the affiliation. Expenses incurred within the person's own
organization in connection with research, selection and supervision of investments shall be
stated separately. Reductions or reimbursements of management or service fees shall be
shown as a negative amount or as a reduction of total expenses shown under this caption.
(b) State separately any other expense item the amount of which exeeds five percent of the
total expenses shown under this caption.
(c) A note to the financial statements shall include information concerning management and
service fees, the rate of fee, and the base and method of computation. State separately the

amount and a description of any fee reductions or reimbursements representing: (1) Expense
limitation agreements or commitments; and (2) offsets received from broker-dealers showing
separately for each amount received or due from (i) unaffiliated persons; and (ii) affliated
persons. If no management or service fees were incurred for a period, state the reason

therefor.
(d) If any expenses were paid otherwise than in cash, state the details in a note.

(e) State in a note to the financial statements the amount of brokerage commissions
(including dealer markups) paid to affiliated broker-dealers in connection with purchase and
sale of investment securities. Open-end management companies shall state in a note the net
amounts of sales charges deducted from the proceeds of sale of capital shares which were
retained by any affliated principal underwriter or other affiliated broker-dealer.

(f) State separately all amounts paid in accordance with a plan adopted under rule 12b-1 of
the Investment Company Act of 1940 (17 CFR 270.12b-1J. Reimbursement to the fund of
expenses incurred under such plan (12b-1 expense reimbursement) shall be shown as a
negative amount and deducted from current 12b-1 expenses. If 12b-1 expense
reimbursements exceed current 12b-1 costs, such excess shall be shown as a negative
amount used in the calculation of total expenses under this caption.
(g)(1) Brokerage/Service Arrangements. If a broker-dealer or an affiliate of the broker-dealer
has, in connection with directing the person's brokerage transactions to the broker-dealer,
provided, agreed to provide, paid for, or agreed to pay for, in whole or in part, services
provided to the person (other than brokerage and research services as those terms are used
in section 28(e) of the Securities Exchange Act of 1934 (15 U.S.C. 78bb(e)J, include in the
expense items set forth under this caption the amount that would have been incurred by the
person for the services had it paid for the services directly in an arms-length transaction.
(2) Expense Offset Arrangements. If the person has entered into an agreement with any other

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person pursuant to which such other person reduces, or pays a third party
which reduces, by
a specified or reasonably ascertainable amount, its fees for services provided to the person in
exchange for use of the person's assets, include in the expense items set forth under this
caption the amount of fees that would have been incurred by the person if the person had not
entered into the agreement.

(3) Financial Statement Presentation. Show the total amount by which expenses are
increased pursuant to paragraphs (1) and (2) of this paragraph 2.(g) as a corresponding
reduction in total expenses under this caption. In a note to the financial statements, state
separately the total amounts by which expenses are increased pursuant to paragraphs (1)
and (2) of this paragraph 2.(9), and list each category of expense that is increased by an
amount equal to at least 5 percent of total expenses. If applicable, the note should state that
the person could have employed the assets used by another person to produce income if it
had not entered into an arrangement described in paragraph 2.(g)(2) of this section.
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.
4. Investment income before income tax expense.
5. Income tax expense. Include under this caption only taxes based on income.
6. Investment income-net.

7. Realized and unrealized gain (loss) on investments-net. (a) State separately the net
realized gain or loss on transactions in: (1) Investment securities of unaffliated issuers, (2)

investment securities of affliated issuers, and (3) investments other than securities.
(b) Distributions of realized gains by other investment companies shall be shown separately
under this caption.
(c) State separately: (1) The gain or loss from expiration or closing of option contracts written,
(2) the gain or loss on closed short positions in securities, and (3) other realized gain or loss.
Disclose in a note to the financial statements the number and associated dollar amounts as to
option contracts written: (i) At the beginning of the period; (ii) during the period; (iii) expired
during the period; (iv) closed during the period; (v) exercised during the period; (vi) balance at
end of the period.

(d) State separately the amount of the net increase or decrease during the period in the

unrealized appreciation or depreciation in the value of investment securities and other
investments held at the end of the period.

(e) State separately any: (1) Federal income taxes and (2) other income taxes applicable to
realized and unrealized gain (loss) on investments, distinguishing taxes payable currently

from deferred income taxes.
8. Net gain (/oss) on investments.
9. Net increase (decrease) in net assets resulting from operations.
(47 FR 56838, Dec. 21,1982, as amended at 52 FR 23172, June 18,1987; 59 FR 65636, Dec. 20,
1994; 60 FR 38923, July 28, 1995)

§ 210.6-08 Special provisions applicable to the statements of operations of issuers of
face-amount certificates.

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(¡JoP
Statements of operations fied by issuers of face-amount certificates shall comply with the following

provisions:

Statements of Operations
1. Investment income. State separately income from: (a) Interest on mortgages; (b) interest on
securities; (c) dividends; (d) rental income; and (e) other investment income. If income from
investments in or indebtedness of affiliates is included hereunder, such income shall be
segregated under an appropriate caption subdivided to show separately income from: (1)
Controlled companies; and (2) other affiliates. If non-cash dividends are included in income,
the bases of recognition and measurement used in respect to such amounts shall be
disclosed. Any other category of income which exceeds five percent of the total shown under

this caption shall be stated separately.
2. Investment expenses. (a) State separately the total amount of investment advisory,
management and service fees, and expenses in connection with research, selection,
supervision, and custody of investments. Amounts of expenses incurred from transactions
with affiliated persons shall be disclosed together with the identity of and related amount
applicable to each such person accounting for five percent or more of the total expenses

shown under this caption together with a description of the nature of the affliation. Expenses
incurred within the person's own organization in connection with research, selection and
supervision of investments shall be stated separately. Reductions or reimbursements of
management or service fees shall be shown as a negative amount or as a reduction of total
expenses shown under this caption.

(b) State separately any other expense item the amount of which exceeds five percent of the
total expenses shown under this caption.
(c) A note to the financial statements shall include information concerning management and
service fees, the rate of fee, and the base and method of computation. State separately the
amount and a description of any fee reductions or reimbursements representing: (1) Expense
limitation agreements or commitments; and (2) offsets received from broker-dealers showing
separately for each amount received or due from: (i) Unaffiliated persons; and (ii) affiliated
persons. If no management or service fees were incurred for a period, state the reason

therefor.
(d) If any expenses were paid otherwise than in cash, state the details in a note.

(e) State in a note to the financial statements the amount of brokerage commissions
(including dealer markups) paid to affiliated broker-dealers in connection with purchase and
sale of investment securities.
3. Interest and amortization of debt discount and expense.

4. Provision for certificate reserves. State separately any provision for additional credits, or
dividends, or interests, in addition to the minimum maturity or face amount specified in the
certificates. State also in an appropriate manner reserve recoveries from surrenders or other

causes.
5. Investment income before income tax expense.
6. Income tax expense. Include under this caption only taxes based on income.
7. Investment income-net.

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8. Realized gain (loss) on investments-net.
(a) State separately the net realized gain or loss on transactions in: (1) Investment securities

of unaffilated issuers, (2) investment securities of affiliated issuers, and (3) other investments.
(b) Distributions of capital gains by other investment companies shall be shown separately
under this caption.
(c) State separately any: (1) Federal income taxes and (2) other income taxes applicable to
realized gain (loss) on investments, distinguishing taxes payable currently from deferred
income taxes.

9. Net income or loss.

§ 210.6-09 Statements of changes in net assets.
(¡JOP
Statements of changes in net assets fied for persons to whom this article is applicable shall comply with
the following provisions:

Statements of Changes in Net Assests

1. Operations. State separately: (a) Investment income-net as shown by §210.6-07.6; (b)
realized gain (loss) on investments-net of any Federal or other income taxes applicable to
such amounts; (c) increase (decrease) in unrealized appreciation or depreciation-net of any
Federal or other income taxes applicable to such amounts; and (d) net increase (decrease) in
net assets resulting from operations as shown by §210.6-07.9.

2. Net equalization charges and credits. State the net amount of accrued undivided earnings
separately identified in the price of capital shares issued and repurchased.
3. Distributions to shareholders. State separately distributions to shareholders from: (a)
Investment income-net; (b) realized gain from investment transactions-net; and (c) other

sources.
4. Capital share.transactions. (a) State the increase or decrease in net assets derived from
the net change in the number of outstanding shares or units.
(b) Disclose in the body of the statements or in the notes, for each class of the person's
shares, the number and value of shares issued in reinvestment of dividends as well as the
number of dollar amounts received for shares sold and paid for shares redeemed.
5. Total increase (decrease).

6. Net assets at the beginning of the period.

7. Net assets at the end of the period. Disclose parenthetically the balance of undistributed
net investment income included in net assets at the end of the period.

§ 210.6-10 What schedules are to be filed.

(¡JOP

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(a) When information is required in schedules for both the person and its subsidiaries consolidated, it
may be presented in the form of a single schedule, provided that items pertaining to the registrant are
separately shown and that such single schedule affords a properly summarized presentation of the facts.
If the information required by any schedule (including the notes thereto) is shown in the related financial
statement or in a note thereto without making such statement unclear or confusing, that procedure may
be followed and the schedule omitted.
(b) The schedules shall be examined by an independent accountant if the related financial statements
are so examined.
(c) Management investment companies. (1) Except as otherwise provided in the applicable form, the
schedules specified in this paragraph shall be filed for management investment companies as of the
dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for
each person or group.

Schedule I-Investments in securites of unaffilated issuers. The schedule prescribed by
§21 0.12-12 shall be fied in support of caption 1 of each balance sheet.
Schedule II-In
vestments-other than securities. The schedule prescribed by §21 0.12-13
shall be filed in support of caption 3 of each balance sheet. This schedule may be omitted if
the investments, other than securities, at both the beginning and end of the period amount to
less than one percent of the value of total investments (§21 0.6-04.4).

Schedule II-Investments in and advances to affilates. The schedule prescribed by §210.1214 shall be fied in support of caption 2 of each balance sheet.

Schedule IV-Investments-securites sold short. The schedule prescribed by §21 0.12-12A

shall be fied in support of caption 1 O(a) of each balance sheet.
Schedule V-Open option contracts written. The schedule prescribed by §21 0.12-12B shall
be filed in support of caption 1 O(b) of each balance sheet.
(2) When permitted by the applicable form, the schedule specified in this paragraph may be filed for
management investment companies as of the dates of the most recent audited balance sheet and any
subsequent unaudited statement being fied for each person or group.

Schedule VI-Summary schedule of investments in securities of unaffílated issuers. The
schedule prescribed by §210.12-12C may be filed in support of caption 1 of each balance

sheet.
(d) Unit investment trusts. Except as otherwise provided in the applicable form:

(1) Schedules i and II, specified below in this section, shall be fied for unit investment trusts as of the
dates of the most recent audited balance sheet and any subsequent unaudited statement being filed for
each person or group. .
(2) Schedule ILL, specified below in this section, shall be filed for unit investment trusts for each period for
which a statement of operations is required to be filed for each person or group.

Schedule I-Investment in securites. The schedule prescribed by §210.12-12 shall be fied in
support of caption 1 of each balance sheet (§21

0.6-04).

Schedule II-Allocation of trust assets to series of trust shares. If the trust assets are
specifically allocated to different series of trust shares, and if such allocation is not shown in
the balance sheet in columnar form or by the filng of separate statements for each series of
trust shares, a schedule shall be filed showing the amount of trust assets, indicated by each
balance sheet filed, which is applicable to each series of trust shares.

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Schedule II-Allocation of trust income and distributable funds to series of trust shares. If the
trust income and distributable funds are specifically allocated to different series of trust shares
and if such allocation is not shown in the statement of operations in columnar form or by the

fiing of separate statements for each series of trust shares, a schedule shall be submitted
showing the amount of income and distributable funds, indicated by each statement of
operations filed, which is applicable to each series of trust shares.
(e) Face-amount certificate investment companies. Except as otherwise provided in the applicable form:

(1) Schedules I, V and X, specified below, shall be filed for face-amount certificate investment
companies as of the dates of the most recent audited balance sheet and any subsequent unaudited
statement being filed for each person or group.

(2) All other schedules specified below in this section shall be fied for face-amount certificate investment
companies for each period for which a statement of operations is fied, except as indicated for Schedules
II and iV.

Schedule I-Investment in securities of unaffliated issuers. The schedule prescribed by
§210.12-21 shall be filed in support of caption 1 and, if applicable, caption 5(a) of each
balance sheet. Separate schedules shall be furnished in support of each caption, if applicable.

Schedule II-Investments in and advances to affliates and income thereon. The schedule
prescribed by §210.12-22 shall be filed in support of captions 1 and 5(b) of each balance
sheet and caption 1 of each statement of operations. Separate schedules shall be furnished in
support of each caption, if applicable.

Schedule II-Mortage loans on real estate and interest earned on mortages. The schedule
prescribed by §210.12-23 shall be filed in support of captions 1 and 5(c) of each balance
sheet and caption 1 of each statement of operations, except that only the information required
by column G and note 8 of the schedule need be furnished in support of statements of
operations for years for which related balance sheets are not required.

Schedule IV-Real estate owned and rental income. The schedule prescribed by §21 0.12-24
shall be filed in support of captions 1 and 5(a) of each balance sheet and caption 1 of each
statement of operations for rental income included therein, except that only the information
required by columns H, i and J, and item "Rent from properties sold during the period" and
note 4 of the schedule need be furnished in support of statements of operations for years for
which related balance sheets are not required.

Schedule V-Qualified assets on deposit. The schedule prescribed by §21 0.12-27 shall be
the information required by caption 4 of §210.6-06 as to total amount of
qualified assets on deposit.

filed in support of

Schedule VI-Certificate reserves. The schedule prescribed by §21 0.12-26 shall be filed in
support of caption 7 of each balance sheet.

Schedule VII-Valuation and qualifying accounts. The schedule prescribed by §210.12-o9
shall be filed in support of all other reserves included in the balance sheet.
(47 FR 56838, Dec. 21,1982, as amended at 59 FR 65636, Dec. 20,1994; 69 FR 11262, Mar. 9, 2004)

Employee Stock Purchase, Savings and Similar Plans

(¡JQR
§ 210.6A-01 Application of §§21 0.6A-01 to 210.6A-05.

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(¡top
(a) Sections 210.6A-D1 to 210.6A-D5 shall be applicable to financial statements fied for employee stock
purchase, savings and similar plans.

(b) (Reserved)
(47 FR 56843, Dec. 21,1982)

§ 210.6A-02 Special rules applicable to employee stock purchase, savings and similar

plans.

(¡JOP
The financial statements fied for persons to which this article is applicable shall be prepared in
accordance with the following special rules in addition to the general rules in §§210.1-01 to 210.4-10.
Where the requirements of a special rule differ from those prescribed in a general rule, the requirements
of the special rule shall be met.

(a) Investment programs. If the participating employees have an option asto the manner in which their
deposits and contributions may be invested, a description of each investment program shall be given in
a footnote or otherwise. The number of employees under each investment program shall be stated.
(b) Net asset value per unit. Where appropriate, the number of units and the net asset value per unit
shall be given by footnote or otherwise.
(c) Federal income taxes. (1) If the plan is not subject to Federal income taxes, a note shall so state
indicating briefly the principal assumptions on which the plan relied in not making provision for such

taxes.
(2) State the Federal income tax status of the employee with respect to the plan.

(d) Valuation of assets. The statement of financial condition shall reflect all investments at value,
showing cost parenthetically. For purposes of this rule, the term value shall mean (1) market value for
those securities having readily available market quotations and (2) fair value as determined in good faith
by the trustee(s) for the plan (or by the person or persons who exercise similar responsibilities) with
respect to other securities and assets.

(47 FR 56843, Dec. 21,1982)

§ 210.6A-03 Statements of financial condition.
(¡ top

Statements of financial condition fied under this rule shall comply with the following provisions:

Plan Assets

1. Investments in securities of participating employers. State separately each class of
securities of the participating employer or employers.

2. Investments in securities of unaffliated issuers.
(a) United States Government bonds and other obligations. Include only direct obligations of
the United States Government.

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(b) Other securities. State separately (1) marketable securities and (2) other securities.

3. Investments. Other than securities. State separately each major class.
4. Dividends and interest receivable.

5. Cash.
6. Other assets. State separately (a) total of amounts due from participating employers or any
of their directors, officers and principal holders of equity securities; (b) total of amounts due
from trustees or managers of the plan; and (c) any other significant amounts.
Liabilities and Plan Equity

7. Liabilties. State separately (a) total of amounts payable to participating employers; (b) total
of amounts payable to participating employees; and (c) any other significant amounts.
8. Reserves and other credits. State separately each significant item and describe each such
item by using an appropriate caption or by a footnote referred to in the caption.
9. Plan equity at close of period.
(27 FR 7870, Aug. 9, 1962., Redesignated at 47 FR 56843, Dec. 21, 1982)

§ 210.6A-04 Statements of income and changes in plan equity.
(j tOR

Statements of income and changes in plan equity filed under this rule shall comply with the following
provisions:

1. Net investment income.

(a) Income. State separately income from (1) cash dividends; (2) interest, and (3) other
sources. Income from investments in or indebtedness of participating employers shall be
segregated under the appropriate subcaption.
(b) Expenses. State separately any significant amounts.

(c) Net investment income.
2. Realized gain or loss on investments. (a) State separately the net of gains or losses arising
from transactions in (1) investments in securities of the participating employer or employers;
(2) other investments in securities; and (3) other investments.
(b) State in a footnote or otherwise for each category of investment in paragraph (a) above
the aggregate cost, the aggregate proceeds and the net gain or loss. State the principle
followed in determining the cost of securities sold, e.g., average cost or first-in, first-out.

3. Unrealized appreciation or depreciation of investments. (a) State the amount of increase or
decrease in unrealized appreciation or depreciation of investments during the period.

(b) State in a footnote or otherwise the amount of unrealized appreciation or depreciation of

investments at the beginning of the period of report, at the end of the period of report, and the

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increase or decrease during the period.

4. Contributions and deposits. (a) State separately (1) total of amounts deposited by
participating employees, and (2) total of amounts contributed by the participating employer or

employers.
(b) If employees of more than one employer participate in the plan, state in tabular form in a

footnote or otherwise the amount contributed by each employer and the deposits of the
employees of each such employer.

5. Withdrawals, lapses and forfeitures. State separately (a) balances of employees' accounts
withdrawn, lapsed or forfeited during the period; (b) amounts disbursed in settlement of such
accounts; and (c) disposition of balances remaining after settement specified in (b).
6. Plan equity at beginning of period.
7. Plan equity at end of period.
(27 FR 7870, Aug. 9, 1962. Redesignated at 47 FR 56843, Dec. 21, 1982)

§ 210.6A-05 What schedules are to be filed.

I!JQP
the most recent audited statement of
financial
condition and any subsequent unaudited statement of financial condition being fied. Schedule II shall be
fied as of the date of each statement of financial condition being filed. Schedule III shall be filed for each
period for which a statement of income and changes in plan equity is fied. All schedules shall be audited
if the related statements are audited.
(a) Schedule I, specified below, shall be filed as of

Schedule I-Investments. A schedule substantially in form prescribed by §210.12-12 shall be
filed in support of captions 1, 2 and 3 of each statement of financial condition unless
substantially all of the information is given in the statement of financial condition by footnote or

otherwise.

Schedule II-Allocation of plan assets and liabilties to investment program. If the plan
provides for separate investment programs with separate funds, and if the allocation of assets
and liabilities to the several funds is not shown in the statement of financial condition in
columnar form or by the submission of separate statements for each fund, a schedule shall be
submitted showing the allocation of each caption of each statement of financial condition filed
to the applicable fund.

Schedule II-Allocation of plan income and changes in plan equity to investment programs. If
the plan provides for separate investment programs with separate funds, and if the allocation
of income and changes in plan equity to the several funds is not shown in the statement of
income and changes in plan equity in columnar form or by the submission of separate
statements for each fund, a schedule shall be submitted showing the allocation of each
caption of each statement of income and changes in plan equity filed to the applicable fund.
(b) (Reserved)
(45 FR 63676, Sept. 25, 1980. Redesignated at 47 FR 56843, Dec. 21, 1982, and amended at 50 FR
25215, June 18, 1985)

Insurance Companies

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(¡JoP
Authority: Secs. 6,7,8,10,12,13,15,19,23 (15 U.S.C. 77f, 77g, 77h, 77j, 77s, 781, 78m,
780(d), 78w, 7ge, 79n, 79t, 80a-8, 80a-29, 80a-30(c), 80(a)).
Source: Sections 210.7-01 through 210.7-05 appears at 46 FR 54335, Nov. 2,1981,
unless otherwise noted.

0.7-01 to 210.7-05.

§ 210.7-01 Application of §§21

(¡ tOR

This article shall be applicable to financial statements filed for insurance companies.
§ 210.7-02 General requirement.

(¡JoP
(a) The requirements of

the general rules in §§210.1-01 to 210.4-10 (Articles 1, 2, 3, 3A and 4) shall be
0.7-01 to 210.7-05.

applicable except where they differ from requirements of §§21

life insurance companies and wholly owned stock insurance
life insurance companies may be prepared in accordance with statutory
accounting requirements. Financial statements prepared in accordance with statutory accounting
requirements may be condensed as appropriate, but the amounts to be reported for net gain from
operations (or net income or loss) and total capital and surplus (or surplus as regards policyholders)
shall be the same as those reported on the corresponding Annual Statement.
(b) Financial statements filed for mutual
company subsidiaries of mutual

§ 210.7-03 Balance sheets.

(¡tQP
this rule is to indicate the various items which, if applicable, and except as otherwise
permitted by the Commission, should appear on the face of the balance sheets and in the notes thereto
filed for persons to whom this article pertains. (See §21 0.4-01 (a).)
(a) The purpose of

Assets

1. Investments-other than investments in related parties.
(a) Fixed maturities.

(b) Equity securities.

(c) Mortgage loans on real estate.
(d) Investment real estate.
(e) Po/icy loans.

(f) Other long-term investments.

(g) Short-term investments.

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(h) Total investments.
Notes: (1) State parenthetically or otherwise in the balance sheet (a) the basis of determining
the amounts shown in the balance sheet and (b) as to fixed maturities and equity securities
either aggregate cost or aggregate value at the balance sheet date, whichever is the alternate
amount of the carrying value in the balance sheet. Consideration shall be given to the
discussion of "Valuation of Securities" in §404.03 of the Codification of Financial Reporting
Policies.
(2) Include under fixed maturities: bonds, notes, marketable certificates of deposit with
maturities beyond one year, and redeemable preferred stocks. Include under equity
securities: common stocks and nonredeemable preferred stocks.
(3) State separately in the balance sheet or in a note thereto the amount of accumulated
depreciation and amortization deducted from investment real estate. Subcaption (d) shall not
include real estate acquired in settling title claims, mortgage guaranty claims, and similar
insurance claims. Real estate acquired in settling claims shall be included in caption 10,
"Other Assets," or shown separately, if materiaL.
(4) Include under subcaption (g) investments maturing within one year, such as commercial
paper maturing within one year, marketable certificates of deposit maturing within one year,
savings accounts, time deposits and other cash accounts and cash equivalents earning
interest. State in a note any amounts subject to withdrawal or usage restrictions. (See

§210.5-02.1.)
(5) State separately in a note the amount of any class of investments included in subcaption
(f) if such amount exceeds ten percent of stockholders' equity.

(6) State in a note the name of any person in which the total amount invested in the person
and its affiliates, included in the above subcaptions, exceeds ten percent of total stockholders'
equity. For this disclosure, include in the amount invested in a person and its affiliates the
aggregate of indebtedness and stocks issued by such person and its affliates that is included
in the several subcaptions above, and the amount of any real estate included in subcpption
(d) that was purchased or acquired from such person and its affiliates. Indicate the amount
included in each subcaption. An investment in bonds and notes of the United States
Government or of a United States Government agency or authority which exceeds ten percent
of total stockholders' equity need not be reported.
(7) State in a note the amount of investments included under each subcaption (a), (c), (d) and
(f) which have been non-income producing for the twelve months preceding the balance sheet

date.

2. Cash. Cash on hand or on deposit that is restricted as to withdrawal or usage shall be
disclosed separately on the balance sheet. The provisions of any restrictions shall be
described in a note to the financial statements. Restrictions may include legally restricted
deposits held as compensating balances against short-term borrowing arrangements,
contracts entered into with others, or company statements of intention with regard to particular
deposits. In cases where compensating balance arrangements exist but are not agreements
which legally restrict the use of cash amounts shown on the balance sheet, describe in the
notes to the financial statements these arrangements and the amount involved, if
determinable, for the most recent audited balance sheet required. Compensating balances
that are maintained under an agreement to assure future credit availability shall be disclosed
in the notes to the financial statements along with the amount and terms of the agreement.
3. Securities and indebtedness of related parties. State separately (a) investments in related

parties and (b) indebtedness from such related parties. (See §210A-08(k).)

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4. Accrued investment income.

5. Accounts and notes receivable. Include under this caption (a) amounts receivable from
agents and insureds, (b) uncollected premiums and (c) other receivables. State separately in
the balance sheet or in a note thereto any category of other receivable which is in excess of
five percent of total assets. State separately in the balance sheet or in a note thereto the
amount of allowance for doubtful accounts that was deducted.

6. Reinsurance recoverable on paid losses.
7. Deferred policy acquisition costs.
8. Property and equipment. (a) State the basis of determining the amounts.
(b) State separately in the balance sheet or in a note thereto the amount of accumulated
depreciation and amortization of property and equipment.
9. Title plant.

10. Other assets. State separately in the balance sheet or in a note thereto any other asset
the amount of which. exceeds five percent of total assets.

11. Assets held in separate accounts. Include under this caption the aggregate amount of
assets used to fund liabilities related to variable annuities, pension funds and similar activities.
The aggregate liabilty shall be included under caption 18. Describe in a note to the financial
statements the general nature of the activities being reported on in the separate accounts.
12. Total assets.

Liabilties and Stockholders' Equity
13. Policy liabilties and accruals. (a) State separately in the balance sheet the amounts of (1)
future policy benefits and losses, claims and loss expenses, (2) unearned preminums and (3)
other policy claims and benefits payable.
(b) State in a note to the financial statements the basis of assumptions (interest rates,
mortaliy, withdrawals)
for future policy benefits and claims and settements which are stated
at present value.

(c) Information shall be given in a note concerning the general nature of reinsurance
transactions, including a description of the significant types of reinsurance agreements
executed. The information provided shall include (1) the nature of the contingent liability in
connection with insurance ceded and (2) the nature and effect of material nonrecurring
reinsurance transactions.
14. Other policyholders' funds. (a) Include amounts of supplementary contracts without life
contingencies, policyholders' dividend accumulations, undistributed earnings on participating
business, dividends to policyholders and retrospective return premiums (not included
elsewhere) and any similar items. State separately in the balance sheet or in a note thereto
any item the amount of which is in excess of five percent of total
liabilities.

(b) State in a noté to the financial statements the relative significance of participating
insurance expressed as percentages of (1) insurance in force and (2) premium income; and

the method by which earnings and dividends allocable to such insurance is determined.

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15. Other liabilties. (a) Include under this caption such items as accrued payrolls, accrued
interest and taxes. State separately in the balance sheet or in a note thereto any item
included in other liabilties the amount of which exceeds five percent of total
liabilities.

(b) State separately in the balance sheet or in a note thereto the amount of (1) income taxes
payable and (2) deferred income taxes. Disclose separately the amount of deferred income
taxes applicable to unrealized appreciation of equity securities.
16. Notes payable, bonds, mortgages and similar obligations, including capitalized leases. (a)
State separately in the balance sheet the amounts of (1) short-term debt and (2) long-term
debt including capitalized leases.

(b) The disclosure required by §21 0.5-02.19(b) shall be given if the aggregate of short-term
borrowings from banks, factors and other financial institutions and commercial paper issued
exceeds five percent of total
liabilities.

(c) The disclosure requirements of §210.5-02.22 shall be followed for long-term debt.
17.

Indebtedness to related parties. (See §210A-o.8(k).)

18. Liabilties related to separate accounts. (See caption 11.)

19. Commitments and contingent liabilties.
Minority Interests

20. Minority interests in consolidated subsidiaries. The disclosure requirements of §21 0.502.27 shall be followed.
Redeemable Preferred Stocks

21 . Preferred stocks subject to mandatory redemption requirements or whose redemption is
outside the control of the issuer. The classification and disclosure requirements of §21 0.502.28 shall be followed.

Nonredeemable Preferred Stocks

22. Preferred stocks which are not redeemable or are redeemable solely at the option of the
issuer. The classification and disclosure requirements of §210.5-02.29 shall be followed.

Common Stocks
23. Common stocks. The classification and disclosure requirements of §21 0.5-02.30 shall be
followed.
Other Stockholders' Equity

24. Other stockholders' equity. (a) Separate captions shall be shown for (1) additional paid-in
capital, (2) other additional capital, (3) unrealized appreciation or depreciation of equity
securities less applicable deferred income taxes, (4) retained earnings (i) appropriated and (ii)
unappropriated. (See §21 OA-08(e).) Additional paid-in capital and other additional capital
may be combined with the stock caption to which they apply, if appropriate.
(b) The classification and disclosure requirements of §210.5-02.31

(b) and (c) shall be

followed for (1) dating and effect of a quasi-reorganization and (2) summaries of each

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stockholder's equity account.
(c) State in a note the following information separately for (1) life insurance legal entities, and
(2) property and liability insurance legal entities: the amount of statutory stockholders' equity
as of the date of each balance sheet presented and the amount of statutory net income or
loss for each period for which an income statement is presented.
25. Total

liabilties and stockholders' equity.

(46 FR 54335, Nov. 2,1981, as amended at 50 FR 25215, June 18,1985)

§ 210.7-04 Income statements.

i:JQR
The purpose of this rule is to indicate the various items which, if applicable, should appear on the face of
the income statements and in the notes thereto filed for persons to whom this article pertains. (See

§210.4-01(a).)

Revenues
1. Premiums. Include premiums from reinsurance assumed and deduct premiums on
reinsurance ceded. Where applicable, the amounts included in this caption should represent
premiums earned.

2. Net investment income. State in a note to the financial statements, in tabular form, the
amounts of (a) investment income from each category of investments listed in the subcaptions
total investment income, (b) total investment
of §210.7-03.1 that exceeds five percent of
income, (c) applicable expenses, and (d) net investment income.
3. Realized investment gains and losses. Disclose the following amounts:

(a) Net realized investment gains and losses, which shall be shown separately regardless of

size.

(b) Indicate in a footnote the registrant's policy with respect to whether investment income and
realized gains and losses allocable to policyholders and separate accounts are included in the
investment income and realized gain and loss amounts reported in the income statement. If
the income statement includes investment income and realized gains and losses allocable to
policyholders and separate accounts, indicate the amounts of such allocable investment
income and realized gains and losses and the manner in which the insurance enterprise's
obligation with respect to allocation of such investment income and realized gains and losses
is otherwise accounted for in the financial statements.

(c) The method followed in determining the cost of investments sold (e.g., "average cost,"
"first-in, first-out," or "identified certificate") shall be disclosed.

(d) For each period for which an income statement is filed, include in a note an analysis of
realized and unrealized investment gains and losses on fixed maturities and equity securities.
For each period, state separately for fixed maturities (see §21 0.7-03.1 (a)) and for equity
securities (see §210.7-03.1 (b)) the following amounts:
(1) Realized investment gaihs and losses, and

(2) The change during the period in the difference between value and cost.

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The change in the difference between value and cost shall be given for both categories of
investments even though they may be shown on the related balance sheet on a basis other
than value.
4. Other income. Include all revenues not included in captions 1 and 2 above. State
separately in the statement any amounts in excess of five percent of total revenue, and
disclose the nature of the transactions from which the items arose.
Benefits, Losses and Expenses

5. Benefits, claims, losses and settement expenses.
6. Policyholders'

share of earnings on participating policies, dividends and similar items. (See

§210.7-03.14(b).)
7. Underwriting, acquisition and insurance expenses. State separately in the income
statement or in a note thereto (a) the amount included in this caption representing deferred
policy acquisition costs amortized to income during the period, and (b) the amount of other
operating expenses. State separately in the income statement any material amount included
in all other operating expenses.
8. Income or loss before income tax expense and appropriate items below.

9. Income tax expense. Include under this caption only taxes based on income. (See §210.408(g).)
10. Minority interest in income of consolidated subsidiaries.

11. Equity in earnings of unconsolidated subsidiaries and 50% or less owned persons. State,
parenthetically or in a note, the amount of dividends received from such persons. If justified by
the circumstances, this item may be presented in a different position and a different manner.
(See §210.4-01(a).)

12. Income or loss from continuing operations.

13. Discontinued operations.
14. Income or
loss before extraordinary items and cumulative effects of changes in
accounting principles.

15. Extraordinary items, less applicable tax.

16. Cumulative effects of changes in accounting principles.
17. Net income or loss.
18. Earnings per share data.
(46 FR 54335, Nov. 2, 1981, as amended at 57 FR 45293, Oct. 1, 1992)

§ 210.7-05 What schedules are to be filed.

(¡top

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(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, ill and V shall be fied as ofthe date and for periods specified in the schedule.
(b) When information is required in schedules for both the registrant and the registrant and its
subsidiaries consolidated it may be presented in the form of a single schedule: Provided, That items
pertaining to the registrant are shown separately and that such single schedule affords a properly
summarized presentation of the facts. If the information required by any schedule (including the notes
thereto) may be shown in the related financial statement or in a note thereto without making such
statement unclear or confusing, that procedure may be followed and the schedule omitted.
(c) The schedules shall be examined by the independent accountant.

Schedule I-Summary 'of investments-other than investments in related parties. The
schedule prescribed by §21 0.12-15 shall be filed in support of caption 1 of the most recent
audited balance sheet.
Schedule II-Condensed financial information of registrant. The schedule prescribed by
§210.12-04 shall be filed when the restricted net assets (§210A.08(e)(3)) of consolidated
subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently
completed fiscal year. For purposes of the above test, restricted net assets of consolidated
subsidiaries shall mean that amount of the registrant's proportionate share of net assets of
consolidated subsidiaries (after intercompany eliminations) which as of the end of the most
recent fiscal year may not be transferred to the parent company by subsidiaries in the form of
loans, advances or cash dividends without the consent of a third party ( i.e. , lender,
regulatory agency, foreign government, etc.). Where restrictions on the amount of funds which
may be loaned or advanced differ from the amount restricted as to transfer in the form of cash
dividends, the amount least restrictive to the subsidiary shall be used. Redeemable preferred
stocks (§210.7-03.21) and minority interests shall be deducted in computing net assets for
purposes of this test.

Schedule II-Supplementary insurance information. The schedule prescribed by §210.12-16
shall be filed giving segment detail in support of various balance sheet and income statement
captions. The required balance sheet information shall be presented as of the date of each
audited balance sheet fied, and the income statement information shall be presented for each
period for which an audited income statement is required to be filed, for each person or group.

Schedule IV-Reinsurance. The schedule prescribed by §21 0.12-17 shall be filed for
reinsurance ceded and assumed.

Schedule V-Valuation and qualifying accounts. The schedule prescribed by §210.12-09
shall be fied in support of valuation and qualifying accounts included in the balance sheet

(see §210A-02).
Information Concerning Property-Casualty Insurance Operations.
Schedule VI-Supplemental
The information required by §21 0.12-18 shall be presented as of the same dates and for the
same periods for which the information is reflected in the audited consolidated financial
statements required by §§21 0.3-01 and 3-02. The schedule may be omitted if reserves for
unpaid property-casualty claims and claim adjustment expenses of the registrant and its
consolidated subsidiaries, its unconsolidated subsidiaries and its 50%-or-less-owned equity
basis investees did not in the aggregate, exceed one-half of common stockholders' equity of
the registrant and its consolidated subsidiaries as of the beginning of the fiscal year. For

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purposes of this test, only the proportionate share of the registrant and its other subsidiaries in
the reserves for unpaid claims and claim adjustment expenses of 50%-or-less-owned equity
investees taken in the aggregate after intercompany eliminations shall be taken into account.

Article 12-Form and Content of Schedules (17 CFR 210)
(Secs. 7 and 19a of

the Securities Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); secs. 12, 13, 14, 15(d), and

23(a) of the Securities Exchange Act of 1934, 15 U.S.C. 78/, 78m, 78n, 780(d), 78w(a), secs. 5(b), 10
the Public Utility
Holding Company Act, 15 U.S.C. 7ge(a), 79n, 791(a); secs. 8, 20, 30,
the Investment Company Act of 1940,15 U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c),
80a-37(a); secs. 6, 7, 8, 10, 19(a))

(a), 14, 20(a) of
31(c), 38(a) of

(46 FR 54335, Nov. 2,1981, as amended at 47 FR 29837, July 9,1982; 49 FR 47598, Dec. 6,1984; 59
FR 65637, Dec. 20, 1994)

Article 8 Financial Statements of Smaller Reporting Companies

(¡JOP
Source: 73 FR 953, Jan. 4, 2008, unless otherwise noted.

§ 210.8-01 Preliminary Notes to Article 8.

(¡JOP
Sections 210.8-01 to 210.8-08 shall be applicable to financial statements filed for smaller reporting
companies. These sections are not applicable to financial statements prepared for the purposes of Item
17 or Item 18 of Form 20-F.

Note 1 to §21 0.8: Financial statements of a smaller reporting company, as defined by §229.1 0
(f)( 1) of this chapter, its predecessors or any businesses to which the smaller reporting
company is a successor shall be prepared in accordance with generally accepted accounting
principles in the United States.

Note 2 to §210.8: Smaller reporting companies electing to prepare their financial statements
with the form and content required in this article need not apply the other form and content
requirements in Regulation S-X with the exception of the following:
a. The report and qualifications of the independent accountant shall comply with the
requirements of Article 2 of this part;

b. The description of accounting policies shall comply with Article 4-08(n) of this part; and
c. Smaller reporting companies engaged in oil and gas producing activities shall follow the
financial accounting and reporting standards specified in Article 4-10 of this part with respect
to such activities.

To the extent that Article 11-01 of this part (Pro Forma Presentation Requirements) offers
enhanced guidelines for the preparation, presentation and disclosure of pro forma financial
information, smaller reporting companies may wish to consider these items.

Note 3 to §210.8: Financial statements for a subsidiary of a smaller reporting company that
issues securities guaranteed by the smaller reporting company or guarantees securities
issued by the smaller reporting company must be presented as required by §210.3-10,
except that the periods presented are those required by §21 0.8-02.

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Note 4 to §21 0.8: Financial statements for a smaller reporting company's affiliates whose
securities constitute a substantial portion of the collateral for any class of securities registered
or being registered must be presented as required by §210.3-16, except that the periods
presented are those required by §210.8-02.

Note 5 to §210.8: The Commission, where consistent with the protection of investors, may
permit the omission of one or more of the financial statements or the substitution of
appropriate statements of comparable character. The Commission by informal written notice
may require the filing of other financial statements where necessary or appropriate.
Note 6 to §21 0.8: Section 210.4-01 (a)(3) shall apply to the preparation offinancial statements
of smaller reporting companies.

§ 210.8-02 Annual financial statements.
(¡. top

Smaller reporting companies shall file an audited balance sheet as of the end of each of the most recent
two fiscal years, or as of a date within 135 days if the issuer has existed for a period of less than one
fiscal year, and audited statements of income, cash flows and changes in stockholders' equity for each
of the two fiscal years preceding the date of the most recent audited balance sheet (or such shorter
period as the registrant has been in business).

§ 210.8-03 Interim financial statements.
(¡ toP

Interim financial statements may be unaudited; however, before filing, interim financial statements
this chapter) must be reviewed by an
independent public accountant using professional standards and procedures for conducting such
reviews, as established by generally accepted auditing standards, as may be modified or supplemented
by the Commission. If, in any filing, the issuer states that interim financial statements have been
reviewed by an independent public accountant, a report of the accountant on the review must be fied
with the interim financial statements. Interim financial statements shall include a balance sheet as of the
end of the issuer's most recent fiscal quarter, a balance sheet as of the end of the preceding fiscal year,
and income statements and statements of cash flows for the interim period up to the date of such
balance sheet and the comparable period of the preceding fiscal year.
included in quarterly reports on Form 10-Q (§249.308(a) of

(a) Condensed format. Interim financial statements may be condensed as follows:
(1) Balance sheets should include separate captions for each balance sheet component presented in
the annual financial statements that represents 10% or more of total assets. Cash and retained earnings
should be presented regardless of relative significance to total assets. Registrants that present a
classified balance sheet in their annual financial statements should present totals for current assets and

current liabilties.
(2) Income statements should include net sales or gross revenue, each cost and expense category
presented in the annual financial statements that exceeds 20% of sales or gross revenues, provision for
income taxes, discontinued operations, extraordinary items and cumulative effects of changes in
accounting principles or practices. (Financial institutions should substitute net interest income for sales
for purposes of determining items to be disclosed.) Dividends per share should be presented.
(3) Cash flow statements should include cash flows from operating, investing and financing activities as
well as cash at the beginning and end of each period and the increase or decrease in such balance.
(4) Additional

line items may be presented to facilitate the usefulness of

the interim financial statements,

including their comparabilty with annual financial statements.

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(b) Disclosure required and additional instructions as to content-(1) Footnotes. Footnote and other
disclosures should be provided as needed for fair presentation and to ensure that the financial
statements are not misleading.
(2) Material subsequent events and contingencies. Disclosure must be provided of material subsequent
events and material contingencies notwithstanding disclosure in the annual financial statements.

Significant equity investees. Sales, gross profi, net income (loss) from continuing operations and net
income must be disclosed for equity investees that constitute 20% or more of a registrant's consolidated
assets, equity or income from continuing operations.

(3)

(4) Significant dispositions and purchase business combinations. If a significant disposition or purchase
business combination has occurred during the most recent interim period and the transaction required
the filing of a Form 8-K (§249.308 of this chapter), pro forma data must be presented that reflects
revenue, income from continuing operations, net income and income per share for the current interim
period and the corresponding interim period of the preceding fiscal year as though the transaction
occurred at the beginning of the periods.
(5) Material accounting changes. Disclosure must be provided of the date and reasons for any material
accounting change. The registrant's independent accountant must provide a letter in the first Form 10-Q

(§249.308a of this chapter) fied after the change indicating whether or not the change is to a preferable
method. Disclosure must be provided of any retroactive change to prior period financial statements,
including the effect of any such change on income and income per share.

(6) Development stage companies. A registrant in the development stage must provide cumulative

financial information from inception.

Instruction 1 to §210.8-03: Where Article 8 is applicable to a Form 10-Q and the interim
period is more than one quarter, income statements must also be provided for the most recent
interim quarter and the comparable quarter of the preceding fiscal year.

Instruction 2 to §210.8-03: Interim financial statements must include all adjustments that, in
the opinion of management, are necessary in order to make the financial statements not
misleading. An affirmative statement that the financial statements have been so adjusted
must be included with the interim financial statements.

§ 210.8-04 Financial statements of businesses acquired or to be acquired.
(¡JQR
(a) If a business combination accounted for as a "purchase" has occurred or is probable, financial
statements of the business acquired or to be acquired shall be furnished for the periods specified in
paragraph (c) of this section:
(1) The term "purchase" encompasses the purchase of an interest in a business accounted for by the

equity method.

(2) Acquisitions of a group of related businesses that are probable or that have occurred subsequent to
the latest fiscal year end for which audited financial statements of the issuer have been fied shall be
treated as if they are a single business combination for purposes of this section. The required financial
statements of related businesses may be presented on a combined basis for any periods they are under
common control or management. A group of businesses is deemed to be related if:
(i) They are under common control or management;

(ii) The acquisition of one business is conditioned on the acquisition of each other business; or
(iii) Each acquisition is conditioned on a single common event.

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(3) Annual financial statements required by this rule shall be audited. The form and content of the
financial statements shall be in accordance with §§21

0.8-02 and 8-03.

(b) The periods for which financial statements are to be presented are determined by comparison of the
most recent annual financial statements of the business acquired or to be acquired and the smaller
reporting company's most recent annual
financial statements filed at or before the date of acquisition to
evaluate each of the following conditions:
(1) Compare the smaller reporting company's investments in and advances to the acquiree to the total
consolidated assets of the smaller reporting company as of the end of the most recently completed fiscal

year.
the total assets (after intercompany

(2) Compare the smaller reporting company's proportionate share of
eliminations) of

the acquiree to the total consolidated assets of

the smaller reporting company as of

end of the most recently completed fiscal year.

the

(3) Compare the smaller reporting company's equity in the income from continuing operations before
income taxes, extraordinary items and cumulative effect of a change in accounting principles of the
acquiree to such consolidated income of the smaller reporting company for the most recently completed
fiscal year.

Computational note to §210.8-04(b): For purposes of making the prescribed income test the
following guidance should be applied: If income of the smaller reporting company and its
subsidiaries consolidated for the most recent fiscal year is at least 10 percent lower than the
average of the income for the last five fiscal years, such average income should be
substituted for purposes of the computation. Any loss years should be omitted for purposes of
computing average income.

(c)( 1) If none of the conditions specified in paragraph (b) of this section exceeds 20%, financial
statements are not required. If any of the conditions exceed 20%, but none exceeds 40%, financial

statements shall be furnished for the most recent fiscal year and any interim periods specified in §210.803. If any of the conditions exceed 40%, financial statements shall be furnished for the two most recent
fiscal years and any interim periods specified in §210.8-03.

the acquired business is not required when the smaller
reporting company's most recent audited balance sheet filed is for a date after the acquisition was

(2)The separate audited balance sheet of

consummated.
(3) If the aggregate impact of individually insignificant businesses acquired since the date of the most
recent audited balance sheet filed for the registrant exceeds 50%, financial statements covering at least
the substantial majority of the businesses acquired shall be furnished. Such financial statements shall be

for the most recent fiscal year and any interim periods specified in §210.8-03.
this chapter (Regulation C) and
proxy statements need not include separate financial statements of the acquired or to be acquired
business if it does not meet or exceed any of the conditions specified in paragraph (b) of this section at
the 50 percent level, and either:
(4) Registration statements not subject to the provisions of §230.419 of

(i) The consummation of the acquisition has not yet occurred; or

(ii) The effective date ofthe registration statement, or mailing date in the case of a proxy statement, is no
more than 74 days after consummation of
the business combination, and the financial statements have
not been fied previously by the registrant.
(5) An issuer that omits from its initial registration statement financial statements of a recently
consummated business combination pursuant to paragraph (c)( 4) of this section shall furnish those

financial statements and any pro forma information specified by §210.8-05 under cover of Form 8-K
(§249.308 of this chapter) no later than 75 days after consummation of the acquisition.

(d) If the smaller reporting company made a significant business acquisition after the latest fiscal year

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end and fied a report on Form 8-K, which included audited financial statements of such acquired
business for the periods required by paragraph (c) of
this section and the pro forma financial information

required by §210.8-5, the determination of significance may be made by using pro forma amounts for
the latest fiscal year in the report on Form 8-K rather than by using the historical amounts of the
registrant. The tests may not be made by "annualizing" data.

(e) 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.

§ 210.8-05 Pro forma financial information.

(lJPP
(a) Pro forma information showing the effects of

the acquisition shall be furnished if

financial statements

of a business acquired or to be acquired are presented.
(b) Pro forma statements should be condensed, in columnar form showing pro forma adjustments and
results, and should include the following:
(1) If the transaction was consummated during the most recent fiscal year or subsequent interim period,
pro forma statements of income reflecting the combined operations of the entities for the latest fiscal
year and interim period, if any; or

(2) If consummation of the transaction has occurred or is probable after the date of the most recent
balance sheet required by §210.8-02 or §210.8-03, a pro forma balance sheet giving effect to the
combination as of the date of the most recent balance sheet. For a purchase, pro forma statements of
income reflecting the combined operations of the entities for the latest fiscal year and interim period, if
any, are required.

§ 210.8-06 Real estate operations acquired or to be acquired.

(lJPP
If, during the period for which income statements are required, the smaller reporting company has
acquired one or more properties that in the aggregate are significant, or since the date of the latest

balance sheet required by §210.8-02 or §210.8-03, has acquired or proposes to acquire one or more
properties that in the aggregate are significant, the following shall be furnished with respect to such

properties:
(a) Audited income statements (not including earnings per unit) for the two most recent years, which
shall exclude items not comparable to the proposed future operations of the property such as mortgage
interest, leasehold rental, depreciation, corporate expenses and federal and state income taxes;
Provided, however, that such audited statements need be presented for only the most recent fiscal year
if:

(1) The propert is not acquired from a related part;
(2) Material factors considered by the smaller reporting company in assessing the propert are
described with specificity in the registration statement with regard to the property, including source of
revenue (including, but not limited to, competition in the rental market, comparative rents, occupancy
rates) and expenses (including but not limited to, utilities, ad valorem tax rates, maintenance expenses,
and capital improvements anticipated); and
(3) The smaller reporting company indicates that, after reasonable inquiry, it is not aware of any material
factors relating to the specific property other than those discussed in response to paragraph (a)(2) of this
section that would cause the reported financial information not to be necessarily indicative of future

operating results.
(b) If

the propert wil be operated by the smaller reporting company, a statement shall be furnished

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showing the estimated taxable operating results of the smaller reporting company based on the most
recent twelve-month period, including such adjustments as can be factually supported. If the propert
will be acquired subject to a net lease, the estimated taxable operating results shall be based on the rent
to be paid for the first year of the lease. In either case, the estimated amount of cash to be made
available by operations shall be shown. Disclosure must be provided of
the principal assumptions that
have been made in preparing the statements of estimated taxable operating results and cash to be
made available by operations.
(c) If appropriate under the circumstances, a table should be provided that shows, for a limited number
of years, the estimated cash distribution per unit, indicating the portion reportable as taxable income and

taxable net

the portion representing a return of capital with an explanation of annual variations, if any. If

greater lhan the cash available for distribution per unit, that fact and the
approximate year of occurrence shall be stated, if significant.
income per unit will be

§ 210.8-07 Limited partnerships.
(i top

the

(a) Smaller reporting companies that are limited partnerships must provide the balance sheets of

general partners as described in paragraphs (b) through (d) of this section.
(b) Where a general partner is a corporation, the audited balance sheet of

the corporation as of

the end

of its most recently completed fiscal year must be filed. Receivables, other than trade receivables, from
affliates of the general partner should be deducted from shareholders' equity of the general partner.

Where an affliate has committed itself to increase or maintain the general partner's capital, the audited
balance sheet of such affliate must also be presented.
(c) Where a general partner is a partnership, there shall be fied an audited balance sheet of such
partnership as of the end of its most recently completed fiscal year.
(d) Where the general partner is a natural person, there shall be fied, as supplemental information, a
balance sheet of such natural person as of a recent date. Such balance sheet need not be audited. The
assets and liabilties should be carried at estimated fair market value, with provisions for estimated
income taxes on unrealized gains. The net worth of such general partner(s), based on such balance
sheet(s), singly or in the aggregate, shall be disclosed in the registration statement.

§ 210.8-08 Age of financial statements.
(i top

At the date of filing, financial statements included in filings other than fiings on Form 10-K must be not
less current than the financial statements that would be required in Forms 1 Q-K and 10-Q if such
reports were required to be fied. If required financial statements are as of a date 135 days or more
before the date a registration statement becomes effective or proxy material is expected to be mailed,
the financial statements shall be updated to include financial statements for an interim period ending
within 135 days of the effective or expected mailing date. Interim financial statements must be prepared
and presented in accordance with paragraph (b) of

this section.

(a) When the anticipated effective or mailing date falls within 45 days after the end of the fiscal year, the
filing may include financial statements only as current as of the end of the third fiscal quarter; Provided,
however, that if the audited financial statements for the recently completed fiscal year are available or
become available before effectiveness or mailng, they must be included in the filing; and

(b) If the effective date or anticipated mailing date falls after 45 days but within 90 days of the end of the
smaller reporting company's fiscal year, the smaller reporting company is not required to provide the
audited financial statements for such year end provided that the following conditions are met:
(1) If the smaller reporting company is a reporting company, all reports due must have been filed;

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Federal Regulations:

(2) For the most recent fiscal year for which audited financial statements are not yet available, the
smaller reporting company reasonably and in good faith expects to report income from continuing
operations before taxes; and
(3) For at least one of the two fiscal years immediately preceding the most recent fiscal year the smaller
reporting company reported income from continuing operations before taxes.

Bank Holding Companies

(¡ltQ
Source: Sections 210.9-01 through 210.9-07 appear at 48 FR 11107, Mar. 16, 1983,
unless otherwise noted.

§ 210.9-01 Application of §§21 0.9-01 to 210.9-07
(¡JQR
This article is applicable to consolidated financial statements filed for bank holding companies and to
any financial statements of banks that are included in filings with the Commission.
§ 210.9-02 General requirement.

(¡tQP
The requirements of the general rules in §§210.1 to 210.4 (Articles 1, 2, 3, 3A and 4) should be complied
with where applicable.

§ 210.9-03 Balance sheets.
(¡JQR
The purpose of this rule is to indicate the various items which, if applicable, should appear on the face of
the balance sheets or in the notes thereto.

Assets
1. Cash and due from banks. The amounts in this caption should include all non

interest

bearing deposits with other banks.
(a) Any withdrawal and usage restrictions (including requirements of the Federal Reserve to
maintain certain average reserve balances) or compensating balance requirements should be

disclosed (see §210.5-02-1).
2. Interest-bearing deposits in other banks.

3. Federal funds sold and securites purchased under resale agreements of similar
arrangements. These amounts should be presented gross and not netted against Federal
funds purchased and securities sold under agreement to repurchase as reported in Caption
13.
4. Trading account assets. Include securities or any other investments held for trading
purposes only.

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5. Other short-term investments.
6. Investment securities Include securities held for investment only. Disclose the aggregate
book value of investment securities; show on the balance sheet the aggregate market value at
the balance sheet date. The aggregate amounts should include securities pledged, loaned or
sold under repurchase agreements and similar arrangements; borrowed securities and
securities purchased under resale agreements or similar arrangements should be excluded.
(a) Disclose in a note the carrying value and market value of securities of (1) the U.S.
Treasury and other U.S. Government agencies and corporations; (2) states of the U.S. and
political subdivisions; and (3) other securities.
7. Loans. Disclose separately (1) total

loans, (2) the related allowance for losses and (3)

unearned income.
(a) Disclose on the balance sheet or in a note the amount of total

loans in each of the

following categories:

(1) Commercial, financial and agricultural

(2) Real estate-construction

(3) Real estate-mortgage
(4) Installment loans to individuals

(5) Lease financing

(6) Foreign
(7) Other (State separately any other loan category regardless of relative size if necessary to
reflect any unusual risk concentration).
(b) A series of categories other than those specified in (a) above may be used to present
details of loans if considered a more appropriate presentation.

(c) The amount of foreign loans must be presented if the disclosures provided by §210.9-05
are required.

(d) For each period for which an income statement is required, furnish in a note a statement of
changes in the allowance for loan losses showing the balances at beginning and end of the
period provision charged to income, recoveries of amounts charged off and losses charged to
the allowance.
(e)(1 )(i) As of each balance sheet date, disclose in a note the aggregate dollar amount of
loans (exclusive of loans to any such persons which in the aggregate do not exceed $60,000
during the latest year) made by the registrant or any of its subsidiaries to directors, executive
officers, or principal holders of equity securities (§21 0.1-02) of the registrant or any of its

significant subsidiaries (§210.1-02), or to any associate of such persons. For the latest fiscal
year, an analysis of activity with respect to such aggregate loans to related parties should be
provided. The analysis should include the aggregate amount at the beginning of the period,
new loans, repayments, and other changes. (Other changes, if significant, should be
explained. )

(ii) This disclosure need not be furnished when the aggregate amount of such loans at the

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balance sheet date (or with respect to the latest fiscal year, the maximum amount outstanding
during the period) does not exceed 5 percent of stockholders equity at the balance sheet

date.
(2) If a significant portion of the aggregate amount of loans outstanding at the end of the fiscal
year disclosed pursuant to (e)(1 )(i) above relates to loans which are disclosed as nonaccrual,
past due, restructured or potential problems (see Item II.C. 1. or 2. of Industry Guide 3,
Statistical Disclosure by Bank Holding Companies), so state and disclose the aggregate
amounts of such loans along with such other information necessary to an understanding of
the effects of the transactions on the financial statements.
(3) Notwithstanding the aggregate disclosure called for by (e)(1) above, if any loans were not
made in the ordinary course of business during any period for which an income statement is
required to be filed, provide an appropriate description of each such loan (see §210A-08(L)
(3)).
(4) Definition of terms. For purposes of this rule, the following definitions shall apply:

Associate means (i) a corporation, venture or organization of which such person is a general
partner or is, directly or indirectly, the beneficial owner of 10 percent or more of any class of
equity securities; (ii) any trust or other estate in which such person has a substantial beneficial
interest or for which such person serves as trustee or in a similar capacity and (Hi) any
member of the immediate family of any of the foregoing persons.

Executive offcers means the president, any vice president in charge of a principal business
unit, division or function (such as loans, investments, operations, administration or finance),
and any other officer or person who performs similar policymaking functions.
Immediate Family means such person's spouse; parents; children; siblings; mothers and
fathers-in-law; sons and daughters-in-law; and brothers and sisters-in-law.
Ordinary course of business means those loans which were made on substantially the same
terms, including interest rate and collateral, as those prevailing at the same time for
comparable transactions with unrelated persons and did not involve more than the normal risk
of collectibility or present other unfavorable features:
8. Premises and equipment.

9. Due from customers on acceptances. Include amounts receivable from customers on
unmatured drafts and bills of exchange that have been accepted by a bank subsidiary or by

a
a bank subsidiary, they should be reported

other banks for the account of a subsidiary and that are outstanding-that is, not held by
subsidiary bank, on the reporting date. (If held by

as "loans" under §210.9-03.7.)
10. Other assets. Disclose separately on the balance sheet or in a note thereto any of the
following assets or any other asset the amount of which exceeds thirty percent of
stockholders equity. The remaining assets may be shown as one amount.

(1) Excess of cost over tangible and identifiable intangible assets acquired (net of
amortization ).

(2) Other intangible assets (net of amortization).

(3) Investments in and indebtness of affiliates and other persons.
(4) Other real estates.

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(a) Disclose in a note the basis at which other real estate is carried. An reduction to fair
market value from the carrying value of the related loan at the time of acquisition shall be
accounted for as a loan loss. Any allowance for losses on other real estate which has been
established subsequent to acquisition should be deducted from other real estate. For each
period for which an income statement is required, disclosures should be made in a note as to
the changes in the allowances, including balance at beginning and end of period, provision
charged to income, and losses charged to the allowance.
11. Total assets.

Liabilities and Stockholders' Equity

Liabilties
12. Deposits. Disclose separately the amounts of non

interest bearing deposits and interest

bearing deposits.
(a) The amount of noninterest bearing deposits and interest bearing deposits in foreign
banking offces must be presented if the disclòsure provided by §210.0-05 are required.
13. Short-term borrowing. Disclosure separately on the balance sheet or in a note, amounts
payable for (1) Federal funds purchased and securities sold under agreements to repurchase;
(2) commercial paper, and (3) other short-term borrowings.
(a) Disclose any unused lines of credit for short-term financing: (§21 0.5-02.19(b)).

14. Bank acceptances outstanding. Disclose the aggregate of unmatured drafts and bills of
exchange accepted by a bank subsidiary, or by some other bank as its agent, less the amount
of such acceptances acquired by the bank subsidiary through discount or purchase.
15. Other liabilities. Disclose separately on the balance sheet or in a note any of the following
liabiliies or any other items which are individually in excess of thirty percent of stockholders'
equity (except that amounts in excess of 5 percent of stockholders' equity should be disclosed
with respect to item (4)). The remaining items may be shown as one amount.

(1) Income taxes payable.
(2) Deferred income taxes.
(3) Indebtedness to affiliates and other persons the investments in which are accounted for by
the equity method.

(4) Indebtedness to directors, executive offcers, and principal holders of equity securities of
the registrant or any of its significant subsidiaries (the guidance in §210.9-03.7(e) shall be
used to identify related parties for purposes of this disclosure).
(5) Accounts payable and accrued expenses.

16. Long-term debt. Disclose in a note the information required by §210.5-02.22.
17. Commitments and contingent liabilities.

18. Minority interest in consolidated subsidiaries. The information required by §21 0.5-02.27
should be disclosed if applicable.

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Redeemable Preferred Stocks
19. Preferred stocks subject to mandatory redemption requirements or whose redemption is
outside the control ofthe issuer. See §210.5-02.28.

Non-redeemable Preferred Stocks
20. Preferred stocks which are not redeemable or are redeemable solely at the option of the
issuer. See §210.5-02.29.
Gammon Stocks

21. Gammon stocks. See §210.5-02.30.
Other Stockholders' Equity

22. Other stockholders' equity. See §210.5-Q2.31.
23. Total

liabilities and stockholders' equity.

(Secs. 7, 19a, and Schedule A (25) and (26) of
(25) and (26); and secs. 12, 13, 14, 15(d), and 23(n) of

the Securities Act of 1933,15 U.S.C. 77g, 77s(a), 77nn
the Securities Exchange Act of 1934,15 U.S.C.

78/, 78m, 78n, 78o(d), 78w(a).

(48 FR 11107, Mar. 16, 1983, as amended at 48 FR 37612, Aug. 19, 1983; 50 FR 25215, June 18,
1985)

§ 210.9-04 Income statements.

(¡jQ
The purpose of this rule is to indicate the various items which, jf applicable, should appear on the face of

the income statement or in the notes thereto.
1. Interest and fees on loans. Include commitment and origination fees, late charges and
current amortization of premium and accretion of discount on loans which are related to or are

an adjustment of the loan interest rate.
2. Interest and dividends on investment securites. Disclosure separately (1) taxable interest
income, (2) nontaxable interest income, and (3) dividends.
3. Trading account interest.

4. Other interest income.

5. Total interest income (total of lines 1 through 4).

6. Interest on deposits.
7. Interest on short-term borrowings.

8. Interest on long-term debt.
9. Total interest expense (total of lines 6 through 8).

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10. Net interest income (line 5 minus line 9).
11 . Provision for loan losses.

12. Net interest income after provision for loan losses.

13. Other income. Disclose separately any of the following amounts, or any other item of other
income, which exceed one percent of the aggregate of total interest income and other income.
The remaining amounts may be shown as one amount, except for investment securities gains
or losses which shall be shown separately regardless of size.
(a) Commissions and fees and fiduciary activities.

(b) Commissions, broker's fees and markups on securities underwriting and other securities
activities.
(c) Insurance commissions, fees and premiums.

(d) Fees for other customer services.
(e) Profit or loss on transactions in securities in dealer trading account.

(f) Equity in earnings of unconsolidated subsidiaries and 50 percent or less owned persons.

(g) Gains or losses on disposition of equity in securities of subsidiaries or 50 percent or less

owned persons.

(h) Investment securities gains or losses. The method followed in determining the cost of
investments sold (e.g., "average cost," "first-in, first-out," or "identified certificate) and related
income taxes s.hall be disclosed.
14. Other expenses. Disclose separately any of the following amounts, or any other item of
other expense, which exceed one percent of the aggregate of total interest income and other
income. The remaining amounts may be shown as one amount.
(a) Salaries and employee benefits.
(b) Net occupancy expense of premises.
(c) Goodwill amortization.

(d) Net cost of operation of other real estate (including provisions for real estate losses, rental
income and gains and losses on sales of real estate).
(e) Minority interest in income of consolidated subsidiaries.
15. Income or loss before income tax expense.

16. Income tax expense. The information required by §210A-08(h) should be disclosed.
17. Income or loss before extraordinary items and cumulative effects of changes in
accounting principles.
18. Extraordinary items, less applicable tax.

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19. Cumulative effects of changes in accounting principles.

20. Net income or loss.
21. Earnings per share data.
(48 FR 11107, Mar. 16, 1983, as amended at 50 FR 25215, June 18,1985)

§ 210.9-05 Foreign activities.

IIJ9P
(a) General requirement. Separate disclosure concerning foreign activities shall be made for each period
in which either (1) assets, or (2) revenue, or (3) income (loss) before income tax expense, or (4) net
income (loss), each as associated with foreign activities, exceeded ten percent of
the corresponding
amount in the related financial statements.
(b) Disclosures. (1) Disclose total identifiable assets (net of valuation allowances) associated with
foreign activities.

(2) For each period for which an income statement is fied, state the amount of revenue, income (loss)
before taxes, and net income (loss) associated with foreign activities. Disclose significant estimates and
assumptions (including those related to the cost of capital) used in allocating revenue and expenses to
foreign activities; describe the nature and effects of any changes in such estimates and assumptions
which have a significant impact on interperiod comparability.
(3) The information in paragraph (b) (1) and (2) of this section shall be presented separately for each
significant geographic area and in the aggregate for all other geographic areas not deemed significant.
(c) Definitions. (1) Foreign activities include loans and other revenues producing assets and transactions
in which the debtor or customer, whether an affliated or unaffliated person, is domiciled outside the
United States.

(2) The term revenue includes the total of the amount reported at §§21 0.9-04.5 and 210.9-04.13.
(3) A significant geographic area is one in which assets or revenue or income before income tax or net
income exceed 10 percent of the comparable amount as reported in the financial statements.

§ 210.9-06 Condensed financial information of registrant.
II toP

The information prescribed by §21 0.12-04 shall be presented in a note to the financial statements when

the restricted net assets (§210A-08(e)(3)) of consolidated subsidiaries exceed 25 percent of
consolidated net assets as of the end of the most recently completed fiscal year. The investment in and
indebtedness of and to bank subsidiaries shall be stated separately in the condensed balance sheet
from amounts for other subsidiaries; the amount of cash dividends paid to the registrant for each of the
last three years by bank subsidiaries shall be stated separately in the condensed income statement from
amounts for other subsidiaries. For purposes of the above test, restricted net assets of consolidated
subsidiaries shall mean that amount of the registrant's proportionate share of net assets of consolidated
subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not
be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends

without the consent of a third part ( i.e. , lender, regulatory agency, foreign government, etc.). Where
restrictions on the amount of funds which may be loaned or advanced differ from the amount restricted
as to transfer in the form of cash dividends, the amount least restrictive to the subsidiary shall be used.
Redeemable preferred stocks (§21
0.5-02.28) and minority interests shall be deducted in computing net
assets for purposes of this test.

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§ 210.9-07 (Reserved)

(¡JQP
Interim Financial Statements

(¡top
§ 210.10-01 Interim financial statements.

(¡JQP
(a) Condensed statements. Interim financial statements shall follow the general form and content of
presentation prescribed by the other sections of this Regulation with the following exceptions:
(1) Interim financial statements required by this rule need only be provided as to the registrant and its
subsidiaries consolidated and may be unaudited. Separate statements of other entities which may
otherwise be required by this regulation may be omitted.
(2) Interim balance sheets shall include only major captions ( i.e. , numbered captions) prescribed by the
applicable sections of this Regulation with the exception of inventories. Data as to raw materials, work in
process and finished goods inventories shall be included either on the face of the balance sheet or in the
notes to the financial statements, if applicable. Where any major balance sheet caption is less than 10%
of total assets, and the amount in the caption has not increased or decreased by more than 25% since
the end of

the preceding fiscal year, the caption may be combined

with others.

(3) Interim statements of income shall also include major captions prescribed by the applicable sections
of this Regulation. When any major income statement caption is less than 15% of average net income
for the most recent three fiscal years and the amount in the caption has not increased or decreased by
more than 20% as compared to the corresponding interim period of the preceding fiscal year, the caption
may be combined with others. In calculating average net income, loss years should be excluded. If
losses were incurred in each of the most recent three years, the average loss shall be used for purposes
of this test. Notwithstanding these tests, §210.4-D2 applies and de minimis amounts therefore need not
be shown separately, except that registrants reporting under §21 0.9 shall show investment securities
gains or losses separately regardless of size.
(4) The statement of cash flows may be abbreviated starting with a single figure of net cash flows from
operating activities and showing cash changes from investing and financing activities individually only
when they exceed 10% of the average of net cash flows from operating activities for the most recent

three years. Notwithstanding this test, §210.4-02 applies and de minimis amounts therefore need not be
shown separately.

(5) The interim financial information shall include disclosures either on the face of the financial
statements or in accompanying footnotes suffcient so as to make the interim information presented not
misleading. Registrants may presume that users of the interim financial information have read or have
access to the audited financial statements for the preceding fiscal year and that the adequacy of
additional disclosure needed for a fair presentation, except in regard to material contingencies, may be
determined in that context. Accordingly, footnote disclosure which would substantially duplicate the
disclosure contained in the most recent annual report to security holders or latest audited financial
statements, such as a statement of significant accounting policies and practices, details of accounts
which have not changed significantly in amount or composition since the end of the most recently
completed fiscal year, and detailed disclosures prescribed by Rule 4-08 of this Regulation, may be
omitted. However, disclosure shall be provided where events subsequent to the end of the most recent
fiscal year have occurred which have a material impact on the registrant. Disclosures should encompass
for example, significant changes since the end of the most recently completed fiscal year in such items
as: accounting principles and practices; estimates inherent in the preparation of financial statements;
status of long-term contracts; capitalization including significant new borrowings or modification of
existing financing arrangements; and the reporting entity resulting from business combinations or
dispositions. Notwithstanding the above, where material contingencies exist, disclosure of such matters

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shall be provided even though a significant change since year end may not have occurred.
(6) Detailed schedules otherwise required by this Regulation may be omitted for purposes of preparing
interim financial statements.

(7) In addition to the financial statements required by paragraphs (a) (2), (3) and (4) of this section,
registrants in the development stage shall provide the cumulative financial statements (condensed to the
same degree as allowed in this paragraph) and disclosures required by Statement of Financial

Accounting Standards No.7, "Accounting and Reporting by Development Stage Enterprises" to the date
of the latest balance sheet presented.

(b) Other instructions as to content. The following additional instructions shall be applicable for purposes
of preparing interim financial statements:
(1) Summarized income statement information shall be given separately as to each subsidiary not

consolidated or 50 percent or less owned persons or as to each group of such subsidiaries or fift

percent or less owned persons for which separate individual or group statements would otherwise be
required for annual periods. Such summarized information, however, need not be furnished for any such
unconsolidated subsidiary or person which would not be required pursuant to Rule 13a-13 or 15d-13 to
file quarterly financial information with the Commission if it were a registrant.
(2) If appropriate, the income statement shall show earnings per share and dividends declared per share
applicable to common stock. The basis of the earnings per share computation shall be stated together
with the number of shares used in the computation. In addition, see Item 601(b)(11) of Regulation S-K,
(17 CFR 229.601 (b)(11)).
(3) If, during the most recent interim period presented, the registrant or any of its consolidated
subsidiaries entered into a business combination treated for accounting purposes as a pooling of
interests, the interim financial statements for both the current year and the preceding year shall reflect
the combined results of the pooled businesses. Supplemental disclosure of the separate results of the
combined entities for periods prior to the combination shall be given, with appropriate explanations.

(4) Where a material business combination accounted for as a purchase has occurred during the current
fiscal year, pro forma disclosure shall be made of the results of operations for the current year up to the
date of the most recent interim balance sheet provided (and for the corresponding period in the
preceding year) as though the companies had combined at the beginning of
the period being reported
on. This pro forma information should as a minimum show revenue, income before extraordinary items
and the cumulative effect of accounting changes, including such income on a per share basis, and net
income and net income per share.
(5) Where the registrant has disposed of any significant segment of its business (as defined in
paragraph 13 of Accounting Principles Board Opinion No. 30) during any of the periods covered by the

interim financial statements, the effect thereof on revenues and net income-total and per share-for all
periods shall be disclosed.
(6) In addition to meeting the reporting requirements specified by existing standards for accounting
changes, the registrant shall state the date of any material accounting change and the reasons for
making it. In addition, for filings on Form 10-Q, a letter from the registrant's independent accountant
shall be filed as an exhibit (in accordance with the provisions of Item 601 of Regulation S-K, 17 CFR
229.601) in the first Form 10-Q after the date of an accounting change indicating whether or not the
change is to an alternative principle which, in the accountant's judgment, is preferable under the
circumstances; except that no letter from the accountant need be fied when the change is made in
response to a standard adopted by the Financial Accounting Standards Board that requires such

change.
(7) Any material retroactive prior period adjustment made during any period convered by the interim

financial statements shall be disclosed, together with the effect thereof upon net income-total and per
share-of any prior period included and upon the balance of retained earnings. If results of operations
for any period presented have been adjusted retroactively by such an item subsequent to the initial
reporting of such period, similar disclosure of the effect of the change shall be made.
(8) Any unaudited interim financial statements fumished shall reflect all adjustments which are, in the

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opinion of management, necessary to a fair statement of the results for the interim periods presented. A
statement to that effect shall be included. Such adjustments shall include, for example, appropriate
estimated provisions for bonus and profit sharing arrangements normally determined or settled at yearend. If all such adjustments are of a normal recurring nature, a statement to that effect shall be made;
otherwise, there shall be furnished information describing in appropriate detail the nature and amount of
any adjustments other than normal recurring adjustments entering into the determination of the results

shown.
(c) Periods to be covered. The periods for which interim financial statements are to be provided in
registration statements are prescribed elsewhere in this Regulation (see §§21

0.3-01 and 3-02). For

filings on Form 10-0, financial statements shall be provided as set forth in this paragraph (c):
(1) An interim balance sheet as of the end of the most recent fiscal quarter and a balance sheet as of the
end of the preceding fiscal year shall be provided. The balance sheet as of the end of the preceding
fiscal year may be condensed to the same degree as the interim balance sheet provided. An interim
balance sheet as of the end of the corresponding fiscal quarter of the preceding fiscal year need not be
provided unless necessary for an understanding of the impact of seasonal fluctuations on the registrant's
financial condition.
(2) Interim statements of income shall be provided for the most recent fiscal quarter, for the period
between the end of the preceding fiscal year and the end of the most recent fiscal quarter, and for the
corresponding periods of the preceding fiscal year. Such statements may also be presented for the
cumulative twelve month period ended during the most recent fiscal quarter and for the corresponding
preceding period.
(3) Interim statements of cash flows shall be provided for the period between the end of the preceding
fiscal year and the end of the most recent fiscal quarter, and for the corresponding period of the
preceding fiscal year. Such statements may also be presented for the cumulative twelve month period
ended during the most recent fiscal quarter and for the corresponding preceding period.
(4) Registrants engaged in seasonal production and sale of a single-crop agricultural commodity may
provide interim statements of income and cash flows for the twelve month period ended during the most
recent fiscal quarter and for the corresponding preceding period in lieu of the year-to-date statements
specified in (2) and (3) above.
(d) Interim review by independent public accountant. Prior to filing, interim financial statements included

in quarterly reports on Form 10-0 (17 CFR 249.308(a)) must be reviewed by an independent public

accountant using professional standards and procedures for conducting such reviews, as established by
generally accepted auditing standards, as may be modified or supplemented by the Commission. If, in
any filing, the company states that interim financial statements have been reviewed by an independent
public accountant, a report of the accountant on the review must be fied with the interim financial

statements.
(e) Filng of other interim financial information in certain cases. The Commission may, upon the informal
written request of the registrant, and where consistent with the protection of investors, permit the
omission of any of the interim financial information herein required or the filing in substitution thereof of
appropriate information of comparable character. The Commission may also by informal written notice
require the fiing of other information in addition to, or in substitution for, the interim information herein
required in any case where such information is necessary or appropriate for an adequate presentation of
the financial condition of any person for which interim financial information is required, or whose financial
information is otherwise necessary for the protection of investors.
(46 FR 12489, Feb. 17, 1981, as amended at 50 FR 25215, June 18, 1985; 50 FR 49533, Dec. 3, 1985;
57 FR 45293, Oct. 1, 1992; 64 FR 73401, Dec. 30, 1999; 73 FR 956, Jan. 4, 2008)
Pro Forma Financial

Information

(¡ toP

Authority: Secs. 210.11-01 to 210.11-03 issued under secs. 7 and 19a of the Securities
Act, 15 U.S.C. 77g, 77s(a), 77aa(25)(26); secs. 12, 13, 14, 15(d), and 23(a) of the Securities

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Exchange Act of 1934, 15 V.S.C. 78 " 78m, 78n, 780(d), 78w(a); secs. 5(b), 10(a), 14, 20(a)
ofthe Public Vtility Holding Company Act, 15 V.S.C. 7ge(a), 79n, 79t(a); secs. 8, 20, 30, 31
the Investment Company Act of 1940,15 V.S.C. 80a-8, 80a-20, 80a-29, 80a-30
(c), 38(a) of
(c), 80a-37(a).

Source: Sections 210.11-01 through 210.11-03 appear at 47 FR 29837, July 9, 1982,
unless otherwise noted.

§ 210.11-01 Presentation requirements.

(¡tQP
(a) Pro forma financial information shall be furnished when any of

the following conditions exist:

(1) During the most recent fiscal year or subsequent interim period for which a balance sheet is required
by §210.3-01, a significant business combination accounted for as a purchase has occurred (for
purposes of these rules, the term "purchase" encompasses the purchase of an interest in a business
accounted for by the equity method);

(2) After the date of the most recent balance sheet fied pursuant to §21 0.3-01, consummation of a
significant business combination to be accounted for by either the purchase method or pooling-ofinterests method of accounting has occurred or is probable;
(3) Securities being registered by the registrant are to be offered to the security holders of a significant
business to be acquired or the proceeds from the offered securities wil be applied directly or indirectly to
the purchase of a specific significant business;
(4) The disposition of a significant portion of a business either by sale, abandonment or distribution to
shareholders by means of a spin-off, split-up or split-off has occurred or is probable and such disposition
is not fully reflected in the financial statements of the registrant included in the filing;
(5) During the most recent fiscal year or subsequent interim period for which a balance sheet is required
by §21 0.3-01, the registrant has acquired one or more real estate operations or properties which in the
aggregate are significant, or since the date of the most recent balance sheet fied pursuant to that
section the registrant has acquired or proposes to acquire one or more operations or properties which in
the aggregate are significant.

(6) Pro forma financial information required by §229.914 is required to be provided in connection with a
roll-up transaction as defined in §229.901(c).
(7) The registrant previously was a part of another entity and such presentation is necessary to reflect
operations and financial position of the registrant as an autonomous entity; or
(8) Consummation of other events or transactions has occurred or is probable for which disclosure of pro
forma financial information would be material to investors.
(b) A business combination or disposition of a business shall be considered significant if:
(1) A comparison of the most recent annual financial statements of the business acquired or to be
acquired and the registrant's most recent annual consolidated financial statements filed at or prior to the
date of acquisition indicates that the business would be a significant subsidiary pursuant to the
conditions specified in §210.1-02(w), substituting 20 percentfor 10 percent each place it appears

therein; or
(2) The business to be disposed of meets the conditions of a significant subsidiary in §210.1-02(w).
(c) The pro forma effects of a business combination need not be presented pursuant to this section if
separate financial statements of the acquired business are not included in the filing.

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(d) For purposes of this rule, the term business should be evaluated in light of the facts and
circumstances involved and whether there is suffcient continuity of the acquired entity's operations prior
to and after the transactions so that disclosure of prior financial information is material to an
understanding of future operations. A presumption exists that a separate entity, a subsidiary, or a
division is a business. However, a lesser component of an entity may also constitute a business. Among
the facts and circumstances which should be considered in evaluating whether an acquisition of a lesser
component of an entity constitutes a business are the following:

(1) Whether the nature of the revenue-producing activity of the component wil remain generally the
same as before the transaction; or
(2) Whether any of the following attributes remain with the component after the transaction:
(i) Physical facilities,

(ii) Employee base,

(iii) Market distribution system,
(iv) Sales force,

(v) Customer base,

(vi) Operating rights,

(vii) Production techniques, or
(viii) Trade names.

(e) This rule does not apply to transactions between a parent company and its totally held subsidiary.

(47 FR 29837, July 9,1982, as amended at 50 FR 49533, Dec. 3,1985; 56 FR 57247, Nov. 8,1991; 61
FR 54514, Oct. 18, 1996)

§ 210.11-02 Preparation requirements.

(¡top
(a) Objective. Pro forma financial information should provide investors with information about the
continuing impact of a particular transaction by showing how it might have affected historical financial
statements if the transaction had been consummated at an earlier time. Such statements should assist
investors in analyzing the future prospects of the registrant because they ilustrate the possible scope of
the change in the registrant's historical financial position and results of operations caused by the

transaction.
(b) Form and content. (1) Pro forma financial information shall consist of a pro forma condensed balance
sheet, pro forma condensed statements of income, and accompanying explanatory notes. In certain
circumstances ( i.e. , where a limited number of pro forma adjustments are required and those
adjustments are easily understood), a narrative description of the pro forma effects of the transaction
may be furnished in lieu of the statements described herein.
(2) The pro forma financial information shall be accompanied by an introductory paragraph which briefly
sets forth a description of (i) the transaction, (ii) the entities involved, and (iii) the periods for which the
pro forma information is presented. In addition, an explanation of what the pro forma presentation shows
shall be set forth.
(3) The pro forma condensed financial information need only include major captions ( i.e. , the numbered
captions) prescribed by the applicable sections of
this Regulation. Where any major balance sheet

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total assets, the caption may be combined with others. When any
major income statement caption is less than 15 percent of average net income of the registrant for the
most recent three fiscal years, the caption may be combined with others. In calculating average net
income, loss years should be excluded unless losses were incurred in each of the most recent three
years, in which case the average loss shall be used for purposes of this test. Notwithstanding these
tests, de minimis amounts need not be shown separately.
caption is less than 10 percent of

(4) Pro forma statements shall ordinarily be in columnar form showing condensed histoncal statements,
pro forma adjustments, and the pro forma results.

(5) The pro forma condensed income statement shall disclose income (loss) from continuing operations
before nonrecurring charges or credits directly attributable to the transaction. Material nonrecurring
charges or credits and related tax effects which result directly from the transaction and which wil be
included in the income of the registrant within the 12 months succeeding the transaction shall be
disclosed separately. It should be clearly indicated that such
charges or credits were not considered in
the pro forma condensed income statement. If the transaction for which pro forma financial information is
presented relates to the disposition of a business, the pro forma results should give effect to the
disposition and be presented under an appropriate caption.
(6) Pro forma adjustments related to the pro forma condensed income statement shall be computed
assuming the transaction was consummated at the beginning of the fiscal year presented and shall
include adjustments which give effect to events that are (i) directly attributable to the transaction, (ii)
expected to have a continuing impact on the registrant, and (iii) factually supportable. Pro forma
adjustments related to the pro forma condensed balance sheet shall be computed assuming the
transaction was consummated at the end of the most recent period for which a balance sheet is required
by §210.3-01 and shall include adjustments which give effect to events that are directly attributable to
the transaction and factually supportable regardless of whether they have a continuing impact or are
nonrecurrng. All adjustments should be referenced to notes which clearly explain the assumptions
involved.

(7) Historical primary and fully diluted per share data based on continuing operations (or net income if
the registrant does not report either discontinued operations, extraordinary items, or the cumulative
effects of accounting changes) for the registrant, and primary and fully diluted pro forma per share data
based on continuing operations before nonrecurring charges or credits directly attributable to the
transaction shall be presented on the face of the pro forma condensed income statement together with
the number of shares used to compute such per share data. For transactions involving the issuance of
securities, the number of shares used in the calculation of the pro forma per share data should be based
on the weighted average number of shares outstanding during the period adjusted to give effect to
shares subsequently issued or assumed to be issued had the particular transaction or event taken place
at the beginning of the period presented. If a convertible security is being issued in the transaction,
consideration should be given to the possible dilution of the pro forma per share data.
(8) If the transaction is structured in such a manner that significantly different results may occur,
additional pro forma presentations shall be made which give effect to the range of possible results.

Instructions: 1. The historical statement of income used in the pro forma financial information
shall not report operations of a segment that has been discontinued, extraordinary items, or
the cumulative effects of accounting changes. If the historical statement of income includes
such items, only the portion of the income statement through "income from continuing
operations" (or the appropriate modification thereof) should be used in preparing pro forma

results.
2. For a purchase transaction, pro forma adjustments for the income statement shall include
amortization of goodwil, depreciation and other adjustments based on the allocated

purchase

price of net assets acquired. In some transactions, such as in financial institution acquisitions,
the purchase adjustments may include significant discounts of the historical cost of the
acquired assets to their fair value at the acquisition date. When such adjustments wil result in
a significant effect on earnings (losses) in periods immediately subsequent to the acquisition
which will be progressively eliminated over a relatively short period, the effect of the purchase
adjustments on reported results of operations for each of the next five years should be

disclosed in a note.

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3. For a disposition transaction, the pro forma financial information shall begin with the
historical financial statements of the existing entity and show the deletion of the business to
be divested along with the pro forma adjustments necessary to arrive at the remainder of the
existing entity. For example, pro forma adjustments would include adjustments of interest

expense arising from revised debt structures and expenses which wil be or have been
incurred on behalf of the business to be divested such as advertising costs, executive salaries

and other costs.
4. For entities which were previously a component of another entity, pro forma adjustments
should include adjustments similar in nature to those referred to in Instruction 3 above.
Adjustments may also be necessary when charges for corporate overhead, interest, or
income taxes have been allocated to the entity on a basis other than one deemed reasonable
by management.
5. Adjustments to reflect the acquisition of real estate operations or properties for the pro
income statement shall include a depreciation charge based on the new accounting
basis for the assets, interest financing on any additional or refinanced debt, and other
appropriate adjustments that can be factually supported. See also Instruction 4 above.

forma

6. When consummation of more than one transaction has occurred or is probable during a
fiscal year, the pro forma financial information may be presented on a combined basis;
however, in some circumstances (e.g., depending upon the combination of probable and
consummated transactions, and the nature of the fiing) it may be more useful to present the
pro forma financial information on a disaggregated basis even though some or all of the
transactions would not meet the tests of significance individually. For combined presentations,
a note should explain the various transactions and disclose the maximum variances in the pro
forma financial information which would occur for any of the possible combinations. If the pro
forma financial information is presented in a proxy or information statement for purposes of
obtaining shareholder approval of one of the transactions, the effects of that transaction must
be clearly set forth.
7. Tax effects, if any, of pro forma adjustments normally should be calculated at the statutory
rate in effect during the periods for which pro forma condensed income statements are
presented and should be reflected as a separate pro forma adjustment.
(c) Periods to be presented. (1) A pro forma condensed balance sheet as of the end of the most recent
period for which a consolidated balance sheet of the registrant is required by §21 0.3-01 shall be filed
unless the transaction is already reflected in such balance sheet.
(2)(i) Pro forma condensed statements of income shall be filed for only the most recent fiscal year and
for the period from the most recent fiscal year end to the most recent interim date for which a balance
sheet is required. A pro forma condensed statement of income may be fied for the corresponding
interim period of the preceding fiscal year. A pro forma condensed statement of income shall not be filed
when the historical income statement reflects the transaction for the entire period.

(ii) For a business combination accounted for as a pooling of interests, the pro forma income statements
(which are in effect a restatement of the historical income statements as if the combination had been
consummated) shall be filed for all periods for which historical income statements of the registrant are

required.
(3) Pro forma condensed statements of income shall be presented using the registrant's fiscal year end.
If the most recent fiscal year end of any other entity involved in the transaction differs from the
registrant's most recent fiscal year end by more than 93 days, the other entity's income statement shall
be brought up to within 93 days of the registrant's most recent fiscal year end, if practicable. This
updating could be accomplished by adding subsequent interim period results to the most recent fiscal
year-end information and deducting the comparable preceding year interim period results. Disclosure
shall be made of the periods combined and of the sales or revenues and income for any periods which
were excluded from or included more than once in the condensed pro forma income statements (e.g., an
interim period that is included both as part of the fiscal year and the subsequent interim period). For
investment companies subject to §§21

0.6-01 to 210.6-10, the periods covered by the pro forma

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statements must be the same.

(4) Whenever unusual events enter into the determination of the results shown for the most recently
completed fiscal year, the effect of such unusual events should be disclosed and consideration should
be given to presenting a pro forma condensed income statement for the most recent twelve-month
period in addition to those required in paragraph (c)(2)(i) above if
the most recent twelve-month period is
more representative of normal operations.

(47 FR 29837, July 9,1982, as amended at 50 FR 49533, Dec. 3,1985)

§ 210.11-03 Presentation of financial forecast.

(¡JOP
(a) A financial forecast may be filed in lieu of the pro forma condensed statements of income required by
§21 0.11-02(b)(1).

(1) The financial forecast shall cover a period of at least 12 months from the latest of (i) the most recent
balance sheet included in the filing or (ii) the consummation date or estimated consummation date of the

transaction.
(2) The forecasted statement of income shall be presented in the same degree of detail as the pro forma
condensed statement of income required by §21 0.11-02(b)(3).
(3) Assumptions particularly relevant to the transaction and effects thereof should be clearly set forth.

(4) Historical condensed financial information of the registrant and the business acquired or to be
acquired, if any, shall be presented for at least a recent 12 month period in parallel columns with the
financial forecast.
(b) Such financial forecast shall be presented in accordance with the guidelines established by the

American Institute of Certified Public Accountants.

(c) Forecasted earnings per share data shall be substituted for pro forma per share data.

(d) This rule does not permit the filing of a financial forecast in lieu of pro forma information required by
generally accepted accounting principles.

Form and Content of Schedules
(¡ top

general

§ 210.12-01 Application of §§210.12-01 to 210.12-29.
(¡ top
These sections prescribe the form and content of

the schedules required by §§21

0.5-04, 210.6-10,

210.6A-05, and 210.7-05.
(59 FR 65637, Dec. 20,1994)
§§ 210.12-02--210.12-03 (Reserved)

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(¡JOR
§ 210.12-04 Condensed financial information of registrant.

(¡JoP
(a) Provide condensed financial information as to financial position, cash flows and results of operations
of the registrant as of the same dates and for the same periods for which audited consolidated financial
statements are required. The financial information required need not be presented in greater detail than
is required for
condensed statements by §210.10-o1(a) (2), (3) and (4); Detailed footnote disclosure
which would normally be included with complete financial statements may be omitted with the exception
of disclosures regarding material contingencies, long-term obligations and guarantees. Descriptions of
significant provisions of the registrant's long-term obligations, mandatory dividend or redemption
requirements of redeemable stocks, and guarantees of the registrant shall be provided along with a fiveyear schedule of maturities of debt. If the material contingencies, long-term obligations, redeemable
stock requirements and guarantees of the registrant have been separately disclosed in the consolidated
statements, they need not be repeated in this schedule.
(b) Disclose separately the amounts of cash dividends paid to the registrant for each of the last three
fiscal years by consolidated subsidiaries, unconsolidated subsidiaries and 50 percent or less owned
persons accounted for by the equity method, respectively.
(46 FR 56180, Nov. 16, 1981, as amended at 57 FR 45293, Oct. 1, 1992)

§ 210.12-05--210.12-08 (Reserved)
(¡JOR
§ 210.12-09 Valuation and qualifying accounts.

(¡ JQP
Column C-Additions I
Column
(1)(2)Charged Charged to
EBalance at to costs
other
Column D- Balance
Column A- beginning
and
accounts- Deductions- at end of
Description 1 of period expenses
describe
describe
period
Column

B-

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

1 List, by major classes, all valuation and qualifying accounts and reserves not included in specific

schedules. Identify each class of valuation and qualifying accounts and reserves by descriptive title.
Group (a) those valuation and qualifying accounts which are deducted in the balance sheet from the
assets to which they apply and (b) those reserves which support the balance sheet caption, Reserves.
Valuation and qualifying accounts and reserves as to which the additions, deduCtions, and balances
were not individually significant may be grouped in one total and in such case the information called for
under columns C and D need not be given.
(37 FR 14602, July 21, 1972. Redesignated and amended at 45 FR 63679, Sept. 25, 1980)

§§ 210.12-10--210.12-11 (Reserved)

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Federal Regulations:

(¡top
for management investment companies

§ 210.12-12 Investments in securities of unaffiliated issuers.

(¡ top
I

COt. A
Cot. B
I
Name of issuer Balance held at close of period.
and title of
Number of shares-principal
issue 1,2

I

Col.C
Value of each item at
close of period.3,4,6,7,8

amount of bonds and notes5

1 Each issue shall be listed separately: Provided, however, that an amount not exceeding five percent of
the total of Column C may be listed in one amount as "Miscellaneous securities," provided the securities
so listed are not restricted, have been held for not more than one year prior to the date of the related
balance sheet, and have not previously been reported by name to the shareholders of the person for
which the schedule is filed or to any exchange, or set forth in any registration statement, application, or
annual report or otherwise made available to the public. If any securities are listed as "Miscellaneous
securities," briefly explain in a footnote what the term represents.

2Categorize the schedule by (i)the type of investment (such as common stocks, preferred stocks,
securities, fixed income securities, government securities, options purchased, warrants, loan
participations and assignments, commercial paper, bankers' acceptances, certificates of deposit, shortterm securities, repurchase agreements, other investment companies, and so forth); and (ii) the related
industry, country, or geographic region of the investment. Short-term debt instruments ( i.e. , debt
instruments whose maturities or expiration dates at the time of acquisition are one year or less) of the
same issuer may be aggregated, in which case the range of interest rates and maturity dates shall be
indicated. For issuers of periodic payment plan certificates and unit investment trusts, list separately: (i)
Trust shares in trusts created or serviced by the depositor or sponsor of this trust; (ii) trust shares in
other trusts; and (iii) securities of other investment companies. Restricted securities shall not be
combined with unrestricted securities of the same issuer. Repurchase agreements shall be stated
separately showing for each the name of the part or parties to the agreement, the date of the
agreement, the total amount to be received upon repurchase, the repurchase date and description of
securities subject to the repurchase agreements.
convertible

3The subtotals for each category of investments, subdivided by business grouping or instrument type,

shall be shown together with their percentage value compared to net assets (§§21 0.6-04.19 or 210.605.4).
4Column C shall be totaled. The total of column C shall agree with the correlative amounts shown on the

related balance sheet.
51ndicate by an appropriate symbol each issue of securities which is non-income producing. Evidences

of indebtedness and preferred shares may be deemed to be income producing if, on the respective last
interest payment date or date for the declaration of dividends prior to the date of the related balance
sheet, there was only a partial payment of interest or a declaration of only a partial amount of the
dividends payable; in such case, however, each such issue shall be indicated by an appropriate symbol
referring to a note to the effect that, on the last interest or dividend date, only partial interest was paid or
partial dividends declared. If, on such respective last interest or dividend date, no interest was paid or no
cash or in kind dividends declared, the issue shall not be deemed to be income producing. Common
shares shall not be deemed to be income producing unless, during the last year preceding the date of
the related balance sheet, there was at least one dividend paid upon such common shares.
61ndicate by an appropriate symbol each issue of restricted securities. State the following in a footnote:

(a) As to each such issue: (1) Acquisition date, (2) carrying value per unit of investment at date of related
balance sheet, e.g., a percentage of current market value of unrestricted securities of the same issuer,
etc., and (3) the cost of such securities; (b) as to each issue acquired during the year preceding the date

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of the related balance sheet, the carrying value per unit of investment of unrestricted securities of the
same issuer at: (1) The day the purchase price was agreed to; and (2) the day on which an enforceable
right to acquire such securities was obtained; and (c) the aggregate value of all restricted securities and
the percentage which the aggregate value bears to net assets.

71ndicate by an appropriate symbol each issue of securities held in connection with open put or call
option contracts or loans for short sales.

8State in a footnote the following amounts based on cost for Federal income tax purposes: (a)
Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax
cost, (b) the aggregate gross unrealized depreciation for all securities in which there is an excess of tax
cost over value, (c) the net unrealized appreciation or depreciation, and (d) the aggregate cost of
securities for Federal income tax purposes.
(47 FR 56843, Dec. 21, 1982, as amended at 69 FR 11262, Mar. 9, 2004)

§ 210.12-12A Investments-securities sold short.

(¡top
(For management investment companies only)

I

CO!. A
Name of issuer

Col.B

I

and title of issue 1

Col.C

I

Balance of short position at close

Value of each open

of period. (number of shares)

short position2

1Each issue shall be listed separately.
2Column C shall be totaled. The total of column C shall agree with the correlative amounts shown on the
related balance sheet.

(47 FR 56844, Dec. 21,1982)

§ 210.12-12B Open option contracts written.
(¡ top

(For management investment companies only)

I

CO!. A
Name of
issuer 1,2

I

CO!. B

Number of
contracts3

I

Col.C
Exercise
price

CO!. D

I

Expiration

date

CO!. E

Value.4

11nformation as to put options shall be shown separately from information as to call options.

20ptions of an issuer where exercise prices or expiration dates differ shall be listed separately.
31f the number of shares subject to option is substituted for number of contracts, the column name shall
reflect that change.

4Column E shall be totaled and shall agree with the correlative amount shown on the related balance

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sheet.
(47 FR 56844, Dec. 21, 1982)

§ 210.12-12C Summary schedule of investments in securities of unaffiliated issuers.

(¡

tOR

Column A

Column B

Name of issuer
and title of

Column C
Balance held at close Value of each item
of period. Number of at close of

issue 1,3,4,5,6

shares-principal

I

I

I

period2,7,9, 10, 11

I

Column D

I

Percentage
value compared
to net assets.

amount of bonds and
notes8

1Categorize the schedule by (a) the type of investment (such as common stocks, preferred stocks,

convertible securities, fixed income securities, government securities, options purchased, warrants, loan
participations and assignments, commercial paper, bankers' acceptances, certificates of deposit, shortterm securities, repurchase agreements, other investment companies, and so forth); and (b) the related

industry, country, or geographic region of the investment.
2The subtotals for each category of investments, subdivided by industry, country, or geographic region,

shall be shown together with their percentage value compared to net assets.

3Except as provided in note 5, list separately the 50 largest issues and any other issue the value of
which exceeded one percent of net asset value of the registrant as of the close of the period. For
purposes of the list (including, in the case of short-term debt instruments, the first sentence of note 4),
aggregate and treat as a single issue, respectively, (a) short-term debt instruments ( i.e. , debt
instruments whose maturities or expiration dates at the time of acquisition are one year or less) of the
same issuer (indicating the range of interest rates and maturity dates); and (b) fully collateralized
repurchase agreements (indicate in a footnote the range of dates of the repurchase agreements, the
total' purchase price of the securities, the total amount to be received upon repurchase, the range of
repurchase dates, and description of securities subject to the repurchase agreements). Restricted and
unrestricted securities of the same issue should be aggregated for purposes of determining whether the
issue is among the 50 largest issues, but should not be combined in the schedule. For purposes of
determining whether the value of an issue exceeds one percent of net asset value, aggregate and treat
as a single issue all securities of anyone issuer, except that all fully collateralized repurchase
agreements shall be aggregated and treated as a single issue. The U.S. Treasury and each agency,

instrumentaliy, or corporation, including each government-sponsored entity, that issues U.S.
government securities is a separate issuer.
41f multiple securities of an issuer aggregate to greater than one percent of net asset value, list each

issue of the issuer separately (including separate listing of restricted and unrestricted securities of the
same issue) except that the following may be aggregated and listed as a single issue: (a) Fixed-income
securities of the same issuer which are not among the 50 largest issues and whose value does not
exceed one percent of net asset value of
the registrant as of
the close of
the period (indicating the range
of interest rates and maturity dates); and (b) U.S. govemment securities of a single agency,
instrumentality, or corporation, which are not among the 50 largest issues and whose value does not
exceed one percent of net asset value of
the registrant as of
the close of
the period (indicating the range
of interest rates and maturity dates). For each category identified pursuant to note 1, group all issues
that are neither separately listed nor included in a group of securities that is listed in the aggregate as a
single issue in a sub-category labeled "Other securities," and provide the information for Columns C and
D.

5Any securities that would be required to be listed separately or included in a group of securities that is
listed in the aggregate as a single issue may be listed in one amount as "Miscellaneous securities,"
provided the securities so listed are eligible to be, and are, categorized as "Miscellaneous securities" in
the registrant's Schedule of Investments in Securities of Unaffliated Issuers required under §210.12-12.
However, if any security that is included in "Miscellaneous securities" would otherwise be required to be

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included in a group of securities that is listed in the aggregate as a single issue, the remaining securities
of that group must nonetheless be listed as required by notes 3 and 4 even if the remaining securities
alone would not otherwise be required to be listed in this manner (e.g., because the combined value of
the security listed in "Miscellaneous securities" and the remaining securities of the same issuer exceeds
one percent of net asset value, but the value of the remaining securities alone does not exceed one
percent of net asset value).
61f any securities are listed as "Miscellaneous securities" pursuant to note 5 or "Other securities"

pursuant to note 4, briefly explain in a footnote what those terms represent.

7Total Column C. The total of column C should equal the total shown on the related balance sheet for

investments in securities of unaffliated issuers.
81ndicate by an appropriate symbol each issue of securities which is non-income producing. Evidences

of indebtedness and preferred shares may be deemed to be income producing if, on the respective last
interest payment date or date for the declaration of dividends prior to the date of the related balance
sheet, there was only a partial payment of interest or a declaration of only a partial amount of the
dividends payable; in such case, however, each such issue shall be indicated by an appropriate symbol
referring to a note to the effect that, on the last interest or dividend date, only partial interest was paid or
partial dividends declared. If, on such respective last interest or dividend date, no interest was paid or no
cash or in kind dividends declared, the issue shall not be deemed to be income producing. Common
shares shall
not be deemed to be income producing unless, during the last year preceding the date of
the related balance sheet, there was at least one dividend paid upon such common shares.
91ndicate by an appropriate symbol each issue of restricted securities. State the following in a footnote:

(a) as to each such issue: (1) Acquisition date, (2) carring value per unit of investment at date of related
balance sheet, e.g., a percentage of current market value of unrestricted securities of the same issuer,
etc., and (3) the cost of such securities; (b) as to each issue acquired during the year preceding the date
of the related balance sheet, the carrying value per unit of investment of unrestricted securities of the
same issuer at: (1) The day the purchase price was agreed to; and (2) the day on which an enforceable
right to acquire such securities was obtained; and (c) the aggregate value of all restricted securities and
the percentage which the aggregate value bears to net assets.
10lndicate by an appropriate symbol each issue of securities held in connection with open put or call

option contracts or loans for short sales.
11 State in a footnote the following amounts based on cost for Federal income tax purposes: (a)

Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax
cost, (b) the aggregate gross unrealized depreciation for all securities in which there is an excess of tax
cost over value, (c) the net unrealized appreciation or depreciation, and (d) the aggregate cost of

securities for Federal income tax purposes.
(69 FR 11262, Mar. 9, 2004)

§ 210.12-13 Investments other than securities.

ItJQ
(For management investment companies only)

Cot. A
Description 1

Col.B
Cot. C
Balance held at close of period- Value of each item at close of
I

quantity2,3,5

period4,6,7

1 List each major category of investments by descriptive title.

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21f practicable, indicate the quantity or measure in appropriate units.

31ndicate by an appropriate symbol each investment which is non-income producing.

41ndicate by an appropriate symbol each investment not readily marketable. The term "investment not
readily marketable" shall include investments for which there is no independent publicly quoted market
and investments which cannot be sold because of restrictions or conditions applicable to the investment
or the company.
51ndicate by an appropriate symbol each investment subject to option. State in a footnote: (a) The

quantity subject to option, (b) nature of option contract, (c) option price, and (d) dates within which

options may be exercised.
6Column C shall be totaled and shall agree with the correlative amount shown on the related balance

sheet.
7Sate in a footnote the following amounts based on cost for Federal income tax purposes: (a) Aggregate

gross unrealized appreciation for all investments in which there is an excess of value over tax cost, (b)
the aggregate gross unrealized depreciation for all investments in which there is an excess of tax cost
over value, (c) the net unrealized appreciation or depreciation, and (d) the aggregate cost of investments
for Federal income tax purposes.

§ 210.12-14 Investments in and advances to affilates.

(¡jQP
(For management investment companies only)

I

Col.Ä

I

CO!. B

Name of issuer Number of
and title of issue shares-principal
or nature of
amount of bonds,
notes and other
indebtedness 1
indebtedness held
at close of period

I

I

I

I

CO!. C

I

Amount of
equity in
net profit
and loss for

the

CO!. D

I

I

Col.E

I

Amount of Value of each
dividends item at close
or
of
interest2,5 period2,3,4,5

period2,6

~redited to
income

1~(1)
1

1(2) Other

I

1(a) List each issue separately and group (1) Investments in majority-owned subsidiaries, segregating

subsidiaries consolidated; (2) other controlled companies; and (3) other affliates. (b) If during the period
there has been any increase or decrease in the amount of investment in and advance to any affliate,
state in a footnote (or if there have been changes to numerous affliates, in a supplementary schedule)
(1) name of each issuer and title of issue or nature of indebtedness; (2) balance at beginning of period;
(3) gross additions; (4) gross reductions; (5) balance at close of period as shown in Column E. Include in
the footnote or schedule comparable information as to affliates in which there was an investment at any
time during the period even though there was no investment at the close of the period of report.
2Give totals for each group. If operations of any controlled companies are different in character from

those of the company, group such affliates (1) within divisions and (2) by type of activities.
3Columns C, D and E shall be totaled. The totals of Column E shall agree with the correlative amount

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shown on the related balance sheet.
4(a) indicate by an appropriate symbol each issue of restricted securities. The information required by

instruction 5 of §210.12-12 shall be given in a footnote. (b) Indicate by an appropriate symbol each
issue of securities subject to option. The information required by instruction 5 of §21 0.12-13 shall be

given in a footnote.
5(a) include in Column D (1) as to each issue held at the close of the period, the dividends or interest

included in caption 1 of the statement of operations. In addition, show as the final item in column D (1)
the aggregate of dividends and interest included in the statement of operations in respect of investments
in affliates not held at the close of the period. The total of this column shall agree with the correlative
amount shown on the related statement of operations.

(b) Include in Column D (2) all other dividends and interest. Explain in an appropriate footnote the
treatment accorded each item.
(c) Indicate by an appropriate symbol all non-cash dividends and explain the circumstances in a

footnote.

(d) Indicate by an appropriate symbol each issue of securities which is non-income producing.
6The information required by column C shall be furnished only as to controlled companies.

(47 FR 56844, Dec. 21,1982)

§ 210.12-15 Summary of investments-other than investments in related parties.

(¡tQP
(For Insurance Companies)

Column A

i

B C Column
I Column
I ColumnDI I
shown in the

i Type of investment
¡Fixed maturities:

I Bonds:
United States Government
and government agencies
and authorities
States, municipalities and
political subdivisions
Foreign governments

Cost1Amount
Value balance
sheet2
i~~
at which

I
I
I
I I I

-~~
I I I

Public utilities I I I

Convertibles and bonds with I I

warrants attached3 ~~

I All other corporate bonds I I I

¡Certificates of deposit I I I
!Redeemable preferred stock ! ! !
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Total fixed maturities

I

IEquity securities:
I
I

Common stocks:
Public utilties

Page 119 of 131

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

I

~~
~~

Banks, trust and insurance

companies
Industrial, miscellaneous and
all other

INonredeemable preferred stocks
I

Total equity securities

IMortgage loans on real estate
IReal estate4
IPolicy loans
IOther long-term investments
¡Short-term investments
¡

Total investments

I

I

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I

I

I

I

I

I

I

I

I

I

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I

10riginal cost of equity securities and, as to fixed maturities, original cost reduced by repayments and
adjusted for amortization of premiums or accrual of discounts.
21f the amount at which shown in the balance sheet is different from the amount shown in either column
B or C, state the reason for such difference. The total of this column should agree with the balance

sheet.
3AII convertibles and bonds with warrants shall be included in this caption, regardless of issuer.
4State separately any real estate acquired in satisfaction of debt.

(46 FR 54337, Nov. 2,1981)

§ 210.12-16 Supplementary insurance information.
(! top

(For insurance companies)

A Column
C ~ E FI~coiumnl
Column G Column
Column IH IColumn
i
I Column
I IB Column
I

I~

policy Other Benefits,
losses,
claims
losses,
Deferred claims and Net and
Future

benefits, policy claims,

Amortization
of deferred
acquisition expenses premiums payable revenue income expenses
policy
cost (caption (caption (caption (caption (caption 2) (caption acquisition
o~
policy and loss Unearned benefits Premium investment settlement

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ITotalSI
I I II III II
13-a-3)

ISegment11 (caption 7)1 13-a-1) 1 13-a-2) I

I

3

1)

5)

costs4

lexp

II

1Segments shown should be the same as those presented in the footnote disclosures called for by
generally accepted accounting principles.

2Does not apply to life insurance or title insurance. This amount should include premiums from
reinsurance assumed, and be net of premiums on reinsurance ceded.
3State the basis for allocation of net investment income and, where applicable, other operating

expenses.
4The total of columns I and J should agree with the amount shown for income statement caption 7.

5Totals should agree with the indicated balance sheet and income statement caption amounts, where a
caption number is shown.

(46 FR 54338, Nov. 2, 1981, as amended at 57 FR 45293, Oct. 1, 1992; 64 FR 1734, Jan. 12, 1999)

§ 210.12-17 Reinsurance.

IIJQP
(For insurance companies)

cOI~mnl
Column C I Column D I COI~mn I Column F I

Percentage
Column A
Life insurance in
fo rce

liability

insurance
Title

I

of amount
assumed to
companies amount2
net3

Assumed

Net

from other

~
i~
-i~~~
~~~-i
i~
i~
I

Life insurance I

Accident and
health
insurance
Property and

I

Gross
amount

companies 1

I

IPremiums:
I

Ceded to
other

insurance

I

I

I

I

I

I

I

I

I

I

Total i~
premiums

I

I

I

i~

I

I

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Indicate in a note any amounts of reinsurance or coinsurance income netted against premiums ceded.

2This Column represents the total of column B less column C plus column D. The total premiums in this
column should represent the amount of premium revenue on the income statement.
3Calculated as the amount in column D divided by amount in column E.

(46 FR 54338, Nov. 2,1981)

§ 210.12-18 Supplemental information (for property-casualty insurance underwriters).

(¡ top
Claims and
claim
adjustment

Reserves Discount,
for unpaid
Deferred claims and deducted
if

any,

expenses
incurred
related to

in
policy
claim
Net
(1)
(2)
column
Affilation with acquisition adjustment
Unearned Earned investment Current Prior
registrant
costs
expenses
C4
premiums premiums income
year years

Am

of
a'c

Column A

I Column B 1 Column C 1 Column 01 Column E I Column F 1 Column G l~col~mnl~

I

(a)
Consølidated
property-

casualty
entities2

.

(b)

Unconsolidated
propertycasualty
subsidiaries2,3
(c)

Proportionate

share of

registrant and
its subsidiaries'
50%-or-lessowned
propertycasualty equity

investees2,3
1
Information included in audited financial statements, including other schedules, need not be repeated in
this schedule. Columns B, C, D, and E are as of the balance sheet dates, columns F, G, H, I, J, and K
are for the same periods for which income statements are presented in the registrant's audited
consolidated financial statements.

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2Present combined or consolidated amounts, as appropriate for each category, after intercompany

eliminations.
31nformation is not required here for 50%-or-less-owned equity investees that file similar information with
th Commission as registrants in their own right, if that fact and the name of the affliated registrant is
stated. If ending reserves in any category (a), (b), or (c) above is less than 5% of
the total reserves

otherwise required to be reported in this schedule, that category may be omitted and that fact so noted.
If the amount of the reserves attributable to 50%-or-less-owned equity investors that fie this information
as registrants in their own right exceeds 95% of the total category (c) reserves, information for the other
50%-or-less-owned equity investees need not be provided.
4Disclose in a footnote to this schedule the rate, or range of rates, estimated if

necessary, at which the

discount was computed for each category.
(49 FR 47599, Dec. 6, 1984)

for face-amount certificate investment companies

Source:Sectíons 210.12-21 to 210.12-41 appear at 16 FR 348, Jan. 13, 1951, unless otherwise noted.
Redesignated at 45 FR 63679, Sept. 25, 1980.

§ 210.12-21 Investments in securities of unaffilated issuers.

(l

JOD

Column B-Balance held
at close of period.

Column ÄColumn DName of
Number of sharesColumn C- Value of each
issuer and title principal amount of bonds Cost of
item at close of
of issue 1
and notes2
each item3,4
period3,5
I

I

I

I

I

I

I

I

I

I

I

I

1 (a) The required information is to be given as to all securities held as of the close of the period of

report. Each issue shall be listed separately.
(b) Indicate by an appropriate symbol those securities which are non-income-producing securities.
Evidences of indebtedness and preferred shares may be deemed to be income-producing if, on the
respective last interest payment date or dates for the declaration of dividends prior to the date of the
related balance sheet, there was only a partial payment of interest or a declaration of only a partial
amount of the dividends payable; in such case, however, each such issue shall be indicated by an
appropriate symbol referring to a note to the effect that, on the last interest or dividend date, only partial
interest was paid or partial dividends declared. If, on such respective last interest or dividend date, no
interest was paid or no dividends declared, the issue shall not be deemed to be income-producing.
Common shares shall not be deemed to be income-producing unless, during the last year preceding the
date of the related balance sheet, there was at least one dividend paid upon such common shares. List
separately (1) bonds; (2) preferred shares; (3) common shares. Within each
of these subdivisions
classify according to type of business, insofar as practicable: e.g., investment companies, railroads,
utilities, banks, insurance companies, or industrials. Give totals for each group, subdivision, and class.
21ndicate any securities subject to option at the end of the most recent period and state in a note the

amount subject to option, the option prices, and the dates within which such options may be exercised.
3Columns C and D shall be totaled. The totals of columns C and D should agree with the correlative
amounts required to be shown by the related balance sheet captions. State in a footnote to column C

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the aggregate cost for Federal income tax purposes.

41f any investments have been written down or reserved against by such companies pursuant to §210.621 (f), indicate each such item by means of an appropriate symbol and explain in a footnote.
5Where value is determined on any other basis than closing prices reported on any national securities
exchange, explain such other basis in a footnote.

(47 FR 56844, Dec. 21,1982)

§ 210.12-22 Investments in and advances to affiliates and income thereon.

(j

top

Column B-

Column

Balance held
at close of

period-

Amount of Amount
of
dividends or
equity
interest4,6
in net
profit
and
(1)loss
for
Credited
the
to
(2)income Other period 7

Column

D-

Number of

shares-

Column A-

F-

Column E-

Amount
Name of
principal
Column at which
issuer and
amount of
C- carried
title of issue bonds, notes. Cost of at close
or amount of
and other
each
of
indebtedness 1 indebtedness2 item3,4 period4,5
I

I

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I

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I

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I

I

I

1(a) The required information is to be given as to all investments in affliates as of
the close of

the period.

See captions 10, 13 and 20 of §21 0.6-22. List each issue and group separately (1) investments in
majority-owned subsidiaries, segregating subsidiaries consolidated; (2) other controlled companies; and
(3) other affliates. Give totals for each group. If operations of any controlled companies are different in
character from those of the registrant, group such affliates within divisions (1) and (2) by type of
activities.

(b) Changes during the period. If during the period there has been any increase or decrease in the
amount of investment in any affliate, state in a footnote (or if there have been changes as to numerous

affliates, in a supplementary schedule) (1) name of each issuer and title of issue; (2) balance at
beginning of period; (3) gross purchases and additions; (4) gross sales and reductions; (5) balance at
close of period as shown in column C. Include in such footnote or schedule comparable information as

to affliates in which there was an investment at any time during the period even though there was no
investment in such affliate as of the close of such period.
21ndicate any securities subject to option at the end of

the most recent period and state in a footnote the
amount subject to option, the option prices, and the dates within which such options may be exercised.

31f the cost in column C represents other than cash expenditure, explain.

4(a) Columns C, D and E shall be totaled. The totals of columns C and D should agree with correlative

amounts required to be shown by the related balance sheet captions. State in a footnote the aggregate

cost for Federal income tax purposes.
(b) If any investments have been written down or reserved against by such companies pursuant to

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§210.6-21(f), indicate each such item by means of an appropriate symbol and explain in a footnote.
5State the basis of determining the amounts shown in column D.
6Show in column E(1) as to each issue held at close of

period, the dividends or interest included in .

caption 1 of the profit and loss or income statement. In addition, show as the final item in column E(1)
the aggregate dividends and interest included in the profit and loss or income statement in respect of
investments in affliates not held at the close of the period. The total of this column should agree with the
amounts shown under such caption. Include in column E(2) all other dividends and interest. Explain
briefly in an appropriate footnote the treatment accorded each item. Identify by an appropriate symbol all

non-cash dividends and explain the circumstances in a footnote. See §§210.6-22(b) and 210.6-23(a).
7The information required by column F need be furnished only as to controlled companies. The equity in

the net profit and loss of each person required to be listed separately shall be computed on an individual
basis. In addition, there may be submitted the information required as computed on the basis of the
statements of each such person and its subsidiaries consolidated.

§ 210.12-23 Mortgage loans on real estate and interest earned on mortgages.1

II

toD

Part 2-lnterest
earned on

Part 1-Mortgage loans on real estate at close of period
Column D-

mortgages

Amount of
principal

Column

F-

Column

Interest
Gdue
and
Interest
EAmount of accrued income
classification B- Carrying amount Subject to mortgage at end earned
indicated Prior of (1)- delinquent being
of
applicable
below2,3,7 liens2 mortgage8,9,10,11 Total interest4 foreclosed period6 to period5

unpaid at close
of period

Column

Column AList by Column Column C- d (2)-

¡Liens on:
I

I

Farms (total)
Residential (total)
Apartments and business (total)
Unimproved (total)

Totai12

i~
i~
i~
~

~
-l

I

I

I

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I

I

I

I

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I

1 All money columns shall be totaled.

21f mortgages represent other than first liens, list separately in a schedule in a like manner, indicating

briefly the nature of the lien. Information need not be fumished as to such liens which are fully insured or
wholly guaranteed by an agency of the United States Government.
31n a separate schedule classify by states in which the mortgaged property is located the total amounts

in support of columns B, C, D and E.
4(a) Interest in arrears for less than 3 months may be disregarded in computing the total amount of
principal subject to delinquent interest.

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(b) Of the total principal amount, state the amount acquired from controlled and other affliates.

51n order to reconcile the total of column G with the amount shown in the profit and loss or income
statement, interest income earned applicable to period from mortgages sold or canceled during period
should be added to the total of this column.
Blf the information required by columns F and G is not reasonably available because the obtaining

thereof would involve unreasonable effort or expense, such information may be omitted if the registrant
shall include a statement showing that unreasonable effort or expense would be involved. In such an
event, state in column G for each of the above classes of mortgage loans the average gross rate of
interest on mortgage loans held at the end of the fiscal period.
7Each mortgage loan included in column C in an amount in excess of $500,000 shall be listed

$100,000 to $500,000 shall be grouped by $50,000 groups, indicating the
number of loans in each group.

separately. Loans from

Bin a footnote to this schedule, furnish a reconcilation, in the following form, of the carring amount of
mortgage loans at the beginning of the period with the total amount shown in column C:

IJÐJ
IJ~J

Balance at beginning of period

Additions during period:
New mortgage loans
Other (describe)
Deductions during period:
Collections of principal

IJLJJ

IJ~J
IJ~J

IJLlJ

J~J
J~J
J~J
J~J

Foreclosures
Cost of mortgages sold

Amortization of premium
Other (describe)
Balance at close of period

JLlJ

If additions represent other than cash expenditures, explain. If any of the changes during the period
result from transactions, directly or indirectly with affliates, explain the bases of such transactions, and
amounts involved. State the aggregate amount of mortgages (a) renewed and (b) extended. If

the

carrying amount of the new mortgages is in excess of the unpaid amount (not including interest) of prior
mortgages, explain.
91f any item of mortgage loans on real estate investments has been written down or reserved against

pursuant to §210.6-21 describe the item and explain the basis for the write-down or reserve.
10State in a footnote to column C the aggregate cost for Federal income tax purposes.

111f the total amount shown in column C includes intercompany profis, state the bases of the

transactions resulting in such profis and, if practicable, state the amounts thereof.
12Summarize the aggregate amounts for each column applicable to captions 6(b), 6(c) and 12 of
§210.6-22.
(16 FR 348, Jan. 13, 1951, as amended at 16 FR 2655, Mar. 24,1951)

§ 210.12-24 Real estate owned and rental income.1

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Page 126 of131

(!toP
Part 1-Real estate owned at end of period

I

Part 2-Ren1

,

(

Column

Column A-

G-

Column

E:

Rents Column
due and H-Total
classification
at which
Column Column Daccrued rental
of property Column B- C-Initial
carried
at
Cost of
Column F- at end income
as indicated Amount of
cost to improvements, close of Reserve for
of applicable
below2,3 incombrances company
etc.
period4,5,6,7 depreciation period to period

E-Amount

List

'Farms

,

,

I

I

I

I

IResidential

,

,

I

I

,

I

I

I

Apartments

and business
¡Unimproved
I

T otai8

I

I

Rent from

properties
sold during
I

period
Total

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,

,

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,
,

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1 All money columns shall be totaled.

2Each item of property included in column E in an amount in excess of $1 00,000 shall be listed
separately.
31n a separate schedule classify by states in which the real estate owned is located the total amounts in

support of columns E and F.

41n a footnote to this schedule, furnish a reconciliation, in the following form, of the total amount at which
real estate was carried at the beginning of the period with the total amount shown in column E:

Balance at beginning of period

Additions during period:
Acquisitions through foreclosure
Other acquisitions
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Improvements, etc
Other (describe)
Deductions during period:
Cost of real estate sold
Other (describe)

IBalance at close of period

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If additions, except acquisitions through foreclosure, represent other than cash expenditures, explain. If
any of the changes during the period result from transactions, directly or indirectly, with affliates, explain
and state the amount of any intercompany gain or loss.
51f any item of real estate investments has been written down or reserved against pursuant to §210.6-21

(f), describe the item and explain the basis for the write-down or reserve.
6State in a footnote to column E the aggregate cost for Federal income tax purposes.
7The amount of all intercompany profis included in the total of column E shall be stated if materiaL.

8Summarize the aggregate amounts for each column applicable to captions 7 and 12 of §210.6-22.
(16 FR 348, Jan. 13, 1951, as amended at 16 FR 2655, Mar. 24, 1951. Redesignated at 45 FR 63679,
Sept. 25, 1980)

§ 210.12-25 Supplementary profit and loss information.

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Column CCharged to other
accounts

Column BCharged to
investment
expense

Column A-Item 1

(1)-

(2)-

Column

Account Amount D-Total

1. Legal expenses (including

Ithose in connection with any

matter, measure or
proceeding before legislative
bodies, offcers or

government departments)
2. Advertising and publicity
3. Sales promotion2
4. Payments directly and
indirectly to trade
associations and service

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organizations, and
contributions to other
¡organizations
1Amounts resulting from transactions with affliates shall be stated separately.
2State separately each category of expense representing more than 5 percent of the total expense
shown under this item.

§ 210.12-26 Certificate reserves.

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Column B-Balance at
beginning of period
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Column C-Additions

Column D-Deductions

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(1)-

Number
of

(1)-

(2)-

(2)-

Charged Reserve
(3)accounts Amount (3)- to profit payments Charged
(2)-Cash
Amount and loss
with
of
by
to other
surenders (3)Column A- security maturity
of
or certificate accounts (1)prior to OtherDescription 1 bidders
value reserved2 income holders describe Maturities maturity describe
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1(a) Each series of certificates shall be stated separately. The description shall include the yield to
maturity on an annual payment basis.

(b) For certificates of the installment type, information required by columns B, D (2) and (3) and E shall
be given by age groupings, according to the number of months paid by security holders, grouped to
show those upon which 1-12 monthly payments have been made, 13-24 payments, etc.
2( a) If the total of the reserves shown in these columns differs from the total of the reserves per the

accounts, there should be stated (i) the aggregate difference and (ii) the difference on a $1,000 face-

amount certificate basis.
(b) There shall be shown by footnote or by supplemental schedule (i) the amounts periodically credited
to each class of security holders' accounts from installment payments and (ii) such other amounts
periodically credited to accumulate the maturity amount of the certificate. Such information shall be
stated on a $1,000 face-amount certificate basis for the term of the certificate.

§ 210.12-27 Qualified assets on deposit.1

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Column DFirst

Column A- Column Column C-

B-

Name of
depositary2

Column Column

mortgages and

Cash

in securities

F-

E-

Investments other first liens

Other

on real estate

Totai3

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1AII money columns shall be totaled.

2Classify names of individual depositaries under group headings, such as banks and states.

3Total of column F shall agree with note required by caption 11 of §210.6-22 as to total amount of
qualified Assets on Deposit.
for certain real estate companies

§ 210.12-28 Real estate and accumulated depreciation.1

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(jJQP
(For Certain Real Estate Companies)

Column D-Cost

Column E-Gross

to acquisition

at close of period3,4,5,6,7

Column C-Initial capitalized subsequent amount of which carried
cost to company

Column A- Column B- J Buildings and

Carrying

Description2 Encumbrances Land improvements Improvements costs
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Land improvements Total ~

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1 All money columns shall be totaled.

2The description for each property should include type of property (e.g., unimproved land, shopping
center, garden apartments, etc.) and the geographical

location.

3The required information is to be given as to each individual investment included in column E except
that an amount not exceeding 5 percent of the total of column E may be listed in one amount as
"miscellaneous investments."
41n a note to this schedule, fumish a reconcilation, in the following form, of the total amount at which
real estate was carried at the beginning of each period for which income statements are required, with
the total amount shown in column E:

¡Balance at beginning of period
Additions during period:

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Acquisitions through foreclosure
Other acquisitions

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Improvements, etc

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Other (describe)
Deductions during period:
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Cost of real estate sold
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Other (describe)
Balance at close of period
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If additions, except acquisitions through foreclosure, represent other than cash expenditures, explain. If
any of the changes during the period result from transactions, directly or indirectly with affliates, explain
the bases of such transactions and state the amounts involved.

A similar reconcilation shall be furnished for the accumulated depreciation.
51f any item of real estate investments has been written down or reserved against, describe the item and

explain the basis for the write-down or reserve.

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6State in a note to column E the aggregate cost for Federal income tax purposes.

7The amount of all intercompany profis included in the total of column E shall be stated if matenal.

(38 FR 6068, Mar. 6,1983. Redesignated at 45 FR 63630, Sept. 25,1980)

§ 210.12-29 Mortgage loans on real estale.1

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(For Certain Real Estate Companies)

Column

H-

Principal
amount of
loans
subject to
Column G- delinquent
Carrying amount principal
of
or
mortgages3,6, 7 ,8,9 interest10

Column Column

D- Column Column
Periodic
B- Final
E- F-Face
Column A- Interest maturity payment Prior amount of
Description2,3,4 rate
date terms5 liens mortgages

C-

Column

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1 All money columns shall be totaled.

2The required information is to be given for each individual mortgage loan which exceeds three percent

of the total of column G.
31f the portolio includes large numbers of mortgages most of which are less than three percent of
column G, the mortgages not required to be reported separately should be grouped by classifications
that wil indicate the dispersion of the portolio, i.e. , for a portolio of mortgages on single family
residential housing. The description should also include number of loans by original

loan amounts (e.g.,

over $100,000, $50,000-$99,999, $20,000-$49,000, under $20,000) and type loan (e.g., VA, FHA,
Conventional). Interest rates and maturity dates may be stated in terms of ranges. Data required by
columns D, E and F may be omitted for mortgages not required to be reported individually.
4Loans should be grouped by categories, e.g., first mortgage, second mortgage, construction loans, etc.,

and for each loan the type of property, e.g., shopping center, high rise apartments, etc., and its
geographic location should be stated.
5State whether principal and interest is payable at level amount over life to maturity or at varying

amounts over life to maturity. State amount of balloon payment at maturity, if any. Also state prepayment
penalty terms, if any.

61n a note to this schedule, furnish a reconcilation, in the following form, of the carrying amount of
mortgage loans at the beginning of each period for which income statements are required, with the total
amount shown in column G:

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¡Balance at beginning of period
Additions during period:
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New mortgage loans
Other (describe)
Deductions during period:
Collections of principal

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Other (describe)

Page 131 of131

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IBalance at close of period

If additions represent other than cash expenditures, explain. If any of the changes during the period
result from transactions, directly or indirectly with affliates, explain the bases of such transactions, and
state the amounts involved. State the aggregate mortgages (a) renewed and (b) extended. If

the

carrying amount of new mortgages is in excess of the unpaid amount of the extended mortgages,
explain.

llf any item of mortgage loans on real estate investments has been written down or reserved against,
describe the item and explain the basis for the write-down or reserve.
8State in a note to column G the aggregate cost for Federal income tax purposes.
9The amount of all intercompany profis in the total of column G shall be stated, if materiaL.

10(a) Interest in arrears for less than 3 months may be disregarded in computing the total amount of
principal subject to delinquent interest.

(b) Ofthe total principal amount, state the amount acquired from controlled and other affliates.
(38 FR 6069, Mar. 6,1973; 38 FR 7323, Mar. 20,1973. Redesignated at 45 FR 63680, Sept. 25,1980)

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