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,

Securities and Exchange Commission
ordered, this form may be used by individuals required to supply such information.
(b) The respondent filing Form D-A is
required promptly to notify the Commission of any material change in the
answer to any question on this form.
(c) Form D-A may not be withheld
from the interested division. A respondent making financial information
disclosures on this form after the institution of proceedings may make a motion, pursuant to Rule 322 of the Commission's Rules of Practice (17 CFR
201.322), for the issuance of a protective
order to limit disclosure to the public
or parties other than the interested division of the information submitted on
Form D-A. A request for a protective
order allows the requester an opportunity to justify the need for confidentiality. The making of a motion for a
protective order, however, does not
guarantee that disclosure will be limited.
(d) No party receiving information
for which a motion for a protective
order has been made may transfer or
convey the information to any other
person prior to a ruling on the motion
without the prior permission of the
Commission or a hearing officer.
(e) A person making financial information disclosures on Form D-A prior
to the institution of proceedings, in
connection with an offer of settlement
or otherwise, may request confidential
treatment of the information pursuant
to the Freedom of Information Act. See
the Commission's Freedom of Information Act ("FOIA") regulations, 17 CFR
200.83. A request for confidential treatment allows the requester an opportunity to substantiate the need for
confidentiality. No determination as to
the validity of any request for confidential treatment will be made until
a request for disclosure of the information under FOIA is received.

Pt. 210

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
APPLICATION OF REGULATION S-X (17 CFR
PART 210)

Sec.
210.1-01 Application of Regulation S-X (17
CFR part 210).
210.1-02 Definitions of terms used in Regulation S-X (17 CFR part 210).
QUALIFICATIONS AND REPORTS OF
ACCOUNTANTS

210.2-01 Qualifications of accountants.
210.2-02 Accountants' reports and attestation reports.
210.2-02T Accountants' reports and attestation reports on internal control over financial reporting.
210.2-03 Examination of financial statements by foreign government auditors.
210.2-04 Examination of financial statements of persons other than the registrant.
210.2-05 Examination of financial statements by more than one accountant.
210.2-06 Retention of audit and review
records.
210.2-07 Communication with audit committees.
GENERAL INSTRUCTIONS AS TO FINANCIAL
STATEMENTS

210.3-01 Consolidated balance sheets.
210.3-02 Consolidated statements of income
and changes in financial position.
210.3-03 Instructions to income statement
requirements.
210.3-04 Changes in stockholders' equity and
noncontrolling interests.
210.3-05 Financial statements of businesses
acquired or to be acquired.
210.3-06 Financial statements covering a period of nine to twelve months.
210.3-07-210.3-08 [Reserved]
210.3-09 Separate financial statements of
subsidiaries not consolidated and 50 percent or less owned persons.
210.3-10 Financial statements of guarantors
and issuers of guaranteed securities registered or being registered.
210.3-11 Financial statements of an inactive
registrant.

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Pt. 210
210.3-12 Age of financial statements at effective date of registration statement or
at mailing date of proxy statement.
210.3-13 Filing of other financial statements
in certain cases.
210.3-14 Special instructions for real estate
operations to be acquired.
210.3-15 Special provisions as to real estate
investment trusts.
210.3-16 Financial statements of affiliates
whose securities collateralize an issue
registered or being registered.
210.3-17 Financial statements of natural
persons.
210.3-18 Special provisions as to registered
management investment companies and
companies required to be registered as
management investment companies.
210.3-19 [Reserved]
210.3-20 Currency for financial statements
of foreign private issuers.
CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS
210.3A-01 Application
of 9§ 210.3A-01
to
210.3A-05.
210.3A-02 Consolidated financial statements
of the registrant and its subsidiaries.
210.3A-03 Statement as to principles of consolidation or combination followed.
210.3A-04 Intercompany items and transactions.
210.3A-05 Special requirements as to public
utility holding companies.
RULES OF GENERAL APPLICATION
210.4-01 Form, order, and terminology.
210.4-02 Items not material.
210.4-03 Inapplicable captions and omission
of unrequired or inapplicable financial
statements.
210.4-04 Omission of substantially identical
notes.
210.4-05--210.4-06 [Reserved]
210.4-07 Discount on shares.
210.4-08 General notes to financial statements.
210.4-09 [Reserved]
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.
COMMERCIAL AND INDUSTRIAL COMPANIES
210.5-01
210.5-02
210.5-03
210.5-04

Application of §§210.5-01 to 210.5-04.
Balance sheets.
Income statements.
What schedules are to be filed.

210.6-05 Statements of net assets.
210.6-06 Special provisions applicable to the
balance sheets of issuers of face-amount
certificates.
210.6-07 Statements of operations.
210.6-08 Special provisions applicable to the
statements of operations of issuers of
face-amount certificates.
210.6-09 Statements of changes in net assets.
210.6-10 What schedules are to be filed.
EMPLOYEE STOCK PURCHASE, SAVINGS AND
SIMILAR PLANS
210.6A-01 Application
of
§§210.6A-01
to
210.6A-05.
210.6A-02 Special rules applicable to employee stock purchase, savings and similar plans.
210.6A-03 Statements of financial condition.
210.6A-04 Statements
of
income
and
changes in plan equity.
210.6A-05 What schedules are to be filed.
INSURANCE COMPANIES
210.7-01
210.7-02
210.7-03
210.7-04
210.7-05

Application of §§210.7-01 to 210.7-05.
General requirement.
Balance sheets.
Income statements.
What schedules are to be filed.

ARTICLE 8 FINANCIAL STATEMENTS OF
SMALLER REPORTING COMPANIES
210.8-01 Preliminary Notes to Article 8.
210.8-02 Annual financial statements.
210.8-03 Interim financial statements.
210.8-04 Financial statements of businesses
acquired or to be acquired.
210.8-05 Pro forma financial information.
210.8-06 Real estate operations acquired or
to be acquired.
210.8-07 Limited partnerships.
210.8-08 Age of financial statements.
BANK HOLDING COMPANIES
210.9-01 Application of §§210.9-01 to 210.9-07.
210.9-02 General requirement.
210.9-03 Balance sheets.
210.9-04 Income statements.
210.9-05 Foreign activities.
210.9-06 Condensed financial information of
registrant.
210.9-07 [Reserved]
INTERIM FINANCIAL STATEMENTS

REGISTERED INVESTMENT COMPANIES

210.10-01

210.6-01 Application of §§210.-01 to 210.6-10.
210.6-02 Definition of certain terms.
210.6-03 Special rules of general application
to registered investment companies.
210.6-04 Balance sheets.

210.11-01
210.11-02
210.11-03

Interim financial statements.

PRO FORMA FINANCIAL INFORMATION

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Presentation requirements.
Preparation requirements.
Presentation of financial forecast.

§ 210.1-01

Securities and Exchange Commission
FORM AND CONTENT OF SCHEDULES

general
210.12-01 Application of §§210.12-01 to 210.1229.
210.12-02--210.12-03 [Reserved]
210.12-04 Condensed financial information of
registrant.
210.12-05--210.12-08 [Reserved]
210.12-09 Valuation and qualifying accounts.
210.12-10-210.12-11 [Reserved]
for management investment companies
210.12-12 Investments in securities of unaffiliated issuers.
sold
210.12-12A Investments-securities
short.
210.12-12B Open option contracts written.
210.12-12C Summary schedule of investments in securities of unaffiliated
issuers.
210.12-13 Investments other than securities.
210.12-14 Investments in and advances to affiliates.
210.12-15 Summary of investments-other
than investments in related parties.
210.12-16 Supplementary insurance information.
210.12-17 Reinsurance.
(for
210.12-18 Supplemental information
insurance
underproperty-casualty
writers).
for face amount certificate investment
companies
210.12-21 Investments in securities of unaffiliated issuers.
210.12-22 Investments in and advances to affiliates and income thereon.
210.12-23 Mortgage loans on real estate and
interest earned on mortgages.
210.12-24 Real estate owned and rental income.
210.12-25 Supplementary profit and loss information.
210.12-26 Certificate reserves.
210.12-27 Qualified assets on deposit.
for certain real estate companies
210.12-28 Real estate and accumulated depreciation.
210.12-29 Mortgage loans on real estate.
AUTHORITY: 15 U.S.C. 77f, 77g, 77h, 77j, 77s,
77z-2, 77z-3, 77aa(25), 77aa(26), 77nn(25),
77nn(26), 78c, 78j-1, 781, 78m, 78n, 78o(d), 78q,
78u-5, 78w, 7811, 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)
§ 210.1-01 Application of Regulation SX (17 CFR part 210).
(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 D 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 filed under the Public
Utility Holding Company Act of 1935
(part 259 of this chapter) by public utility holding companies registered under
such Act; and
statements
and
(4)
Registration
shareholder reports under the Investment Company Act of 1940 (part 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, §210.4-10
applies to the preparation of accounts
by persons engaged, in whole or in
part, in the production of crude oil or

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§ 210.1-02
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 l(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, 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).
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'sreport, 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 criteriafor asset-backed se-

curities 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 240.15d15(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) Affiliate. An affiliate 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.

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§ 210.1-02

Securities and Exchange Commission
(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
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.
(j) 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.
(1) Foreign business. A business that is
majority owned by persons who are not
citizens or residents of the United
States and is not organized under the
laws of the United States or any state
thereof, and either:

(1) More than 50 percent of its assets
are located outside the United States;
or
(2) The majority of its executive officers and directors are not United
States citizens or residents.
(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.
(o) 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 affiliate controlling 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 joint-stock 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 property, 10 percent or

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§ 210.1-02

17 CFR Ch. 11 (4-1-10 Edition)

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
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
Party 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 combination
between entities under common control, 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 exclusive of
amounts attributable to any noncontrolling interests 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 exclusive of amounts attributable to any noncontrolling interests 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 exclusive of amounts attributable to any noncontrolling interests should be excluded
from such income of the registrant and its
subsidiaries consolidated for purposes of the
computation.
2. If income of the registrant and its subsidiaries consolidated exclusive of amounts
attributable to any noncontrolling interests
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 submitted 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 affiliate 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 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

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Securities and Exchange Commission
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) of this 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 §210.5-02.27) and
noncontrolling 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 majority components of assets and liabilities);
(ii) Net sales or gross revenues, gross
profit (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, net income or loss, and net income or loss attributable to the entity (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 §210.10-01(b) for
interim periods shall include the infor-

§ 210.2-01
mation
required
by
(aa)(1)(ii) of this section.

paragraph

[37 FR 14593, July 21, 1972]
EDITORIAL NOTE: For FEDERAL REGISTER citations affecting §210.1-02, see the List of
CFR Sections Affected, which appears in the
Finding Aids section of the printed volume
and on GPO Access.
QUALIFICATIONS AND REPORTS OF
ACCOUNTANTS
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.
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.
2. Section 210.2-01(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 §210.2-01(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
conflicting 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.
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 will not recognize any person as a certified public accountant who is not duly registered

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17 CFR Ch. 11 (4-1-10 Edition)

and in good standing as such under the
laws of the place of his residence or
principal office. The Commission will
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 office.
(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 will consider all relevant circumstances, including all relationships
between the accountant and the audit
client, and not just those relating to
reports filed with the Commission.
(c) This paragraph sets forth a nonexclusive
specification
of
circumstances inconsistent with paragraph (b) of this section.
(1) Financial relationships. An accountant is not independent if, at any
point during the audit and professional
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, principal, 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, 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;

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§ 210.2-01

(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 officers, 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 difficulties 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. 78fff-3); or
(3) With respect to non-U.S. accounts
not subject to SIPA protection, the
value of assets in the accounts exceeds
the amount insured or protected by a
program similar to SIPA.
(D) 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

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§ 210.2-01
(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
(ii) 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)(1)(ii) of this section, and the acquisition of the financial interest was an
unavoidable consequence of participation in his or her employer's employee
compensation or benefits 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 accountingfirm. 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
officers or directors are record or beneficial owners of more than 5% of the
equity securities of the accounting
firm.
(B) Underwriting. An accounting firm
engages an audit client to act as an underwriter,
broker-dealer,
marketmaker, promoter, or analyst with respect to securities issued by the accounting firm.
(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 accountingfirm. (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
earnings 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 1OA(f) of the Securities Exchange Act of 1934 (15 U.S.C.
78j-l(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

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Securities and Exchange Commission
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
(iii) 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 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
(iii) Individuals that are employed by
the registered investment company or
any entity in the 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.
(iv) Employment at accounting firm of
former employee of audit client. A former
officer, director, or employee of an
audit client becomes a partner, principal, shareholder, or professional employee of the accounting firm, unless
the individual does not participate in,

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§ 210.2-01
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 officers, 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 will
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;
(B) Preparing the audit client's financial statements that are filed with
the Commission or that form the basis
of financial statements filed with the
Commission; or
(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 will 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

(B) Designing or implementing a
hardware or software 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 fairness opinion or contribution-inkind report for an audit client, unless
it is reasonable to conclude that the results of these services will 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
will 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 will 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, officer, 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;
(B) Engaging in psychological testing, or other formal testing or evaluation programs;
(C) Undertaking reference checks of
prospective candidates for an executive
or director position;

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Securities and Exchange Commission
(D) Acting as a negotiator on the
audit client's behalf, such as determining position, status or title, compensation, fringe benefits, 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 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

§210.2-01
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 audit partner:
(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 1OA(f) of the Securities Exchange Act of 1934 (15 U.S.C.
78j-l(f))) and less than ten 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 affiliate of
the audit client that is an entity in the

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§210.2-01
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 under 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 12-month period count as a single consecutive year.
(7) Audit committee administration of
the engagement. An accountant is not
independent of an issuer (as defined in
section 1OA(f) of the Securities Exchange Act of 1934 (15 U.S.C. 78j-l(f))),
other than an issuer that is an AssetBacked Issuer as defined in §229.1101 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 1OA(i)
of the 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 nonaudit 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 preapproval policies and 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 responsibilities 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 preapprove 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 portfolio
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 that 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

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Securities and Exchange Commission
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-l(f)))
shall be exempt from the requirement
stated in the previous sentence.
(d) Quality controls. An accounting
firm's independence will 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;
(2) The covered person's lack of independence was corrected as promptly as
possible
under
the
relevant
circumstances after the covered person or
accounting firm became aware of it;
and
(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. 781), a quality control system
will not provide such reasonable assurance unless it has at least the following features:
(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 ac-

§ 210.2-01
countant 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, officers, 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 will 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)(8) of this
section during the fiscal year of the accounting firm that includes the effective date of this section.
(iii) 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.

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§ 210.2-01
(v) Until the first day of the issuer's
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 until 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) Settling financial arrangementswith
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.
(f) Definitions of terms. For purposes
of 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 certified public accountant or public accountant is affiliated.
(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 filed 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 role 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 officer, president,
chief financial officer, chief operating
officer, general counsel, chief accounting officer, controller, director of internal audit, director of financial reporting, treasurer, or any equivalent
position.
(4) Affiliate 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;
(iii) 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

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Securities and Exchange Commission
filed 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 file, 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 affiliates of the
audit client, other than, for purposes of
paragraph (c)(1)(i) of this section, entities that are affiliates of the audit client only by virtue of paragraph
(f)(4)(ii) or (f)(4)(iii) 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 report-

§ 210.2-01
ing 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 partner");
(B) 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;
(ii) Evaluate the performance or recommend the compensation of the audit
engagement partner; or
(iii) 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

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§ 210.2-02
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";
(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 "office" 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 controlling 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)(14)(i)(A) of this
section if the entity:

(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 portfolio 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 benefit
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 at-

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

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Securities and Exchange Commission
(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 affiliate 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 Ander-

§ 210.2-02
sen 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

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17 CFR Ch. 11 (4-1-10 Edition)

§ 21I0.2-02T
expressed. If an overall opinion cannot
be expressed, explain why.
[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 FR 35321, June 27, 2007]
§ 210.2-02T Accountants' reports and
attestation reports on internal control over financial reporting.
(a) The requirements of § 210.2-02(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 filed by a registrant that is neither a "large accelerated filer" nor an "accelerated filer,"
as those terms are defined in §240.12b2 of this chapter, for a fiscal year ending on or after December 15, 2007 but
before June 15, 2010.
(b) This section expires on December
15, 2010.
EFFECTIVE DATE NOTE: At 71 FR 47059, Aug.
15, 2006, temporary §210.2-02T 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.
At 73 FR 38099, July 2, 2008, §210.2-02T was
amended by removing paragraphs (a) and (b)
and redesignating paragraphs (c) and (d) as
(a) and (b); revising the date "December 15,
2008" in newly redesignated paragraph (a) to
read "December 15, 2009"; and revising newly
redesignated paragraph (b), effective Sept. 2,
2008 to June 30, 2010. At 74 FR 30211, June 25,
2009, the effectiveness of temporary §210.202T was extended through June 30, 2010. At 74
FR 53628, 53630, Oct. 19, 2009, temporary
§210.2-02T was amended in paragraphs (a)
and (b) and its effectiveness was extended
through Dec. 15, 2010.
§ 210.2-03 Examination of
financial
statements by foreign government
auditors.
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.
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.
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].
[46 FR 40872, Aug. 13, 1981]
§ 210.2-06 Retention of audit and review records.
(a) For a period of seven years after
an accountant concludes an audit or
review of an issuer's financial statements to which section 1OA(a) of the
Securities Exchange Act of 1934 (15
U.S.C. 78j-l(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.

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Securities and Exchange Commission

§ 210.2-07

(b) For 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
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-l(f)).
[68 FR 4872, Jan. 30, 2003]

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
(ii) The treatment preferred by the
registered 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;
(4) If 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 §210.2-01 (c)(7).
(b) [Reserved]

§210.2-07 Communication
committees.

with audit

[68 FR 6048, Feb. 5, 2003, as amended at 70 FR
1593, Jan. 7, 2005]

(a) Each registered public accounting
firm that performs for an audit client
that is an issuer (as defined in section
1OA(f) of the Securities Exchange Act
of 1934 (15 U.S.C. 78j-l(f))), other than
an issuer that is an Asset-Backed
Issuer as defined in §229.1101 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 filing of such audit report
with the Commission (or in the case of
a registered investment company, annually, and if the annual communication is not within 90 days prior to the
filing, provide an update, in the 90 day

GENERAL INSTRUCTIONS AS TO FINANCIAL
STATEMENTS
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.

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§210.3-01
For filings under the Securities Exchange
Act of 1934, attention is directed to §240.12b23 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.

(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:
(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 attributable to the registrant,
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 attributable to the registrant, after taxes but before extraor-

dinary 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
this section are not met, the filing
must include the audited balance
sheets required by paragraph (a) of this
section.
(e) For filings made after the number
of days specified in paragraph (i)(2) of
this section, the filing 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 filers 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-Q.
(g) For filings by registered management investment companies, the requirements of §210.3-18 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 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.
(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:

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Securities and Exchange Commission
(i) 129 days subsequent to the end of
the registrant's most recent fiscal year
for large accelerated filers 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; 74 FR 18614, Apr.
23, 2009]
§ 210.3-02 Consolidated statements of
income and changes in financial positions.
(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 filed 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
§ 210.10-01.
(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 at 46
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
§210.3-03 Instructions to income statement requirements.
(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
may be
and
cash
flows
(which
unaudited) for the twelve-month period
ending on the date of the most recent
balance sheet being filed, 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 reconciliations 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 filed 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
year-end. 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.

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§ 210.3-04
(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 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 stockholders' eq-

uity and noncontrolling interests.
An analysis of the changes in each
caption of stockholders' equity and
noncontrolling interests 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 with contributions
from and distribution to owners shown
separately. Also, 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. Provide a
separate schedule in the notes to the financial statements that shows the effects of any changes in the registrant's
ownership interest in a subsidiary on
the equity attributable to the registrant.
[74 FR 18614, Apr. 23, 2009]
§ 210.3-05 Financial
statements
businesses acquired or to be
quired.

of
ac-

(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) A business combination has occurred or is probable (for purposes of
this section, this encompasses the acquisition of an interest in a business
accounted for by the equity method);
or
(ii) Consummation of a combination
between entities under common control 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 §210.11-01(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 §§210.3-01 and 210.302 shall be furnished for the business to
be acquired, except as provided otherwise for filings on Form N-14, S-4 or F4 (§§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).
(2) In all cases not specified in paragraph (b)(1) of this section, financial

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§ 210.3-05

Securities and Exchange Commission
statements of the business acquired or
to be acquired shall be filed for the periods specified in this paragraph (b)(2)
or such shorter 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 §210.1-02(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 §§210.301 and 210.3-02.
(ii) If any of the conditions exceeds 20
percent, but none exceed 40 percent, financial statements shall be furnished
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 be furnished
for at least the two most recent fiscal
years and any interim periods specified
in §§ 210.3-01 and 210.3-02.
(iv) If any of the conditions exceed 50
percent, the full financial statements
specified in §§ 210.3-01 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 million.
(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 filed 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 §210.11,
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 filed with the Commission pursuant to §230.424(b) of this
chapter, 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 previously been
filed by the registrant.
(ii) An issuer, other than a foreign
private issuer required to file 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.
(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

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§ 210.3-06
that omission of such financial statements would materially impair an investor's ability 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
§210.1-02 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
filed 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 §210.301 is for a date after the date the acquisition was consummated.
(c) Financialstatements 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.
[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; 74 FR
18614, Apr. 23, 2009]
§ 210.3-06 Financial statements covering a period of nine to twelve
months.
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
§ 210.3-05 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 exceed-

ing 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]

§ 210.3-09 Separate
financial
statements of subsidiaries not consolidated and 50 percent or less owned
persons.
(a) If any of the conditions set forth
in §210.1-02(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 §210.1-02(w), substituting 20
percent for 10 percent, is met. For purposes of a filing on Form 10-K (§249.310
of this chapter):
(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 filed as an amendment to the
report within 90 days, or within six

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Securities and Exchange Commission
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 filing, or if the fiscal
year ends after the date of the filing,
the required financial statements may
be filed as an amendment to the report
within the subsidiary's number of filing
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'snumber 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'snumber of filing 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 filer;
(ii) 75 days if the 50 percent or less
owned person is an accelerated filer;
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 filed 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

§ 210.3-10
(§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 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.
(a)(1) General rule. Every issuer of a
registered security that is guaranteed
and every guarantor of a registered security must file the financial statements required for a registrant by Regulation S-X.
(2) Operation of this rule. Paragraphs
(b), (c), (d), (e) and (f) of this section
are exceptions to the general rule of
paragraph (a)(1) of this section. Only
one of 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 consolidating financial
information required by paragraphs (c),
(d), (e) and (f) of this section.
NOTE TO PARAGRAPH

(a)(2).

Where para-

graphs (b), (c), (d), (e) and (f)of this section
specify the filing of financial statements of
the parent company, the financial statements of an entity 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 §§210.3-01 and 3-02, a foreign private issuer may comply by providing financial statements for the periods specified by Item 8.A of Form 20F (§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

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§ 210.3-10
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 filed for the periods
specified by §§210.3-01 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;
(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 filed for the periods
specified by §§210.3-01 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 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.
(d) Subsidiary issuer of securities 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 §§210.3-01 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) The guarantor subsidiaries of the
parent company on a combined basis;
(iv) Any other subsidiaries of the parent company on a combined basis;

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Securities and Exchange Commission

§ 210.3-10

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

(3) No other subsidiary of that parent
guarantees the securities; and
(4) The parent company's financial
statements are filed for the periods
specified by §§210.3-01 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;
(iv) Consolidating adjustments; and
(v) 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 column 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
several 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)(10) of this section.
(e) Single subsidiary guarantorof 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;

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) Multiple subsidiary guarantorsof 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:

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§ 210.3-10

17 CFR Ch. 11 (4-1-10 Edition)

(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
(4) The parent company's financial
statements are filed for the periods
specified by §§210.3-01 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 guarantors on a
combined basis;
(iii) 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 of the
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.
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 filed 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 §§210.3-01 and 210.3-02.
(ii) The financial statements must
conform to the requirements of Regulation S-X (§§210.1-01 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;
(B) 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

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§ 210.3-10

Securities and Exchange Commission
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:
(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.
(3) Annual report refers to an annual
report on Form 10-K or Form 20-F
(§249.310 or 249.220f of this 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 consid-

ering 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
§210.10-01 for the form and content for
condensed financial statements and
present the financial information in
sufficient 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 based upon their proportionate share of the subsidiary's net assets;
(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;
(iii) Subsidiary guarantors whose
guarantee is not joint and several with
the guarantees of the other subsidiaries; and
(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

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17 CFR Ch. 11 (4-1-10 Edition)

§ 210.3-11
(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 §210.4-08(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 material for investors to evaluate the sufficiency of the guarantee;
(ii) Shall include sufficient 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 Principles to the extent necessary to allow investors to
evaluate the sufficiency of the guarantees. The reconciliation may be limited
to the information specified by Item 17
of Form 20-F (§249.220f of this chapter).
The reconciling information need not
duplicate information included else-

where 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;
74 FR 18615, Apr. 23, 2009]
§ 210.3-11 Financial statements of an
inactive registrant.
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;
(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 material 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 of financial statements
at effective date of registration
statement or at mailing date of
proxy statement.
(a) If the financial statements in a
filing are as of a date the number of
days specified in paragraph (g) of this
section or more before the date the filing 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 interim 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

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§ 210.3-13

Securities and Exchange Commission
of the preceding fiscal year. Such interim financial statements may be
unaudited and need not be presented in
greater detail than is required by
§210.10-01. 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 §210.3-01. 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 filing is made near the
end of a fiscal year and audited financial statements for that fiscal year are
not included in the filing, 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 filed
under the Securities Act of 1933 or filed
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 report-

ing requirements of section 13 or 15(d)
of the Securities Exchange Act of 1934.
(e) For filings 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 §§210.3-05 or
210.3-09 because it is an acquired business or a 50 percent or less owned person may be of the age specified in Item
8.A of Form 20-F.
(g)(1) For purposes of paragraph (a) of
this section, the number of days shall
be:
(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]
EDITORIAL NOTE: For FEDERAL REGISTER ci-

tations affecting §210.3-12, see the List of
CFR Sections Affected, which appears in the
Finding Aids section of the printed volume
and on GPO Access.
§ 210.3-13 Filing of other financial
statements 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 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

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§ 210.3-14

17 CFR Ch. 11 (4-1-10 Edition)

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.
(a) If, during the period for which income statements are required, the registrant has acquired one or 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 property is not acquired from
a related party;
(ii) Material factors considered by
the registrant in assessing the property
are described with specificity in the filing 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, utility rates, ad valorem tax rates, maintenance expenses,
capital improvements anticipated); and
(iii) 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 necessarily indicative of future operating results.
NOTE: The discussion of material factors
considered should be combined with that required by Item 15 of Form S-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 property 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 will 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.
(a)(1) The income statement prepared
pursuant to §210.5-03 shall include the
following additional captions between
those required by § 210.5-03.15 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.

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§ 210.3-18

Securities and Exchange Commission
(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 affiliates
whose
securities
collateralize an issue registered or
being registered.
(a) For each of the registrant's affiliates whose securities constitute a substantial portion of the collateral for
any class of securities registered or
being registered, there shall be filed
the financial statements that would be
required if the affiliate 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 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.
(a) In lieu of the financial statements
otherwise required, a natural person
may file 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 §210.3-09(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 controlling 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.
(a) For filings by registered management investment companies, the following financial statements shall be
filed:
(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.)

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17 CFR Ch. 11 (4-1-10 Edition)

§ 210.3-19
(4) Audited statements of changes in
net assets conforming to the requirements of §210.6-09 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 liabilities may
be as of the end of the preceding fiscal
year and the filing shall include an additional balance sheet or statement of
assets and liabilities 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 period 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.
(c) If 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 filing 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
liabilities is presented and the date of
the most recent interim balance sheet
or statement of assets and liabilities
filed.
(d) Interim financial statements provided in accordance with these requirements may be unaudited but shall be
presented in the same detail as required by §§210.6-01 to 210.6-10. When
unaudited financial statements are
presented in a registration statement,

they shall include the statement required by §210.3-03(d).
(Sees. 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. 781, 78m, 78n, 78o(d),
78w(a), sees. 5(b), 10(a), 14, 20(a) of the Public
Utility Holding Company Act, 15 U.S.C.
79e(a), 79n, 79t(a); secs. 8, 20, 30, 31(c), 38(a) of
the Investment Company Act of 1940, 15
U.S.C. 80a-8, 80a-20, 80a-29, 80a-30(c), 80a37(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]

§ 210.3-20 Currency for financial statements of foreign private issuers.
(a) A foreign private issuer, as defined in § 230.405 of this chapter, shall
state amounts in its primary 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

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Securities and Exchange Commission
have nbt 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 own
transactions, and those of each of its
material operations (e.g., branches, divisions, subsidiaries, joint ventures,
and similar entities) that is included in
financial
the
issuer's consolidated
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
of sharetranslation adjustment")
holder'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

§ 210.3A-02
since at least the earliest period presented in the filing. 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, 19991
CONSOLIDATED AND COMBINED FINANCIAL
STATEMENTS

§ 210.3A-01

Application of § 210.3A-01

to § 210.3A-05.
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, 19851
financial
§ 210.3A-02 Consolidated
statements of the registrant and its
subsidiaries.
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 will 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
controlling 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

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§ 210.3A-03
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
registrant, in substance, does not have
a controlling financial interest (for example, when the subsidiary is in legal
reorganization or in bankruptcy). 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 of a date or for periods substantially
different from those of the registrant.
Rather, the earnings 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 statements 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.
(2) Notwithstanding the 93-day provision specified in paragraph (b)(1) of this
section, in connection with the retroactive combination of financial statements of entities following a combination between entities under common

control, 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
will 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, as amended at 74
FR 18615, Apr. 23, 2009]
§ 210.3A-03 Statement as to principles
of consolidation or combination followed.
(a) A brief description of 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.
(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

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Securities and Exchange Commission
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]
§ 210.3A-04 Intercompany items and
transactions.
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
profits 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.
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
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.
(a) Financial statements should be
filed in such form and order, and
should use such generally accepted ter-

§ 210.4-01
minology, as will 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 will 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 filed with the Commission.
(2) In all filings of foreign private
issuers (see §230.405 of this chapter), except as stated otherwise in 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.
(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

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17 CFR Ch. 11 (4-1-10 Edition)

§ 210.4-02
not file 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.

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.

(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.
If a note covering substantially the
same subject matter is required with
respect to two or more financial statements relating to the same or affiliated 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.
§§ 210.4-05--210.4-06

[Reserved]

§ 210.4-07 Discount on shares.
any
or
shares,
on
Discount
unamortized balance thereof, shall be
shown separately as a deduction from
as ciraccount(s)
applicable
the
cumstances require.

§ 210.4-08 General notes to financial
statements.
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 filed, 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 filed and for paragraph (j) as specified therein. When
specific statements are presented separately, the pertinent notes shall accompany such statements unless crossreferencing is appropriate.
(a) Principles of consolidation or combination. With regard to consolidated or
combined financial statements, refer to
§§210.3A-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

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Securities and Exchange Commission
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 section 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 consolidated and unconsolidated
subsidiaries as of the end of the most
recent fiscal year which may not be
transferred to the parent company in

§ 210.4-08
the form of loans, advances or cash
dividends by the subsidiaries without
the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.). Not all limitations on
transferability of assets are considered
to be restrictions for purposes of this
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 of funds 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
(§210.5-02.27) and noncontrolling 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

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§ 210.4-08
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, liabilities and results of operations as
detailed in §210.1-02(bb) shall be presented in notes to the financial statements on an individual or group basis
for:
(i) Subsidiaries not consolidated; or
(ii) For 50 percent or less owned persons accounted for by the equity method by the registrant or by a subsidiary
of the registrant, if the criteria in
§210.1-02(w) for a significant subsidiary
are met:
(A) Individually by any subsidiary
not consolidated or any 50% or less
owned person; or
(B) On an aggregated basis by any
combination of such subsidiaries and
persons.
(2) Summarized financial information
shall be presented insofar as is practicable as of the same dates and for the
same periods as the audited consolidated financial statements provided
and shall include the disclosures prescribed by §210.1-02(bb). Summarized
information of subsidiaries not consolidated shall not be combined for disclosure purposes with the summarized information of 50 percent or less owned
persons.
(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 (benefit) 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 difthe
separately
(indicate
ferences
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 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 reconciliation between
the amount of reported total income
tax expense (benefit) 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 perin
dollar
than
rather
centages
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

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Securities and Exchange Commission
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.
(j) [Reserved]
(k) Related party transactions which
affect the financial statements. (1) Related party 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 profits or losses resulting
from transactions with related parties
and not eliminated and the effects
thereof shall be disclosed.
(1) [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 liabilities incurred pursuant to repurchase agreements including accrued interest payable thereon.

§ 210.4-08
(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 (m)(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 carrying 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 liability 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 counterparty 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

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§ 210.4-08
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 repurchaseagreements
(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 sufficient 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 counterparty 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
or group of related
counterparty
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 counterparty to
the registrant (or to a third party
agent that has affirmatively 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 settlement
accounting (e.g., whether and how risk
designation,
reduction,
correlation,
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., FiAccounting
Standards
Board
nancial
("FASB"), Statement of Financial Accounting
Standards No. 119, "Disclosure about Derivative

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§ 210.4-10

Securities and Exchange Commission
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 settled in cash or with
another financial instrument. For purposes
of this paragraph, settlement in cash includes settlement 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
StandardsNo. 80, "Accounting for Futures Contracts," paragraph 9,(August 1984)).
4. Registrants should provide disclosures
required under paragraph (n) in filings 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; 74 FR
18615, Apr. 23, 2009]
§ 210.4-9

[Reserved]

§ 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.
This section prescribes financial accounting and reporting standards for
registrants with the Commission engaged in oil and gas producing activities in filings under the Federal securities laws and for the preparation of ac-

counts 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 of this 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 applicability of
this section to filings 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) 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.
(2) Analogous reservoir. Analogous reservoirs, as used in resources assessments, have similar rock and fluid
properties, reservoir conditions (depth,
temperature, and pressure) and drive
mechanisms, but are typically at a
more advanced stage of development
than the reservoir of interest and thus
may provide concepts to assist in the
interpretation of more limited data
and estimation of recovery. When used
to support proved reserves, an "analogous reservoir" refers to a reservoir
that shares the following characteristics with the reservoir of interest:

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§ 210.4-10

17 CFR Ch. 11 (4-1-10 Edition)

(i) Same geological formation (but
not necessarily in pressure communication with the reservoir of interest);
(ii) Same environment of deposition;
(iii) Similar geological structure; and
(iv) Same drive mechanism.
Instruction to paragraph (a)(2): Reservoir
properties must, in the aggregate, be no
more favorable in the analog than in the reservoir of interest.
(3) Bitumen. Bitumen, sometimes referred to as natural bitumen, is petroleum in a solid or semi-solid state in
natural deposits with a viscosity greater than 10,000 centipoise measured at
original temperature in the deposit and
atmospheric pressure, on a gas free
basis. In its natural state it usually
contains sulfur, metals, and other nonhydrocarbons.
(4) Condensate. Condensate is a mixture of hydrocarbons that exists in the
gaseous phase at original reservoir
temperature and pressure, but that,
when produced, is in the liquid phase at
surface pressure and temperature.
(5) Deterministic estimate. The method
of estimating reserves or resources is
called deterministic when a single
value for each parameter (from the
geoscience, engineering, or economic
data) in the reserves calculation is
used in the reserves estimation procedure.
(6) Developed oil and gas reserves. Developed oil and gas reserves are reserves of any category that can be expected to be recovered:
(i) Through existing wells with existing equipment and operating methods
or in which the cost of the required
equipment is relatively minor compared to the cost of a new well; and
(ii)
Through installed extraction
equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not
involving a well.
(7) 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 drilling, including surveying well locations for the purpose of
determining specific development drilling 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.
(iii) 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.
(8) Development project. A development project is the means by which petroleum resources are brought to the
status of economically producible. As
examples, the development of a single
reservoir or field, an incremental development in a producing field, or the
integrated development of a group of
several fields and associated facilities
with a common ownership may constitute a development project.
(9) 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.
(10) Economically producible. The term
economically producible, as it relates
to a resource, means a resource which
generates revenue that exceeds, or is
reasonably expected to exceed, the
costs of the operation. The value of the
products that generate revenue shall be
determined at the terminal point of oil
and gas producing activities as defined
in paragraph (a)(16) of this section.
(11) Estimated ultimate recovery (EUR).
Estimated ultimate recovery is the
sum of reserves remaining as of a given
date and cumulative production as of
that date.
(12) Exploration costs. Costs incurred
in identifying areas that may warrant
examination and in examining specific

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Securities and Exchange Commission
areas that are considered to have prospects of containing oil and gas reserves, including costs of drilling exploratory wells and exploratory-type
stratigraphic test wells. Exploration
costs may be incurred both before acquiring the related property (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 facilities 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 drilling and equipping
exploratory wells.
(v) Costs of drilling exploratory-type
stratigraphic test wells.
(13) Exploratory well. An exploratory
well is a well drilled to find a new field
or to find a new reservoir in a field previously found to be productive of oil or
gas in another reservoir. Generally, an
exploratory well is any well that is not
a development well, an extension well,
a service well, or a stratigraphic test
well as those items are defined in this
section.
(14) Extension well. An extension well
is a well drilled to extend the limits of
a known reservoir.
(15) Field. An area consisting of a single reservoir or multiple reservoirs all
grouped on or related to the same individual geological structural feature
and/or 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

§210.4-10
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.
(16) Oil and gas producing activities. (i)
Oil and gas producing 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;
(B) The acquisition of property rights
or properties for the purpose of further
exploration or for the purpose of removing the oil or gas from such properties;
(C) The construction, drilling, and
production activities necessary to retrieve oil and gas from their natural
reservoirs, including the acquisition,
construction, installation, and maintenance of field gathering and storage
systems, such as:
(1) Lifting the oil and gas to the surface; and
(2) Gathering, treating, and field
processing (as in the case of processing
gas to extract liquid hydrocarbons);
and
(D) Extraction of saleable hydrocarbons, in the solid, liquid, or gaseous
state, from oil sands, shale, coalbeds,
or other nonrenewable natural resources which are intended to be upgraded into synthetic oil or gas, and
activities undertaken with a view to
such extraction.
Instruction 1 to paragraph(a)(16)(i): The oil
and gas production function shall be regarded as ending at a "terminal point",
which is the outlet valve on the lease or field
storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for
the production function as:
a. The first point at which oil, gas, or gas
liquids, natural or synthetic, are delivered to
a main pipeline, a common carrier, a refinery, or a marine terminal; and
b. In the case of natural resources that are
intended to be upgraded into synthetic oil or
gas, if those natural resources are delivered
to a purchaser prior to upgrading, the first
point at which the natural resources are delivered to a main pipeline, a common carrier,
a refinery, a marine terminal, or a facility
which upgrades such natural resources into
synthetic oil or gas.

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§ 210.4-10
Instruction 2 to paragraph (a)(16)(i): For
purposes of this paragraph (a)(16), the term
saleable hydrocarbons means hydrocarbons
that are saleable in the state in which the
hydrocarbons are delivered.
(ii) Oil and- gas producing activities
do not include:
(A) Transporting, refining, or marketing oil and gas;
(B) Processing of produced oil, gas or
natural resources that can be upgraded
into synthetic oil or gas by a registrant that does not have the legal
right to produce or a revenue interest
in such production;
(C) Activities relating to the production of natural resources other than
oil, gas, or natural resources from
which synthetic oil and gas can be extracted; or
(D) Production of geothermal steam.
(17) Possible reserves. Possible reserves
are those additional reserves that are
less certain to be recovered than probable reserves.
(i) When deterministic methods are
used, the total quantities ultimately
recovered from a project have a low
probability of exceeding proved plus
probable plus possible reserves. When
probabilistic methods are used, there
should be at least a 10% probability
that the total quantities ultimately recovered will equal or exceed the proved
plus probable plus possible reserves estimates.
(ii) Possible reserves may be assigned
to areas of a reservoir adjacent to probable reserves where data control and
interpretations of available data are
progressively less certain. Frequently,
this will be in areas where geoscience
and engineering data are unable to define clearly the area and vertical limits
of commercial production from the reservoir by a defined project.
(iii) Possible reserves also include incremental quantities associated with a
greater percentage recovery of the hydrocarbons in place than the recovery
quantities assumed for probable reserves.
(iv) The proved plus probable and
proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons

to

results

in

successful

similar

projects.
(v) Possible reserves may be assigned
where geoscience and engineering data
identify directly adjacent portions of a
reservoir within the same accumulation that may be separated from
proved areas by faults with displacement less than formation thickness or
other geological discontinuities and
that have not been penetrated by a
wellbore, and the registrant believes
that such adjacent portions are in communication with the known (proved)
reservoir. Possible reserves may be assigned to areas that are structurally
higher or lower than the proved area if
these areas are in communication with
the proved reservoir.
(vi) Pursuant to paragraph (a)(22)(iii)
of this section, where direct observation has defined a highest known oil
(HKO) elevation and the potential exists for an associated gas cap, proved
oil reserves should be assigned in the
structurally higher portions of the reservoir above the HKO only if the higher
contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that
do not meet this reasonable certainty
criterion may be assigned as probable
and possible oil or gas based on reservoir fluid properties and pressure
gradient interpretations.
(18) Probable reserves. Probable reserves are those additional reserves
that are less certain to be recovered
than proved reserves but which, together with proved reserves, are as
likely as not to be recovered.
(i) When deterministic methods are
used, it is as likely as not that actual
remaining quantities recovered will exceed the sum of estimated proved plus
probable reserves. When probabilistic
methods are used, there should be at
least a 50% probability that the actual
quantities recovered will equal or exceed the proved plus probable reserves
estimates.
(ii) Probable reserves may be assigned to areas of a reservoir adjacent
to proved reserves where data control
or interpretations of available data are
less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable
certainty criterion. Probable reserves

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Securities and Exchange Commission
may be assigned to areas that are
structurally higher than the proved
area if these areas are in communication with the proved reservoir.
(iii) Probable reserves estimates also
include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons
in place than assumed for proved reserves.
(iv) See also guidelines in paragraphs
(a)(17)(iv) and (a)(17)(vi) of this section.
(19) Probabilisticestimate. The method
of estimation of reserves or resources
is called probabilistic when the full
range of values that could reasonably
occur for each unknown parameter
(from the geoscience and engineering
data) is used to generate a full range of
possible outcomes and their associated
probabilities of occurrence.
(20) Production costs. (i) Costs incurred to operate and maintain wells
and related equipment and facilities,
including depreciation and applicable
operating costs of support equipment
and facilities and other costs of operating and maintaining those wells and
related equipment and facilities. 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.
(B) Repairs and maintenance.
(C) Materials, supplies, and fuel consumed and supplies utilized in operating the wells and related equipment
and facilities.
(D) Property 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

§ 210.4-10
of oil and gas produced along with production (lifting) costs identified above.
(21) Proved area. The part of a property to which proved reserves have
been specifically attributed.
(22) Proved oil and gas reserves. Proved
oil and gas reserves are those quantities of oil and gas, which, by analysis
of geoscience and engineering data, can
be estimated with reasonable certainty
to be economically producible-from a
given date forward, from known reservoirs, and under existing economic
conditions, operating methods, and
government regulations-prior to the
time at which contracts providing the
right to operate expire, unless evidence
indicates that renewal is reasonably
certain, regardless of whether deterministic or probabilistic methods are
used for the estimation. The project to
extract the hydrocarbons must have
commenced or the operator must be
reasonably certain that it will commence the project within a reasonable
time.
(i) The area of the reservoir considered as proved includes:
(A) The area identified by drilling
and limited by fluid contacts, if any,
and
(B) Adjacent undrilled portions of the
reservoir that can, with reasonable certainty, be judged to be continuous with
it and to contain economically producible oil or gas on the basis of available
geoscience and engineering data.
(ii) In the absence of data on fluid
contacts, proved quantities in a reservoir are limited by the lowest known
hydrocarbons (LKH) as seen in a well
penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower
contact with reasonable certainty.
(iii) Where direct observation from
well penetrations has defined a highest
known oil (HKO) elevation and the potential exists for an associated gas cap,
proved oil reserves may be assigned in
the structurally higher portions of the
reservoir only if geoscience, engineering, or performance data and reliable
technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced
economically through application of
improved recovery techniques (including, but not limited to, fluid injection)

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§ 210.4-10
are included in the proved classification when:
(A) Successful testing by a pilot
project in an area of the reservoir with
properties no more favorable than in
the reservoir as a whole, the operation
of an installed program in the reservoir
or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the
engineering analysis on which the
project or program was based; and
(B) The project has been approved for
development by all necessary parties
and entities, including governmental
entities.
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is
to be determined. The price shall be
the average price during the 12-month
period prior to the ending date of the
period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month
price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
(23) Proved properties. Properties with
proved reserves.
(24) Reasonable certainty. If deterministic methods are used, reasonable
certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are
used, there should be at least a 90%
probability that the quantities actually recovered will equal or exceed the
estimate. A high degree of confidence
exists if the quantity is much more
likely to be achieved than not, and, as
changes due to increased availability
of geoscience (geological, geophysical,
and geochemical), engineering, and
economic data are made to estimated
ultimate recovery (EUR) with time,
reasonably certain EUR is much more
likely to increase or remain constant
than to decrease.
(25) Reliable technology. Reliable technology is a grouping of one or more
technologies (including computational
methods) that has been field tested and
has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous
formation.

(26) Reserves. Reserves are estimated
remaining quantities of oil and gas and
related substances anticipated to be
economically producible, as of a given
date, by application of development
projects to known accumulations. In
addition, there must exist, or there
must be a reasonable expectation that
there will exist, the legal right to
produce or a revenue interest in the
production, installed means of delivering oil and gas or related substances
to market, and all permits and financing required to implement the project.
Note to paragraph (a)(26): Reserves should
not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults
until those reservoirs are penetrated and
evaluated as economically producible. Reserves should not be assigned to areas that
are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir,
or negative test results). Such areas may
contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).
(27) Reservoir. A porous and permeable underground formation containing a natural accumulation of producible oil and/or gas that is confined
by impermeable rock or water barriers
and is individual and separate from
other reservoirs.
(28) Resources. Resources are quantities of oil and gas estimated to exist
in naturally occurring accumulations.
A portion of the resources may be estimated to be recoverable, and another
portion may be considered to be unrecoverable. Resources include both discovered and undiscovered accumulations.
(29) Service well. A well drilled 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, saltwater disposal, water supply for injection, observation, or Injection for insitu combustion.
(30) Stratigraphic test well. A stratigraphic test well is a drilling effort,
geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intent of

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Securities and Exchange Commission
being completed for hydrocarbon production. The classification also includes tests identified as core tests and
all types of expendable holes related to
hydrocarbon exploration. Stratigraphic
tests are classified as "exploratory
type" if not drilled in a known area or
"development type" if drilled in a
known area.
(31) Undeveloped oil and gas reserves.
Undeveloped oil and gas reserves are
reserves of any category that are expected to be recovered from new wells
on undrilled acreage, or from existing
wells where a relatively major expenditure is required for recompletion.
(i) Reserves on undrilled acreage
shall be limited to those directly offsetting development spacing areas that
are reasonably certain of production
when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic
producibility at greater distances.
(ii) Undrilled locations can be classified as having undeveloped reserves
only if a development plan has been
adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify
a longer time.
(iii) Under no circumstances shall estimates for 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
projects in the same reservoir or an
analogous reservoir, as defined in paragraph (a)(2) of this section, or by other
evidence using reliable technology establishing reasonable certainty.
(32) Unproved properties. Properties
with no proved reserves.
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

§ 210.4-10
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 property 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; (B) 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:
(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

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§ 210.4-10
Impairment
impairment.
assessing
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 drilling 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 property, 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 drilling 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 addi-

tional 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-property) 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
consideration
of
prices
(including
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
consolidation
basis.
proportionate
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:

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Securities and Exchange Commission
(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 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 ceiling.
(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

§ 210.4-10
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
drilling 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 drilling arrangements involving oil
and gas exploration and development
activities (e.g., carried interest, turnkey 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

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17 CFR Ch. 11 (4-1-10 Edition)

§ 210.4-10
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 registrant or an affiliate
(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.
(B) 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 intercompany profit under generally accepted accounting principles.
(C) Notwithstanding the provisions of
paragraphs (i)(6)(iv) (A) and (B) 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 affiliate. 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 (B)
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.
(8) For purposes of this paragraph (c),
the term "current price" shall mean
the average price during the 12-month
period prior to the ending date of the

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Securities and Exchange Commission
period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month
price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
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 drilling and development costs and other costs incurred that enter into the determination of taxable income and pretax accounting income in different periods.
[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;
74 FR 2190, Jan. 14, 2009]
COMMERCIAL AND INDUSTRIAL
COMPANIES
§ 210.5-01 Application of §§ 210.5-01 to
210.5-04.
Sections 210.5-01 to 210.5-04 shall be
applicable to financial statements filed
for all persons except(a) Registered investment companies
(see §§210.6-01 to 210.6-10).
(b) Employee stock purchase, savings
and similar plans (see §§210.6A-01 to
210.6A-05).
(c) Insurance companies (see §§210.701 to 210.7-05).
(d) Bank holding companies and
banks (see §§210.9-01 to 210.9-07).
(e) Brokers and dealers when filing
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.
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 §210.4-01(a)).

§ 210.5-02
ASSETS AND OTHER DEBITS
CurrentAssets, 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. 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 §210.408(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 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.
(c) If receivables include amounts due
under long-term contracts (see §210.502.6(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.

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§ 210.5-02
(2) Amounts representing the recognized
sales value of performance and such amounts
that had not been billed and were not
billable to customers at the date of the balance sheet. Include a general description of
the prerequisites for billing.
(3) Billed or unbilled 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 §210.405); (3) work in process (see §210.4-05); (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 of
this method shall include the nature of the
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, 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, first-out, 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 §§210.5-02.3 and 210.502.6, long-term contracts or programs include (1) all contracts or programs for which
gross profits are recognized on a percentageof-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 inprocess 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. Prepaidexpenses.
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 currentassets, when appropriate.
10. Securities of related parties. (See §210.408(k).)
11. Indebtedness of related parties-not current. (See §210.4-08(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.
LIABILIPIES AND STOCKHOLDERS' EQuITY
Current Liabilities, 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 §210.4-08(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 dis-

§ 210.5-02
closed, 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 liabilities. State separately, in the balance sheet or in a note
thereto, any item in excess of 5 percent of
total current liabilities. 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.
21. Total current liabilities, 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 §210.406):
(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 §210.408(k).
(b) The amount 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 §210.408(k).
24. Other liabilities. 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 total liabilities.
25. Commitments and contingent liabilities.
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.
Redeemable Preferred Stocks
27. 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

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17 CFR Ch. 11 (4-1-10 Edition)

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 §210.5-02.28 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 balance sheet, for each issue, the number of
shares authorized and the number of shares
issued or outstanding, as appropriate (See
§210.4-07).
(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 §210.4-08(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
28. 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 §210.4-07). 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 filed.
(See also §210.4-08(d).)
Common Stocks
29. Common 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 §210.4-07), 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 §210.4-08(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
30. 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 §210.4-08(e).) Additional paid-in capital and other additional
capital may be combined with the stock caption to which it applies, if appropriate.
(b) For a period of at least 10 years subsequent to the effective date of a quasi-reorganization, 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.
Noncontrolling Interests
31. Noncontrolling 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 equity.
32. Total liabilitiesand equity.
[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; 74 FR
18615, Apr. 23, 2009]
§ 210.5-03

Income statements.

(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

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appear on the face of the income statements filed for the persons to whom
this article pertains (see §210.4-01(a)).
(b) If income is derived from more
than one of the subcaptions described
under §210.5-03.1, 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 §210.5-03.2 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 §210.4-08(k). A public utility 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 §210.5-03.2 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 utilities 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 § 210.4-0(k).
3. Other operating costs and expenses. State
separately any material amounts not included under caption 2 above.
4. Selling, 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 shall be disclosed as required under

§210.5-04
§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 appropriateitems below.
11. Income tax expense. Include under this
caption only taxes based on income (see
§ 210.4-08(h)).
12. 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 §210.4-01(a)).
13. Income or loss from continuing operations.
14. Discontinued operations.
15. Income or loss before extraordinaryitems
and cumulative effects of changes in accounting
principles.
16. Extraordinary items, less applicable tax.
17. Cumulative effects of changes in accounting principles.
18. Net income or loss.
19. Net income attributableto the noncontrolling interest.
20. Net income attributable to the controlling
interest.
21. 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; 74 FR 18615, Apr. 23, 2009]
§ 210.5-04
filed.

What

schedules

are to

be

(a) Except as expressly provided otherwise in the applicable form:
(1) The schedules specified below in
this Section as Schedules II and III
shall be filed as of the date of the most
recent audited balanced sheet for each
person or group.
(2) Schedule II shall be filed for each
period for which an audited income
statement is required to be filed for
each person or group.
(3) Schedules I and IV shall be filed
as of the date and for periods specified
in the schedule.

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§ 210.6-01
(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 (§210.4-08(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 (§210.5-02.27) and
noncontrolling 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
§210.4-02.)
Schedule III-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 §210.12-29 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 ("P/C") 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 P/C
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; 74 FR
18615, Apr. 23, 2009]
REGISTERED INVESTMENT COMPANIES
SOURCE: Sections 210.6-01 through 210.6-10
appear at 47 FR 56838, Dec. 21, 1982, unless
otherwise noted.
§ 210.6-01

Application of §§ 210.6-01

to

210.6-10.
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.

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) Affiliate. The term affiliate means
an affiliated 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.

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§ 210.6-03

Securities and Exchange Commission
(b) Value. As used in §§210.6-01 to
210.6-10, the term value shall have the
meaning given in section 2(a)(41)(B) of
the Investment Company Act of 1940.
(c) Balance sheets; statements of net assets. As used in §§ 210.6-01 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.
The financial statements filed for
persons to which §§210.6-01 to 210.6-10
are applicable shall be prepared in accordance with the following special
rules in addition to the general rules in
§§210.1-01 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 of financial 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, trust indenture or
other governing legal
instruments
specifying certain accounting procedures inconsistent with those required
in §§ 210.6-01 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 210.3A05 (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 filed, the amounts included under each caption in which financial data pertaining to affiliates 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 §§210.6-04.1, 6-04.2 and 604.3 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

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§210.6-03
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
unless 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 affiliated companies if any part of such investment is
restricted and the aggregate value of
the investment in all issues of such
company or affiliated group exceeds
five percent of the value of total assets.
(As used in this paragraph, the term affiliated shall have the meaning given in
§210.6-02(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 accured on
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 accordance with section 852(b)(3)(D) 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.
(i) Issuance and repurchase by a registered investment company of its own securities. Disclose for each class of the
company's securities:
(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.

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Securities and Exchange Commission
(j) 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 31/2 per
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 32
per 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 min-

§ 210.6-04
imum 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 thereon at
rates required under the terms of the
certificate.
(v) Amounts for other appropriate
contingency reserves, for death and
disability benefits or for reinstatement
rights on any certificate providing for
such benefits or rights.
(1) Inapplicable captions. Attention is
directed to the provisions of §§210.4-02
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, officers,
and affiliates shall nevertheless be separately set forth except as otherwise
specifically permitted under a particular caption.
§ 210.6-04 Balance sheets.
This rule is applicable to balance
sheets filed 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 faceamount certificates which are subject
to the special provisions of §210.6-06 of
this part. Balance sheets filed under
this rule shall comply with the following provisions:
ASSETS

1. Investments in securities of unaffiliated
issuers.
2. Investments in and advances to affiliates.
State separately investments in and advances to: (a) Controlled companies and (b)
other affiliates.
3. Investments-other than securities. 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 §210.5-02.1 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 officers; and
(5) others.

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§ 210.6-05
(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 securities 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 liabilities.
State separately amounts payable for: (a) 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 liabilities which are material. Securities sold short and open option contracts
written shall be stated at value.
11. Deposits for securities 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 affiliates, 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 §210.5-02.19(b) regarding unused
lines of credit for short-term financing and
§210.5-02.22(b) regarding unused commitments for long-term financing arrangements.
14. Total liabilities.
15. Commitments and contingent liabilities.
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 (loss).
Disclose:
(a) The accumulated undistributed investment income-net,
(b) accumulated undistributed net realized
gains (losses) on investment transactions,
appreciation
unrealized
(c)
net
and
(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.

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 unaffiliated 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 liabilities 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 §§210.6-04.10 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) §210.604.16, (ii) §210.6-04.17 and (iii) §210.6-04.18
shall be furnished in a note to the financial
statements.

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Securities and Exchange Commission
§ 210.6-06

Special provisions applicable to the balance sheets of issuers
of face-amount certificates.
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)
dividends and 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 classified in another asset
caption.
6. Total assets.
LIABILITIES
7. Certificate reserves. Issuers of faceamount 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

§ 210.6-07
category amounts payable within one year
and amounts payable after one year.
(b) Provide in a note the information required under §210.5-02.19(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 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 affiliates, excluding any
amounts owing to noncontrolled affiliates
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. Total liabilities.
11. Commitments and contingent liabilities.
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 setting forth the information prescribed in §210.3-04 shall be given in a note or
separate statement for each period in which
a statement of operations is presented.
14. Total liabilitiesand stockholders' equity.
§ 210.6-07

Statements of operations.

Statements of operations filed by
registered
investment
companies,
other than issuers of face-amount certificates subject to the special provisions of §210.6-08 of this part, shall
comply with the following 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.

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17 CFR Ch. 11 (4-1-10 Edition)

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) 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. 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 affiliated principal underwriter or other affiliated brokerdealer.
(f) State separately all amounts paid in accordance with a plan adopted under rule 12b1 of the Investment Company Act of 1940 [17
CFR 270.12b-1]. Reimbursement to the fund
of expenses incurred under such plan (12b-i
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) BrokeragelService Arrangements. If a
broker-dealer or an affiliate of the brokerdealer 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)]), 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 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.(g), 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 unaffiliated issuers,
(2) investment securities of affiliated 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

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Securities and Exchange Commission
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 (loss) 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.
Statements of operations filed 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; (a) 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
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

§ 210.6-09
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.
8. Realized gain (loss) on investments-net.
(a) State separately the net realized gain
or loss on transactions in: (1) Investment securities of unaffiliated 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
net assets.

of

changes

in

Statements of changes in net assets
filed for persons to whom this article is
applicable shall comply with the following provisions:
STATEMENTS OF CHANcES IN NET ASSESTS
1. Operations. State separately: (a) Investment income-net as shown by §210.6-07.6; (b)

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§210.6-10

17 CFR Ch. 11 (4-1-10 Edition)

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.
(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
each person or group.

for

Schedule I-Investments in securities of unaffiliated issuers. The schedule prescribed by
§210.12-12 shall be filed in support of caption
1 of each balance sheet.
Schedule II-Investments-other than securities. The schedule prescribed by §210.12-13
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 (§210.6-04.4).
Schedule III-Investments in and advances to
affiliates. The schedule prescribed by §210.1214 shall be filed in support of caption 2 of
each balance sheet.
Schedule IV-Investments-securities sold
short. The schedule prescribed by §210.12-12A
shall be filed in support of caption 10(a) of
each balance sheet.
Schedule V-Open option contracts written.
The schedule prescribed by §210.12-12B shall
be filed in support of caption 10(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 filed for
each person or group.
Schedule VI-Summary schedule of investments in securities of unaffiliated 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 filed 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 III, 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 securities. The
schedule prescribed by §210.12-12 shall be
filed in support of caption 1 of each balance
sheet (§ 210.6-04).
Schedule I-Allocation of trust assets to series of trust shares. If the trust assets are specifically allocated to different series of trust

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Securities and Exchange Commission
shares, and if such allocation is not shown in
the balance sheet in columnar form or by the
filing 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.
Schedule III-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 filing 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 filed for
face-amount
certificate
investment
companies for each period for which a
statement of operations is filed, except
as indicated for Schedules III and IV.
Schedule I-Investment in securities of unaffiliated 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 ll-Investments in and advances to
affiliates 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 Ill-Mortgage loans on real estate
and interest earned on mortgages. 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 §210.12-24
shall be filed in support of captions 1 and 5(a)

§ 210.6A-02
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 §210.12-27 shall be
filed in support of the information required
by caption 4 of §210.6-06 as to total amount
of qualified assets on deposit.
Schedule VI-Certificate reserves. The schedule prescribed by §210.12-26 shall be filed in
support of caption 7 of each balance sheet.
Schedule VII-Valuation and qualifying accounts. The schedule prescribed by §210.12-09
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

§ 210.6A-01

Application of §§ 210.6A-01

to 210.6A-05.
(a)
Sections 210.6A-01 to 210.6A-05
shall be applicable to financial statements filed 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.
The financial statements filed 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 as to
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

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17 CFR Ch. 11 (4-1-10 Edition)

§ 210.6A-03
net asset value per unit shall be given
by footnote or otherwise.
(c) Federalincome 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.

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.
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)
[47 FR 56843, Dec. 21, 1982]
State separately the net of gains or losses
arising from transactions in (1) investments
§ 210.6A-03 Statements
of
financial
in securities of the participating employer or
condition.
employers; (2) other investments in securities; and (3) other investments.
Statements of financial condition
(b) State in a footnote or otherwise for
filed under this rule shall comply with
each category of investment in paragraph (a)
the following provisions:
above the aggregate cost, the aggregate proceeds and the net gain or loss. State the
PLAN ASSETS
principle followed in determining the cost of
1. Investments in securities of participating securities sold, e.g., average cost or first-in,
employers. State separately each class of sefirst-out.
curities of the participating employer or em3. Unrealized appreciation or depreciation of
ployers.
investments. (a) State the amount of increase
2. Investments in securities of unaffiliated or decrease in unrealized appreciation or deissuers.
preciation of investments during the period.
(a) United States Government bonds and other
(b) State in a footnote or otherwise the
obligations. Include only direct obligations of
amount of unrealized appreciation or deprethe United States Government.
ciation of investments at the beginning of
(b) Other securities. State separately (1) the period of report, at the end of the period
marketable securities and (2) other securiof report, and the increase or decrease during
ties.
the period.
3. Investments. Other than securities. State
4. Contributionsand deposits. (a) State sepaseparately each major class.
rately (1) total of amounts deposited by par4. Dividends and interest receivable.
ticipating employees, and (2)
total of
5. Cash.
amounts contributed by the participating
6. Other assets. State separately (a) total of
employer or employers.
amounts due from participating employers
(b) If employees of more than one employer
or any of their directors, officers and prinparticipate in the plan, state in tabular form
cipal holders of equity securities; (b) total of
in a footnote or otherwise the amount conamounts due from trustees or managers of
tributed by each employer and the deposits
the plan; and (c) any other significant
of the employees of each such employer.
amounts.
5. Withdrawals, lapses and forfeitures. State
separately (a) balances of employees' acLIABILrrIES AND PLAN EQUTrY
counts withdrawn, lapsed or forfeited during
7. Liabilities. State separately (a) total of
the period; (b) amounts disbursed in settleamounts payable to participating employers;
ment of such accounts; and (c) disposition of
(b) total of amounts payable to participating balances remaining after settlement speciemployees; and (c) any other significant
fied in (b).
amounts.
6. Plan equity at beginning of period.

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Securities and Exchange Commission
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

§ 210.7-03
§ 210.7-01 Application of §§ 210.7-01 to
210.7-05.
This article shall be applicable to financial statements filed for insurance
companies.

filed.
(a) Schedule I, specified below, shall
be filed as of the most recent audited
statement of financial condition and
any subsequent unaudited statement of
financial condition being filed. Schedule II shall be filed 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
filed. All schedules shall be audited if
the related statements are audited.
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 liabilities 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 IIl-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
SOURCE: Sections 210.7-01 through 210.7-05
appears at 46 FR 54335, Nov. 2, 1981, unless
otherwise noted.

§ 210.7-02

General requirement.
(a) The requirements of the general
rules in §§210.1-01 to 210.4-10 (Articles 1,
2, 3, 3A and 4) shall be applicable except
where they differ from requirements of
§§210.7-01 to 210.7-05.
(b) Financial statements filed for
mutual life insurance companies and
wholly owned stock insurance company
subsidiaries of mutual 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.
§ 210.7-03 Balance sheets.
(a) The purpose of 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 §210.4-01(a).)
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) Policy loans.
(f) Other long-term investments.
(g) Short-term investments.
(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.

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17 CFR Ch. 11 (4-1-10 Edition)

§210.7-03
(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 affiliates that is included in the several subcaptions above, and the amount of
any real estate included in subcaption (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 §210.4-08(k).)
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. Reinsurancerecoverable 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 liability 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.
LIABILITIES AND STOCKHOLDERS' EQurry
13. Policy liabilities 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, mortality, withdrawals) for future policy benefits and claims and settlements
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

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Securities and Exchange Commission
(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 note 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.
15. Other liabilities. (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 liabilities 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) longterm debt including capitalized leases.
(b) The disclosure required by §210.502.19(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 §210.502.22 shall be followed for long-term debt.
17. Indebtedness to related parties. (See
§210.4-0.8(k).)
18. Liabilities related to separate accounts.
[See caption 11.]
19. Commitments and contingent liabilities.
REDEEMABLE PREFERRED STOCKS
20. Preferred stocks subject to mandatory redemption requirements or whose redemption is
outside the control of the issuer. The classification and disclosure requirements of §210.502.27 shall be followed.
NONREDEEMABLE PREFERRED STOCKS
21. Preferred stocks which are not redeemable
or are redeemable solely at the option of the
issuer. The classification and disclosure requirements of § 210.5-02.28 shall be followed.

§210.7-04
COMMON STOCKS
22. Common stocks. The classification and
disclosure requirements of §210.5-02.29 shall
be followed.
OTHER STOCKHOLDERS' EQUrTY
23. 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 §210.408(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 § 210.5-02.30(b) shall be followed
for dating and effect of a quasi-reorganization.
(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.
NONCONTROLLING INTERESTS
24. Noncontrolling interests in consolidated
subsidiaries. The disclosure requirements of
§210.5-02.31 shall be followed.
25. Total liabilitiesand equity.
[46 FR 54335, Nov. 2, 1981, as amended at 50
FR 25215, June 18, 1985; 74 FR 18615, Apr. 23,
2009]
§ 210.7-04

Income statements.

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 of §210.7-03.1 that exceeds five
percent of total investment income, (b) total
investment income, (c) applicable expenses,
and (d) net investment income.
3. Realized investment gains and losses. Disclose the following amounts:

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§210.7-05
(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 §210.7-03.1(a)]
and for equity securities [see §210.7-03.1(b)]
the following amounts:
(1) Realized investment gains and losses,
and
(2) The change during the period in the difference between value and cost.
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 settlement 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 appropriateitems below.

9. Income tax expense. Include under this
caption only taxes based on income. (See
§ 210.4-08(g).)
10. 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).)
11. Income or loss from continuing operations.
12. Discontinued operations.
13. Income or loss before extraordinary items
and cumulative effects of changes in accounting
principles.
14. Extraordinaryitems, less applicable tax.
15. Cumulative effects of changes in accounting principles.
16. Net income or loss.
17. Net income attributableto the noncontrolling interest.
18. Net income attributableto the controlling
interest.
19. Earningsper share data.
[46 FR 54335, Nov. 2, 1981, as amended at 57
FR 45293, Oct. 1, 1992; 74 FR 18615, Apr. 23,
2009]
§210.7-05

What

schedules

are to

be

filed.
(a) Except as expressly provided otherwise in the applicable form:
(1) The schedule specified below in
this section as Schedules I shall be as
of the date of the most recent audited
balance sheet for each person or group.
(2) The schedules specified below in
this section as Schedule IV and V shall
be filed for each period for which an audited income statement is required to
be filed for each person or group.
(3) Schedules II, III and V shall be
filed as of the date and for periods specified in the schedule.
(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.

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§ 210.8-01

Securities and Exchange Commission
Schedule I-Summary of investments-other
than investments in related parties. The schedule prescribed by §210.12-15 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 (§210.4.08(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 (§210.7-03.20) and
noncontrolling interests shall be deducted in
computing net assets for purposes of this
test.
Schedule IlI-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 filed,
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 §210.12-17 shall be filed for reinsurance ceded and assumed.
Schedule V-Valuation and qualifying accounts. The schedule prescribed by §210.12-09
shall be filed in support of valuation and
qualifying accounts included in the balance
sheet (see § 210.4-02).
Schedule VI-Supplemental Information Concerning Property-Casualty Insurance Operations. The information required by §210.1218 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 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 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)
[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; 74 FR 18615,
Apr. 23, 2009]
ARTICLE 8 FINANCIAL STATEMENTS OF
SMALLER REPORTING COMPANIES
SOURCE: 73 FR 953, Jan. 4, 2008, unless otherwise noted.
§ 210.8-01
8.

Preliminary Notes to Article

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 §210.8: Financial statements of a
smaller reporting company, as defined by
§229.10(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

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§ 210.8-02

17 CFR Ch. 11 (4-1-10 Edition)

§210.3-10, except that the periods presented
are those required by § 210.8-02.
NOTE 4 TO §210.8: 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 §210.8: Section 210.4-01(a)(3) shall
apply to the preparation of financial statements of smaller reporting companies.
§ 210.8-02

Annual financial statements.

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.
Interim financial statements may be
unaudited; however, before filing, interim financial statements included in
quarterly
reports
on
Form
10-Q
(§249.308(a) of 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
filed 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 in-

come 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.
(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 liabilities.
(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 comparability with annual financial statements.
(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.
(3) Significant equity investees. Sales,
gross profit, net income (loss) from

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Securities and Exchange Commission
continuing operations, net income, and
net income attributable to the investee
must be disclosed for equity investees
that constitute 20 percent or more of a
registrant's consolidated assets, equity
or income from continuing operations
attributable to the registrant.
(4) Significant dispositions and business
combinations. If a significant disposition or 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, net income attributable to the
registrant 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) filed 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.
[73 FR 953, Jan. 4, 2008, as amended at 74 FR
18615, Apr. 23, 2009]

§210.8-04
of
statements
§ 210.8-04 Financial
businesses acquired or to be acquired.
(a) If a business combination 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) This 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
filed 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.
(3) Annual financial statements required by this rule shall be audited.
The form and content of the financial
statements shall be in accordance with
§§ 210.8-02 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.
(2) Compare the smaller reporting
company's proportionate share of the
total assets (after intercompany eliminations) of the acquiree to the total

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17 CFR Ch. 11 (4-1-10 Edition)

consolidated assets of the smaller reporting company as of the end of the
most recently completed fiscal year.
(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 exclusive of
amounts attributable to any noncontrolling interests 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 exclusive of
amounts attributable to any noncontrolling
interests 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 §210.8-03. 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.
(2) The separate audited balance
sheet of 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 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.
(4) 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
meet or exceed any of the conditions
specified in paragraph (b) of this section at the 50 percent level, and either:
(i) The consummation of the acquisition has not yet occurred; or
(ii) The effective date of the 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 filed 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 §210.805 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 end and filed
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 §210.8-05, 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.
[73 FR 953, Jan. 4, 2008, as amended at 74 FR
18616, Apr. 23, 2009]
§ 210.8-05 Pro forma financial information.
(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

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Securities and Exchange Commission
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.
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 property is not acquired from
a related party;
(2) Material factors considered by the
smaller reporting company in assessing
the property 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

§ 210.8-07
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 property will be operated by
the smaller reporting company, a
statement shall be furnished 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 property
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 the portion
representing a return of capital with
an explanation of annual variations, if
any. If taxable net income per unit will
be greater than the cash available for
distribution per unit, that fact and the
approximate year of occurrence shall
be stated, if significant.
§ 210.8-07

Limited partnerships.

(a) Smaller reporting companies that
are limited partnerships must provide
the balance sheets of the 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 affiliates of the
general partner should be deducted

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§ 210.8-08
from shareholders' equity of the general partner. Where an affiliate has
committed itself to increase or maintain the general partner's capital, the
audited balance sheet of such affiliate
must also be presented.
(c) Where a general partner is a partnership, there shall be filed 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 filed, 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 liabilities
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.

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;
(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 attributable to the
registrant 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 attributable to the
registrant before taxes.

§ 210.8-08

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 88 210.9-01 to
210.9-07
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.

Age of financial statements.
At the date of filing, financial statements included in filings other than
filings on Form 10-K must be not less
current than the financial statements
that would be required in Forms 10-K
and 10-Q if such reports were required
to be filed. 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 mailing, 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

[73 FR 953, Jan. 4, 2008, as amended at 74 FR
18616, Apr. 23, 2009]
BANK HOLDING COMPANIES

§ 210.9-02

General requirement.
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.
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 noninterest
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).

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Securities and Exchange Commission
2. Interest-bearing deposits in other banks.
3. Federalfunds sold and securities 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.
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 (§210.1-02) of the reg-

§ 210.9-03
istrant 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 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 HI.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 §210.4-08(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 (iii) any member of the immediate family of any of the foregoing persons.
Executive officers 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-inlaw; 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.

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17 CFR Ch. 11 (4-1-10 Edition)

§ 210.9-04
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 other banks for the account of a subsidiary and that are outstanding-that is,
not held by a subsidiary bank, on the reporting date. (If held by a bank subsidiary, they
should be reported as "loans" under §210.903.7.)
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.
(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

lowing liabilities 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 officers, 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.
Redeemable Preferred Stocks
18. Preferred stocks subject to mandatory redemption requirements or whose redemption is
outside the control of the issuer. See §210.502.27.
Non-redeemable PreferredStocks
19. Preferred stocks which are not redeemable
or are redeemable solely at the option of the
issuer. See §210.5-02.28.
Common Stocks
20. Common stocks. See §210.5-02.29.
Other Stockholders' Equity
21. Other stockholders' equity. See §210.502.30.

Liabilities
separately
the
12.
Deposits. Disclose
amounts of noninterest bearing deposits and
interest bearing deposits.
(a) The amount of noninterest bearing deposits and interest bearing deposits in foreign banking offices must be presented if the
disclosure 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: (§ 210.5-02.19(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 fol-

Noncontrolling Interests
22. Noncontrolling interests in consolidated
subsidiaries. The disclosure requirements of
§210.5-02.31 shall be followed.
23. Total liabilities and equity.
[48 FR 11107, Mar. 16, 1983, as amended at 48
FR 37612, Aug. 19, 1983; 50 FR 25215, June 18,
1985; 74 FR 18616, Apr. 23, 2009]
§ 210.9-04

Income statements.

The purpose of this rule
the various items which,
should appear on the face
statement or in the notes

is to indicate
if applicable,
of the income
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.

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Securities and Exchange Commission
2. Interest and dividends on investment securities. 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 I
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).
10. Net interest income (line 5 minus line 9).
11. Provision for loan losses.
12. Net interest income after provisionfor 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 shall 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).
15. Income or loss before income tax expense.
16. Income tax expense. The information required by §210.4-08(h) should be disclosed.
17. Income or loss before extraordinary items
and cumulative effects of changes in accounting
principles.
18. Extraordinaryitems, less applicable tax.

§ 210.9-05
19. Cumulative effects of changes in accounting principles.
20. Net income or loss.
21. Net income attributableto the noncontrolling interest.
22. Net income attributable to the controlling
interest.
23. Earningsper share data.
[48 FR 11107, Mar. 16, 1983, as amended at 50
FR 25215, June 18, 1985; 74 FR 18616, Apr. 23,
2009]
§ 210.9-05

Foreign activities.

(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 filed, 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 proin
and transactions
ducing assets
which the debtor or customer, whether
an affiliated or unaffiliated person, is
domiciled outside the United States.
(2) The term revenue includes the
total of the amount reported at §§ 210.904.5 and 210.9-04.13.
(3) A significant geographicarea 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.

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§ 210.9-06

17 CFR Ch. 11 (4-1-10 Edition)

§ 210.9-06 Condensed financial information of registrant.
The
information
prescribed
by
§210.12-04 shall be presented in a note
to the financial statements when the
restricted net assets (§210.4-08(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 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 (§210.5-02.27) and noncontrolling interests shall be deducted
in computing net assets for purposes of
this test.
[48 FR 11107, Mar. 16, 1983, as amended at 74
FR 18616, Apr. 23, 2009]
§ 210.9-07

[Reserved]

INTERIM FINANCIAL STATEMENTS
§ 210.10-01 Interim financial
statements.
(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 pro-

vided 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,
§210.4-02 applies
and
de minimis
amounts therefore need not be shown
separately, except that registrants reporting under §210.9 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.

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§ 210.10-01

Securities and Exchange Commission
(5) The interim financial information
shall include disclosures either on the
face of the financial statements or in
accompanying footnotes sufficient 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 408 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 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 al-

lowed 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
fifty 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 combination between entities
under common control, the interim financial statements for both the current year and the preceding year shall
reflect the combined results of the
combined
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 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

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§ 210.10-01

17 CFR Ch. 11 (4-1-10 Edition)

information shall, at a minimum, show
revenue, income before extraordinary
items and the cumulative effect of accounting changes, including such income on a per share basis, net income,
net income attributable to the registrant, 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 filed 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 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
year-end. 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 §§ 210.3-01 and 3-02). For
filings on Form 10-Q, 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.

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§ 210.11-01

Securities and Exchange Commission
(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-todate 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-Q (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 filed with the interim financial statements.
(e) Filing 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 filing 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; 74 FR
18616, Apr. 23, 2009]
PRO FORMA FINANCIAL INFORMATION
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.
(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 has
occurred (for purposes of these rules,
-this encompasses the acquisition of an
interest in a business accounted for by
the equity method);
(2) After the date of the most recent
balance sheet filed pursuant to §210.301, consummation of a significant business combination or a combination of
entities under common control 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 will 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 §210.3-01,
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 filed 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.

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§210.11-02

17 CFR Ch. 11 (4-1-10 Edition)

(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 percent for 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.
(d) For purposes of this rule, the
term business should be evaluated in
light of the facts and circumstances involved and whether there is sufficient
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 will 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; 74 FR 18616,
Apr. 23, 2009]
§ 210.11-02 Preparation requirements.
(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 illustrate 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 caption is less than 10 percent of total assets, the caption may be
combined with others. When any major
income statement caption is less than
15 percent of average net income attributable to the registrant for the
most recent three fiscal years, the caption may be combined with others. In

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Securities and Exchange Commission
calculating average net income attributable to the registrant, 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.
(4) Pro forma statements shall ordinarily be in columnar form showing
condensed historical 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
will 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 nonrecurring. All
adjustments should be referenced to

§210.11-02
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 business combination, pro forma
adjustments for the income statement shall
include amortization, 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 will result in a significant effect on

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17 CFR Ch. 11 (4-1-10 Edition)

§210.11-02
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.
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
will 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 forma 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.
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 filing) 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 §210.3-01
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 filed 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
conbeen
had
combination
the
summated) 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
§§210.6-01 to 210.6-10, the periods covered by the pro forma statements must
be the same.

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§ 210.12-05-210.12-08

Securities and Exchange Commission
(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; 74 FR 18616, Apr. 23,
2009]

§ 210.11-03

Presentation

of

financial

forecast.
(a) A financial forecast may be filed
in lieu of the pro forma condensed
statements of income required by
§210.11-02(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 §210.11-02(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

general
§ 210.12-01

Application of §§ 210.12-01
to 210.12-29.
These sections prescribe the form and
content of the schedules required by
§§ 210.5-04, 210.6-10, 210.6A-05, and 210.705.
[59 FR 65637, Dec. 20, 1994]

§§ 210.12-02--210.12-03

[Reserved]

§ 210.12-04

Condensed financial information of registrant.
(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 §210.10-01(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
five-year 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

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[Reserved]

17 CFR Ch. 11 (4-1 -10 Edition)

§ 210.12-09
§ 210.12-09

Valuation and qualifying accounts.

Column A-Description

1

Column B-Balance at beginning of penod

Column C-Additions
(1)-Charged to
costs and expenses

(2)-Charged to
other accountsdescribe

Column D-Deductions---describe

Column E-Balance at end of
period

1List, bymajor 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]

for management investment companies
§ 210.12-12

Investments in securities of unaffiliated issuers.
Col. A

Col. B

Name of issuer and title of issue 1.2

Col. C

Balance held at close of period. Number Value of each item at close of period. 3.,6.7.8
of shares-principal amount of bonds
and notes 5
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, convertible securities, fixed
income securities, government securities, options purchased, warrants, loan participations and assignments, commercial paper,
bankers' acceptances, certificates of deposit, short-term 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 party or parties to the agreement, the date of the agreement, the total amount to be received upon repurchase,
the3 repurchase date and description of securities subject to the repurchase agreements.
The 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 (§§210.6-04.19 or 210.6-05.4).
4Column C shall be totaled. The total of column C shall agree with the correlative amounts shown on the related balance
sheet.
5
Indicate 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, dunng
the last year preceding the date of the related balance sheet, there was at least one dividend paid upon such common shares.
6Indicate 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 unrestncted 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.
7Indicate by an appropriate symbol each issue of securities held in connection with open put or call option contracts or loans
for short sales.
eState 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]

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Securities and Exchange Commission
§ 210.12-12A

§210.12-12C

Investments-securities sold short.
[For management investment companies only]

Col. A

Col. B

Col. C

Balance of short position at close of peNod. (number of shares).

Name of issuer and title of issue

Value of each open short position 2

'Each 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.
[For management investment companies only)

Col. A

Col. B
2

Col. C

Number of contracts

Name of issuer '.

3

Col. D

Col. E
Value. 4

Expiration date

Exercise price

21Information as to put options shall be shown separately from information as to call
Options of an issuer where exercise prices or expiration dates differ shall be listed
3

options.
separately.
if the number of shares subject to option is substituted for number of contracts, the column name shall reflect that change.
* Column E shall be totaled and shall agree with the correlative amount shown on the related balance sheet.

[47 FR 56844, Dec. 21, 1982]
§ 210.12-12C
issuers.

Summary

Column A
Name of issuer and title of
issue

schedule

of investments

Column B
Balance held at close of perod. Number of sharesri.4.3.6,
principal amount of bonds
and notes B.

in

securities

Column C
Value of each item at close of
period 2,7.9,10,11.

of

unaffiliated
Column D

Percentage value compared
to net assets.

Categorize 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 ofdeposit, short-term 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.
3 Except 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 any one issuer, except that
all fully collateralized repurchase agreements shall be aggregated and treated as a single issue. The U.S. Treasury and each
agency, instrumentality, or corporation, including each government-sponsored entity, that issues U.S. government securities is a
separate issuer.
4 if
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. government 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.
sAny 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 Securties of Unaffiliated
Issuers required under §210.12-12. However, if any security that is included in "Miscellaneous securities" would otherwise be
required to be 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 ame 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).
6Ifany 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.
7
Total Column C. The total ofcolumn C should equal the total shown on the related balance sheet for investments in securities of unaffiliated issuers.

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17 CFR Ch. 11 (4-1-10 Edition)

§210.12-13

alndicate 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 shalt 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.
by an appropriate symbol each issue of restricted securities. State the following in a footnote: (a) as to each such
9Indicate
issue: (1) Acquisition date, (2) carrying value per unit of investment at date of related balance sheet, e.g., a percentage of current maret 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 ofthe 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
10 value bears to net assets.
Indicate by an appropriate symbol each issue of securities held in connection with open put or call option contracts or loans
for short sales.
11State in a footnote the following amounts based on cost for Federal income tax purposes: (a) Aggregate gross unrealized
appreciation for allsecurities 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.
[For management investment companies only]
Col. A

Description

Col. B

1

Col. C

Balance held at close of period--quan-

4.6 ,7

Value ofeach item at close of period

tity 2.3.5

each major category of investments by descriptive title.
2Ifpracticable, indicate the quantity or measure in appropriate units.
3 Indicate by an appropriate symbol each investment which is non-income producing.
4 Indicate 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 ofrestrictions or conditions applicable to the investment or the company.
5lndicate
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.
6 Column 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 taxcost, (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.
1Ust

§ 210.12-14

Investments in and advances to affiliates.
[For management investment companies only]

Col. A
Name of issuer and
title of issue or nature of indebtedness'

Col. B

Col. C

Number of shares-principal amount of bonds,
notes and other indebtedness held at close of period

Amount of equity in
net profit and loss
26
for the period .

Col. D
Amount of dividends
25
or interest .

Col. E
Value of each item at
close of period 2.3,4.5

(1) Credited to income.
(2) Other.
(a) List each issue separately and group (1) Investments in majority-owned subsidiaries, segregating subsidiaries consolidated; (2) other controlled companies; and (3) other affiliates. (b) Ifduring the period there has been any increase or decrease in
the amount of investment in and advance to any affiliate, state in a footnote (or ifthere have been changes to numerous affiliates, 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 affiliates 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 affiliates (1) within divisions and (2) by type of activities.
3Clumns C, D and E shall be totaled. The totals of Column E shall agree with the correlative amount 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§210.12-13 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 affiliates not held at the close of the period. The total of this column
shall agree with the correlative amount shown on the related statement ofoperations.
(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 allnon-cash dividends and explain the circumstances in a footnote.
d) Indicate by an appropriate symbol each issue ofsecurities which is non-income producing.

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§ 210.12-16

Securities and Exchange Commission
6

The 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.
[For Insurance Companies]
Column A

Column B

Column C

Type of investment

Cost'1

Value

Column D
Amount at
which shown
in the bal2
ance sheet

Fixed maturities:
Bonds:
United States Government and government agencies and authodties.
States, municipalities and political subdivisions.
Foreign governments.
Public utilities.
3
Convertibles and bonds with warrants attached .
All other corporate bonds.
Certificates of deposit.
Redeemable preferred stock.
Total fixed maturities.
Equity secuties:
Common stocks:
Public utilities.
Banks, trust and insurance companies.
Industrial, miscellaneous and all other.
Nonredeemable preferred stocks.
Total equity securities.
Mortgage loans on real estate.
4.
Real estate
Policy loans.
Other long-term investments.
Short-term investments.
Total investments.
Odginal cost of equity securities and, as to fixed matudties, original cost reduced by repayments and adjusted for amortization
2 of premiums or accrual of discounts.
if 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.
3All convertibles and bonds with warrants shall be included in this caption, regardless of issuer.
4 State separately any real estate acquired in satisfaction of debt.
[46 FR 54337, Nov. 2, 1981]

§ 210.12-16

Supplementary insurance information.
[For insurance companies]

Column
A

Column
B

Deferred
policy
acquisition cost
(caption

Segment'

7)

Column
C

Column
D

Column
E

Column
F

Column
G

Future
policy
benefits,
losses,
claims
and loss
expess
penses
(caption
13-a-1)

Unearned
premiums
(caption
12)3
13-a-2)

Other
policy
claims
and benefits payable
(caption
13-a-3)

Premium
revenue
(caption
1)

Net inie
income
(
ilion

Column
H

Column I

Benefits,
claims,
losses,
tement
tlement

Amoridef

penses
(caption
5)

Costs

dpolicy
acquisi-

Column J

ating expenses

Column
K

Premiums2
written

5

Total .
'Segments shown should be the same as those presented in the footnote disclosures called for by generally accepted accounting
principles.
2
Does not apply to life insurance or title insurance. This amount should include premiums from reinsurance assumed, and be
net of premiums on reinsurance ceded.
3 State the basis for allocation of net investment income and, where applicable, other operating expenses.

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17 CFR Ch. 11 (4-1-10 Edition)

§210.12-17

4The total of columns I and J should agree with the amount shown for income statement caption 7.
sTotals 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.
[For insurance companies]
Column B

Column C

Column D

Gross amount

Ceded to other
companies

Assumed from
other compahies

Column A

Column E
Net amount

Column F
2

Percentage of
3
amount net
assumed
to

Life insurance in force.
Premiums:
Life insurance.
Accident and health insurance.
Property and liability insurance.
Title insurance.
Total premiums.
12 Indicate

in a note any amounts of reinsurance or coinsurance income netted against premiums ceded. This 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.
3
Calculated 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).

Affiliation with registrant

Column A

Deerred
policy
acquisition
costs

Column B

Reserves
for unpaid
claims
claim
caim
adjust
ment
expenses
Column C

Discount,
iuny,
if any,
dedutd
ducted
in column
C

Urelated
Unearned
pr-mnt
premiums
miums

income

Column D

Column E

Column G

Column F

Net invest-

Claims and claim
adjustment expenses incurred
to

(1)
Current
year

Paid
claims
and
claim
adjustment
expenses

miun
t
miums

(2)
Pror
years

Amortization
of deferred
policy
acquisition
costs

Column H

Column I

Column J

Column K

(a) Consolidated
property-casualty
2
entities
b) Unconsolidated
property-casualty
subsidiaries 2.3
(c) Proportionate
share of registrant and its
subsidiaries'
50%-or-lessowned propertycasualty equity

investaes 2.3
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.
2 Present combined or consolidated amounts, as appropriate for each category, after intercompany eliminations.
3 nformation 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 affiliated 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 file this information as registrants in their own right exceeds 95% of the total category (c) reserves, information for the other 50%-or-lessowned equity investees need not be provided.
' Disclose in a footnote to this schedule the rate, or range of rates, estimated if necessary, at which the discount was computed for each category.
1

[49 FR 47599, Dec. 6, 1984]

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§ 210.12-22

Securities and Exchange Commission
FOR FACE-AMOUNT CERTIFICATE INVESTMENT COMPANIES

SOURCE: Sections 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 unaffiliated issuers.

Column A-Name of issuer and title of issue

1

Column B-Balance held at close
of period. Number
of shares-principa amount of 2
bonds and notes

Column C-Cost
of each item 3A

Column DValue of each
item at close
3 5 of
period .

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.
2 Indicate any securities subject to option at the end of the most recent period and state in a note the amount subject to option,
the3 option prices, and the dates within which such options may be exercised.
Columns 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 the aggregate cost for Federal income tax purposes.
4 If any investments have been written down or reserved against by such companies pursuant to §210.6-21((0, indicate each
such
5 item by means of an appropriate symbol and explain in a footnote.
Where 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.

Column A-Name of issuer and title of
issue or amount of indebtedness

Column BBalance held
at close of period-Number
of sharesprincipal
amount of
bonds, notes
and other indebtedness 2

Column
C-Cost of
each
item 3.4

Column
0oun
DAmount at
which carcloe
cls off
period'.

1

Column E-Amount 4,of
dividends or interest 6

Column
F-Amount
of equity in
nd o

ited
to incomefoth

(2)-Other

for the pe
riod 7

(a) The required information is to be given as to all investments in affiliates as of the close of the period. See captions 10, 13
and 20 of §210.6-22. Ust each issue and group separately (1) investments in majority-owned subsidiaries, segregating subsidiaries consolidated; (2) other controlled companies: and (3) other affiliates. Give totals for each group. If operations of any controlled companies are different in character from those of the registrant, group such affiliates 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 affiliate, state in a footnote (or if there have been changes as to numerous affiliates, 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 affiliates in which there was an investment at any time during the period even though there was no investment in such affiliate
as of the close of such period.
2Indicate 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.
3 If 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 §210.6-21(I, indicate each
such item by means of an appropriate symbol and explain in a footnote.
sState the basis of determining the amounts shown in column D.

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17 CFR Ch. 11 (4-1-10 Edition)

§210.12-23
6

Show 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 Elf) the aggregate dividends and interest included in the
profit and loss or income statement in respect of investments in affiliates 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).
7
The 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 submittedthe information required as computed on the basis of the statements of each such person and its subsidiaries
consolidated.

Mortgage loans on real estate and interest earned on mortgages.1

§ 210.12-23

Part 1-Mortgage loans on real estate at close of period

Column A-List by classification
2 37
indicated blow .

Column
B-Prio2
liens

Column
C-Carrying
amount of

Column D--Amount of
principal unpaid at close
o1 period

mort-

gage 8.9.,o.,,

(1)-Total

Part 2-Interest earned
on mortgages

(2)-Sub-

Column
EAmount of
mortgage

Column
F-Interest
due and
accrued at

ject to de-

being fore-

end ofp-plicable
to
er
i od st

linquent interest'

closed

riod
n

Column
G-Interest income
earned app

Liens on:
Farms (total).
Residential (total).
Apartments and business (total).
Unimproved (total).
Total

12

21All money columns shall be totaled.
If 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 furnished as to such liens which are fully insured or wholly guaranteed by an agency of the United
States
Government.
3
1n 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.
(b) Of the total principal amount, state the amount acquired from controlled and other affiliates.
5In 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.
6If 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 ofthe above classes of mortgage loans
the average gross rate of interest on mortgage loans held at the end ofthe fiscal period.
7Each mortgage loan included in column C in an amount in excess of $500,000 shall be listed separately. Loans from
$100,000 to $500,000 shall be grouped by $50,000 groups, indicating the number of loans in each group.
8 In a footnote to this schedule, furnish a reconciliation, in the following form, of the carrying amount of mortgage loans at the
beginning of the period with the total amount shown in column C:

Balance at beginning of period .....................................................................................
..................
$.
Additions during period:
New m ortgage loans ......................................................................................
. ................ $.
Other (describe).
Deductions during period:
Collections of principal ....................................................................................
..................
$.
Foreclosures.
Cost of mortgages sold.
Amortization of premium.
Other (describe).
Balance 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 affiliates, explain the bases of such transactions. and amounts involved. State the aggregate amount of
mortgages (a) renewed and (b) extended. Ifthe carrying amount of the new mortgages is in excess of the unpaid amount (not including
interest) of prior mortgages, explain.
6
lfany item ofmortgage 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.
1eState in a footnote to column C the aggregate costfor Federal income tax purposes.
II If the total amount shown in column C includes intercompany profits, state the bases of the transactions resulting in such
profits
and, ifpracticable, state the amounts thereof.
2
1 Summarize 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]

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Securities and Exchange Commission
§ 210.12-24

§ 210.12-25

Real estate owned and rental income. I
Part 1-Real estate owned at end of period

Com
prrt

asiicatn

Aount o-

ofa
2 iniaeatonf
3 proert asrie

incombrances

below .

ColCum
uin
-

Column
DCost of

cost to
cornonpany

improvements,
etc.

ls

Part 2-Rental income
col
Column
Cu
E- aiti
Amount
FU__at which
carried at
close of
pe-. 6. 7
riod4

serve
for
de
pep
tion

Column
Rents
due

aa
and accrued
at end
of period

Column
HFTotal
rental

Column
IFxpended
for in-

income
applicable
to penod

terest,
taxes,
repairs
and expenses

Column
J-Net
income
applicable
to period

Farms.
Residential.
Apartments and business.
Unimproved.
Total

8

Rent from properties sold during period.
Total.
'All money columns shall be totaled.
2 Each item of property included in column E in an amount in excess of $100,000 shall be listed separately.
3In a separate schedule classify by states in which the real estate owned is located the total amounts in support of columns E
and F.
4 In 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.
Improvements, etc.
Other (describe).
Deductions during period:
Cost of real estate sold .............................................................................................
$.
Other (describe).
Balance at close of period .......................................................................................................
..................
$.
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 affiliates, explain and state the amount of any intercompany
gain or loss.
5lf 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.
6
7 State in a footnote to column E the aggregate cost for Federal income tax purposes.
The amount of all intercompany profits included in the total of column E shall be stated it 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.
Column C-Charged to
Column Bother accounts
Charged to
investment
(2)espenseepne (1)-Account
Amount

Column A--Itemi

Column DTotal

1. Legal expenses (including those in connection with any matter,
measure or proceeding before legislative bodies, officers or government departments).
2. Advertising and publicity.
3. Sales promotion 2.
4. Payments directly and indirectly to trade associations and service
organizations, and contributions to other organizations.
I Amounts resulting from transactions with affiliates shall be stated separately.
2
State separately each category of expense representing more than 5 percent of the total expense shown under this item.

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17 CFR Ch. if1(4-1 -10 Edition)

§210.12-26

-00
0

)

0

0

0

E~E

0

c

BO

0

0

&

-0

.

0

E a

2Ob3

0

t3~

-

150 Z0

0

~~

wE00
0

o

0

0c

12 c
0E

-0

0.

o

E-

-

0

E

E'T:2
0

-

w

E

0

0

CD

5
0

.

0

E

E28~

2
0 12

ET
0
E

1.0

~

~

(DZr

lai'

0-

-

E 0 0.

00

0

~.8,00
-~~~ -0O=0
0

00

-

f
.

0-

0

-

.0

0

0,

gs

344

HeinOnline -- CFR 344 2010

Securities and Exchange Commission
§ 210.12-27

§ 210.12-28

Qualified assets on deposit. 1

Column A-Name of depositary

2

Column DColumn BCash

Column C-Investments in
securities

First mortgages and
other first liens
on real estate

Column Eother
Other

Column 3FToalu
Total

1 All money

columns shall be totaled.
Classiy 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.
2

FOR CERTAIN REAL ESTATE COMPANIES

§ 210.12-28

Real estate and accumulated depreciation.1
[For Certain Real Estate Companies]
Column C-Initial
cost to company

Column
A-Descrip-2
tion

Column
B-Encumbrances

Land

Buildings
and inprovements

Column D-Cost
capitalized subsequent to acqui-

Irprovements

Carrying
costs

Column E-Gross amount
of which carded at close of
period 3A.5.6,7

BuildLandacand inprovements

Total

Column

Column

cumu-

Date of

Column
H-Date

depreciation

struction

quired
qr

Column
I-Life
on
which
depreciation
in latestincome
ace
ments
is computed

All money columns shall be totaled.
The 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."
4In a note to this schedule, furnish a reconciliation, in the following form, of the total amount at which real estate was carded
at the beginning of each period for which income statements are required, with the total amount shown in column E:
1

2

Balance at beginning of period ................
..........................
Additions during period:
Acquisitions through foreclosure $.
Other acquisitions.
Improvements, etc.
O ther (describe) ........................
................................
Deductions during period:
Cost of real estate sold .............
Other (describe).
Balance at close of period .......................
. .... .......................
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 affiliates, explain the bases of such transactions and state the
amounts involved.
A similar reconciliation shall be furnished for the accumulated depreciation.
5If 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.
76eState in a note to column E the aggregate cost for Federal income tax purposes.
The amount of all intercompany profits included in the total of column E shall be stated if material.
[38 FR 6068, Mar. 6, 1983. Redesignated at

45 FR 63630, Sept,. 25, 1980]

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17 CFR Ch. 11 (4-1-10 Edition)

§210.12-29
§ 210.12-29

Mortgage loans on real estate. L
[For Certain Real Estate Companies]

3

Column A--escption. A

Column
B-Interest rate

Column
maturi
ty
date

Column
D-Pe-C
odic payment5
terms

Column GColumn
F-Face
Carrying
amount of amount of
mortmort-

Column
E-Prior
liens

gages

ages 3.6s.9

Column
H-Principa
amount of
loans
subject to
delinquent

principal
or inter0
est'

21Allmoney

G.

columns shall be totaled.
The required information is to be given for each individual mortgage loan which exceeds three percent of the total of column

3lf the portfolio 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 will indicate the dispersion of the portfolio, i.e.,
for a portfolio of mortgages on single family residential housing. The description should also include number of loans by original
loan amounts (e.g., over $100,000, $S50,000-$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.
4 Loans should be grouped by categories, e.g., first mortgage, second mortgage, construction loans, etc., and for each loan the
type
5 of property, e.g., shopping center, high rise apartments, etc., and its geographic location should be stated.
State whether principal and interest is payable at level amount over life to maturity or at varying amounts over life to maturity.
State
6 amount of balloon payment at maturity, if any. Also state prepayment penalty terms, if any.
Ina note to this schedule, furnish a reconciliation, 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:
Balance at beginning of period ................................................................................................
.................. $.
Additions during period:
New mortgage loans .................................................................................................
$.
O ther (describe) .........................................................................................................
.................. $.
Deductions dunng period:
Collections of principal .............................................................................................
$.
Foreclosures ..............................................................................................................
Cost of mortgages sold .............................................................................................
Am ortization of prem ium ...........................................................................................
Other (describe).
Balance 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 affiliates, 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.
7if 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.
8
State in a note to column G the aggregate cost for Federal income tax purposes.
QThe amount of all intercompany profits 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)Of the total principal amount, state the amount acquired from controlled and other affiliates.
[38 FR 6069, Mar. 6, 1973; 38 FR 7323, Mar. 20, 1973. Redesignated at 45 FR 63680, Sept. 25, 1980]

PART 211 -INTERPRETATIONS

RELATING TO FINANCIAL REPORTING

MAIERS
Subpart A-Financial Reporting Releases
Release
No.

Subject
Codification of financial reporting policies ..............................................................
Disclosure considerations relating to foreign operations and foreign currency
translation effects.
Accounting for extinguishment of debt ...................................................................
Certification of financial statements ............................................... :.......................
Independence of accountants ................................................................................
Last-tn, First-Out method of accounting for inventories .........................................
Significance of oral guarantees to the financial reporting process ........................
Disclosure of the effects of the Tax Reform Act of 1986 ......................................
Accounting for loan losses by registrants engaged in lending activities ...............

HeinOnline -- CFR 346 2010

1
6
15
16
291
889
22
26
28

Date

Fed. Reg. Vol.
and page

Apr. 15, 1982 47 FR 21030
Nov. 18, 1982 47 FR 53330
Dec. 22, 1983
Feb. 15, 1984
Apr. 10, 1981
July 2, 1981
Dec. 19, 1985
Oct. 30, 1986
Dec. 1, 1986

49 FR
49 FR
46 FR
46 FR
50 FR
51 FR
51 FR

54
6707
22569
36127
51671
39652
44446