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persons are located outside the United States. Such disclosure need not be included on the inside front cover page of the prospectus, if it is included, under appropriate caption, elsewhere in the forepart of the prospectus.
(1) Such disclosure shall indicate:
(i) Whether investors will be able to effect service of process within the United States upon such persons;
(ii) Whether investors will be able to enforce; in United States courts, judgments against such persons judgments obtained in such courts predicated upon the civil liability provisions of the Federal securities laws;
(iii) Whether the appropriate foreign courts would enforce judgments of United States courts obtained in actions against such persons predicated upon the civil liability provisions of the Federal securities laws; and
(iv) Whether the appropriate foreign courts would enforce, in original actions, liabilities against such persons predicated solely upon the Federal securities laws.
(2) If any portions of such disclosures are stated to be based upon an opinion of counsel, such counsel shall be named in the prospectus and an appropriate manually signed consent to the use of such name and opinion shall be included as an exhibit to the registration statement.
(g) Table of contents. Include a reasonably detailed table of contents showing the subject matter of the various sections or subdivisions of the prospectus and the page number on which each such section or subdivision begins.
(c) Risk factors. Registrants, where appropriate, shall set forth on the page immediately following the cover page of the prospectus (or following the summary, if included) under an appropriate caption, a discussion of the principal factors that make the offering speculative or one of high risk; these factors may be due, among other things, to such matters as an absence of an operating history of the registrant, an absence of profitable operations in recent periods, the financial position of the registrant, the nature of the business in which the registrant is engaged or proposes to engage, or, if common equity or securities convertible into or exercisable for common equity are being offered, the absence of a previous market for the registrant's common equity.
(d) Ratio of earnings to fixed charges. The ratio of earnings to fixed charges or the ratio of earnings to combined fixed charges and preferred stock dividends (the “ratio") should be disclosed pursuant to the following rules and definitions:
(1)(i) Furnish in registration statements filed under the Securities Act of 1933 (A) the ratio of earnings to fixed charges if debt securities are being registered; or (B) the ratio of earnings to combined fixed charges and preferred stock dividends if preferred stock is being registered. Disclosure of both ratios is permitted in registration statements relating to debt or preferred stock and either ratio or both ratios may be disclosed in other filings.
(ii) The ratio shall be disclosed for the following periods:
(A) Each of the last five fiscal years of the registrant (or for the life of the registrant and its predecessors, if less), and
(B) The latest interim period for which financial statements are presented.
(2) The ratio shall be computed using the amounts for the enterprise as a whole including (i) the registrant, (ii) its majority-owned subsidiaries, whether or not consolidated, (iii) its proportionate share of any fifty-percent-owned persons, and (iv) any income received (but not undistributed
8 229.503 (Item 503) Summary informa
tion, risk factors and ratio of earnings
to fixed charges. (a) Summary. Registrants should include a summary of the information contained in the prospectus where the length or complexity of the prospectus makes such a summary appropriate.
(b) Address and telephone number. Registrants shall include in the forepart of the prospectus the complete mailing address, including zip code, and the telephone number, including area code, of their principal executive offices.
amounts) from less-than-fifty-percentowned persons.
(3) The term “earnings" shall be defined as pretax income from continuing operations with the following adjustments:
(i) Add to pretax income the amount of fixed charges computed pursuant to paragraph (d)(4) of this section, adjusted to exclude (A) the amount of any interest capitalized during the period and (B) the actual amount of any preferred stock dividend requirements of majority-owned subsidiaries and fifty-percent-owned persons which were included in such fixed charges amount but not deducted in the determination of pretax income.
(ii) Only the registrant's share in the income of majority-owned subsidiaries and the distributed income of lessthan-fifty-percent-owned persons shall be included in earnings, except that a registrant may include the minority interest in the income of majorityowned subsidiaries that have fixed charges.
(iii) The full amount of losses of majority-owned subsidiaries shall be considered in the computation of earnings.
(iv) Where an investment in a lessthan-fifty-percent-owned person counted for under the equity method results in the recognition of a loss, such loss shall not be considered in the computation of the ratio except where the registrant has guaranteed or otherwise undertaken, directly or indirectly to service the debt of such person. In the latter case, the registrant's equity in the loss shall be included in earnings and the fixed charges shall include the interest expense related to the guaranteed debt.
(v) Registrants other than public utilities may add to earnings the amount of previously capitalized interest amortized during the period.
(vi) A registrant which is a rate-regulated public utility shall not reduce fixed charges (see paragraph (d)(4) below) by any allowance for funds used during construction, but rather, shall include any such allowance in the determination of earnings under this paragraph.
(4)(i) The term "fixed charges” shall mean the total of (A) interest, wheth
er expensed or capitalized; (B) amortization of debt expense and discount or premium relating to any indebtedness, whether expensed or capitalized; (C) such portion of rental expense as can be demonstrated to be representative of the interest factor in the particular case; and (D) preferred stock dividend requirements of majority-owned subsidiaries and fifty-percent-owned persons, excluding in all cases items which would be or are eliminated in consolidation.
(ii) If the registrant is a guarantor of debt of a less than fifty-percent-owned person or of an unaffiliated person (such as a supplier), he amount of fixed charges associated with such debt should not be included in the computation of the ratio unless the registrant has been required to satisfy the guarantee or it is probable that the registrant will be required to honor the guarantee and the amount can reasonably be estimated. A footnote to the ratio should disclose the existence of any such guarantee and the amount of the associated fixed charges and state whether or not such amount is included in the computation of the ratio.
(5) The term “preferred stock” shall include all types of preferred and preference stocks.
(6) For purposes of paragraph (4)(i)(D) above and computation of the combined ratio, the preferred stock dividend requirements shall be increased to an amount representing the pre-tax earnings which would be required to cover such dividend requirements. Therefore, the increased amount=
Preferred Stock Dividend Requirements
100%-Income Tax Rate
The tax rate shall be based on the relationship of the provision for income tax expense applicable to income from continuing operations to the amount of pre-tax income from continuing operations.
(7) If either ratio computation indicates a less than one-to-one coverage, Stat. 857; sec. 8, 68 Stat. 685; sec. 1, 79 Stat. 1051; sec. 308(a)(2), 90 Stat. 57; secs. 12, 13, 15(d), 23(a), 48 Stat. 892, 894, 895, 901; secs. 1, 3, 8, 49 Stat. 1375, 1377, 1379; sec. 203(a), 49 Stat. 704; sec. 202, 68 Stat. 686; secs. 3, 4, 6, 78 Stat. 565-568, 569, 570-574; secs. 1, 2, 82 Stat. 454; sec. 28(c), 84 Stat. 1435; secs. 1, 2, 84 Stat. 1497; sec. 105(b), 88 Stat. 1503; secs. 8, 9, 10, 18, 89 Stat. 117, 118, 119, 155; sec. 308(b), 90 Stat. 57; secs. 202, 203, 204, 91 Stat. 1494, 1498, 1499, 1500; secs. 8, 30, 31(c), 38(a), 54 Stat. 803, 836, 838, 841; 74 Stat. 201; 84 Stat. 1415; 15 U.S.C. 77f, 77g, 77h, 773, 77s(a), 781, 78m, 780(d), 78w(a), 80a-8, 80a-29, 80a-30(c), 80a-37(a) (47 FR 11401, Mar. 16, 1982, as amended at 47 FR 54769, Dec. 6, 1982; 49 FR 19874, May 3, 1983)
state that earnings are inadequate to cover fixed charges and disclose the dollar amount of the coverage deficiency.
(8) If the level of the registrant's ratio is maintained by its parent, for example, in order to meet the minimum borrowing standards of agencies of various states, or if the registrant's parent is guaranteeing the registrant's debt securities or preferred stock, the parent's ratio as well as the registrant's ratio shall be disclosed.
(9) A pro forma ratio shall be presented in the prospectus of any registration statement filed to register debt or preferred stock to be used in a refinancing if the effect of the refinancing changes the historical ratio by ten percent or more.
(i) A “refinancing” is defined as the extinguishment of one or more specific issues of dept with the proceeds from the sale of additional debt, or the extinguishment of one or more specific issues of preferred stock with the proceeds from the sale of additional preferred stock.
(ii) The only adjustments which shall be made to the corresponding historical ratio are to give effect to the net increase or decrease in interest expense or preferred stock dividends resulting from (A) the proposed issuance of new debt or preferred stock and (B) the corresponding retirement of any debt or preferred stock presently outstanding (but only for the period of time outstanding) which will be retired with the proceeds from the proposed offering. If only a portion of the proceeds will be used to retire presently outstanding debt or preferred stock, only a related portion of the interest or preferred dividend should be used in the pro forma adjustment.
(iii) The pro forma ratio, if applicable, shall be presented for only the most recent fiscal year and the latest interim period or, at the option of the registrant, the most recent twelve months.
(10) If the registrant is a foreign private issuer, the ratio shall be computed on the basis of the primary financial statements and, if materially different, their reconciliations. (Secs. 6, 7, 8, 10, 19(a), 48 Stat. 78, 79, 81, 85; secs. 205, 209, 48 Stat. 906, 908; sec. 301, 54
8 229.504 (Item 504) Use of proceeds.
State the principal purposes for which the net proceeds to the registrant from the securities to be offered are intended to be used and the approximate amount intended to be used for each such purpose. Where registrant has no current specific plan for the proceeds, or a significant portion thereof, the registrant shall so state and discuss the principal reasons for the offering.
Instructions to Item 504. 1. Where less than all the securities to be offered may be sold and more than one use is listed for the proceeds, indicate the order of priority of such purposes and discuss the registrant's plans if substantially less than the maximum proceeds are obtained. Such discussion need not be included if underwriting arrangements with respect to such securities are such that, if any securities are sold to the public, it reasonably can be expected that the actual proceeds will not be substantially less than the aggregate proceeds to the registrant shown pursuant to Item 501 of Regulation S-K ($ 229.501).
2. Details of proposed expenditures need not be given; for example, there need be furnished only a brief outline of any program of construction or addition of equipment. Consideration should be given as to the need to include a discussion of certain mat. ters addressed in the discussion and analysis of registrant's financial condition and results of operations, such as liquidity and capital expenditures.
3. If any material amounts of other funds are necessary to accomplish the specified purposes for which the proceeds are to be obtained, state the amounts and sources of such other funds needed for each such specified purpose and the sources thereof.
convertible securities exercisable for common equity for which there is no established public trading market for purposes of paragraph (a) of Item 201 of Regulation S-K ($ 229.201(a)) are being registered, describe the various factors considered in determining their exercise or conversion price.
4. If any material part of the proceeds is to be used to discharge indebtedness, set forth the interest rate and maturity of such indebtedness. If the indebtedness to be discharged was incurred within one year, describe the use of the proceeds of such indebtedness other than short-term borrowings used for working capital.
5. If any material amount of the proceeds is to be used to acquire assets, otherwise than in the ordinary course of business, describe briefly and state the cost of the assets and, where such assets are to be acquired from affiliates of the registrant or their associates, give the names of the persons from whom they are to be acquired and set forth the principle followed in determining the cost to the registrant.
6. Where the registrant indicates that the proceeds may, or will, be used to finance acquisitions of other businesses, the identity of such businesses, if known, or, if not known, the nature of the businesses to be sought, the status of any negotiations with respect to the acquisition, and a brief description of such business shall be included. Where, however, pro forma financial statements reflecting such acquisition are not required by Regulation S-X to be included, in the registration statement, the possible terms of any transaction, the identification of the parties thereto or the nature of the business sought need not be disclosed, to the extent that the registrant reasonably determines that public disclosure of such information would jeopardize the acquisition. Where Regulation S-X (17 CFR 210) would require financial statements of the business to be acquired to be included, the description of the business to be acquired shall be more detailed.
7. The registrant may reserve the right to change the use of proceeds, provided that such reservation is due to certain contingencies that are discussed specifically and the alternatives to such use in that event are indicated.
$ 229.506 (Item 506) Dilution.
Where common equity securities are being registered and there is substantial disparity between the public offering price and the effective cash cost to officers, directors, promoters and affiliated persons of common equity acquired by them in transactions during the past five years, or which they have the right to acquire, and the registrant is not subject to the reporting requirements of section 13(a) or 15(d) of the Exchange Act immediately prior to filing of the registration statement, there shall be included a comparison of the public contribution under the proposed public offering and the effective cash contribution of such persons. In such cases, and in other instances where common equity securities are being registered by a registrant that has had losses in each of its last three fiscal years and there is a material dilution of the purchasers' equity interest, the following shall be disclosed:
(a) The net tangible book value per share before and after the distribution;
(b) The amount of the increase in such net tangible book value per share attributable to the cash payments made by purchasers of the shares being offered; and
(c) The amount of the immediate dilution from the public offering price which will be absorbed by such purchasers.
$ 229.507 (Item 507) Selling security hold
8 229.505 (Item 505) Determination of of.
fering price. (a) Common equity. Where common equity is being registered for which there is no established public trading market for purposes of paragraph (a) of Item 201 of Regulation S-K ($ 229.201(a)) or where there is a material disparity between the offering price of the common equity being registered and the market price of outstanding shares of the same class, describe the various factors considered in determining such offering price.
(b) Warrants, rights and convertible securities. Where warrants, rights or
If any of the securities to be registered are to be offered for the account of security holders, name each such security holder, indicate the nature of any position, office, or other material relationship which the selling security holder has had within the past three years with the registrant or any of its predecessors or affiliates, and state
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be offered otherwise than through un
derwriters 8 209 Ohtem 5, Plan of distribution
(1) li any securities are to be offered (2) Underuriters and under riting pursuant to a dividend or interest reinobligation. If the securities are to be vestment pian the terms of which pro offered through under-riters, rame vide for the purchase of some securithe principal underwriters, and state ties on the market, state whether the the respective amounts underwritten registrant or the participant pays fees, Identify each such underwriter having commissions, and expenses incurred in a material relationship with the regis- connection with the plan. If the partrant and state the nature of the rela- ticipant will pay such fees, commistionship. State briefly the nature of sions and expenses, state the anticithe obligation of the underwriter(s) to pated cost to participants by transactake the securities.
tion or other convenient reference. Instruction to Paragraph 5082). All that
(2) If the securities are to be offered is required as to the nature of the under
through the selling efforts of brokers writera obligation is whether the underwrit- or dealers, describe the plan of distriers are or will be committed to take and to bution and the terms of any agree pay for all of the securities if any are taken, ment, arrangement, or understanding or whether it is merely an agency or the entered into with broker(s) type of “best efforts" arrangement under which the underwriters are required to take
dealer(s) prior to the effective date of and to pay for only such securities as they
the registration statement, including may sell to the public. Conditions precedent volume limitations on sales, parties to to the underwriters' taking the securities, the agreement and the conditions including "market-outs,” need not be de- under which the agreement may be scribed except in the case of an agency or terminated. If known, identify the “best efforts” arrangement.
broker(s) or dealer(s) which will par(b) New underwriters. Where securi- ticipate in the offering and state the ties being registered are those of a reg. amount to be offered through each. istrant that has not previously been (3) If any of the securities being reg. required to file reports pursuant to istered are to be offered otherwise section 13(a) or 15(d) of the Exchange than for cash, state briefly the general Act, or where a prospectus is required purposes of the distribution, the basis to include reference on its cover page upon which the securities are to be ofto material risks pursuant to Item 501 fered, the amount of compensation bf Regulation S-K (§ 229.501), and any and other expenses of distribution, pne
of the managing and by whom they are to be borne. If inderwriter(s) (or where there are no the distribution is to be made pursunanaging underwriters, a majority of ant to a plan of acquisition, reorganihe principal underwriters) has been zation, readjustment or succession, derganized, reactivated, or first regis- scribe briefly the general effect of the ered as a broker-dealer within the plan and state when it became or is to ast three years, these facts concern- become operative. As to any material lg such underwriter(s) shall be dis- amount of assets to be acquired under osed in the prospectus together with, the plan, furnish information correhere applicable, the disclosures that sponding to that required by Instrucbe principal business function of such tion 5 of Item 504 of Regulation S-K piderwriter(s) will be to sell the secu- ($ 229.504). Jies to be registered, or that the pro- (d) Offerings on exchange. If the sebters of the registrant have a materi. curities are to be offered on an ex
relationship with such change, indicate the exchange. If the derwriter(s). Sufficient details shall registered securities are to be offered