INSTRUCTIONS FOR THE PREPARATION OF FORM CLC-2 PRENOTIFICATION, REPORT, OR RECORD OF PRICES, COSTS, AND PROFITS

GENERAL INSTRUCTIONS

A. Purpose

1. Form CLC-2 is designed to provide the data necessary for the Cost of Living Council to execute its role in monitoring the performance of the economy pursuant to Executive Order 11695. Attention has been given to the selfadministered aspects of phase III and an effort has been made to reduce the public and private burden of the economic stabilization program.

2. Form CLC-2 provides the means by which the Cost of Living Council monitors on a quarterly basis the price adjustments and related costs and profits of those firms subject in whole or in part to the general price standard of Subpart B and those firms subject in whole or in part to the mandatory rules applicable to the food industry in Subpart F of the phase III regulations. In addition form CLC-2 provides the means by which an entity prenotifies the Cost of Living Council of certain price adjustments (see special instructions for prenotification of price adjustments).

B. Who Must Use Form CLC-2

1. Price reporting firm. Each firm with $250 million or more of annual sales or revenues as defined in 6 CFR Part 130, Subpart L must report quarterly to the Cost of Living Council on form CLC-2.

2. Price recordkeeping firm. Each firm with $50 million or more but less than $250 million of annual sales or revenues as defined in 6 CFR. Part 130, Subpart L must place among its records on a quarterly basis a completed form CLC-2.

3. Other CLC-2 users. Generally, firms with less than $50 million of annual sales or revenues as defined in 6 CFR, Part 130, Subpart L are not required to use form CLC-2 but are encouraged to do so to assist in complying with the General Price Standard (6 CFR 130.13). However, every firm which is subject to the mandatory rules applicable to the food industry (6 CFR Part 130, Subpart F), and which is not a price reporting

firm is subject to the price recordkeeping requirements regardless of the dollar amount of its annual sales or revenues and must therefore place among its records on a quarterly basis a completed form CLC-2.

4. General rules. The following rules apply for the purpose of determining whether a firm is a price reporting firm or a price recordkeeping firm:

a. Determination of "Firm”. If a firm directly or indirectly controls another firm or firms, and is not itself directly or indirectly controlled by another firm, that firm is called a "parent" for the purposes of this form CLC-2. If a firm does not directly or indirectly control any other firm or firms, and is not itself directly or indirectly controlled by another firm, that firm is also called a "parent" for purposes of this form CLC-2. The parent and its consolidated and unconsolidated controlled firms (if any), taken all together, constitute the "firm" for the purposes of paragraphs B.1-B.3, above.

b. Parent and consolidated entities. Once the price reporting or price recordkeeping status is determined, only the sales or revenues of the parent and the sales or revenues of the controlled entities (if any), consolidated with the parent in its financial statements prepared in accordance with generally accepted accounting principles are combined for purposes of preparation of the form CLC-2 applicable to the "Parent and Consolidated Entities." The form CLC-2 is prepared by the parent for and on behalf of the entire consolidated group and is either submitted to the Cost of Living Council or retained as a record depending upon the price reporting or price recordkeeping status of the "firm.”

c. Unconsolidated entity. In addition to preparing form CLC-2 for and on behalf of the entire consolidated group, the parent must prepare a separate form CLC-2 for and on behalf of each unconsolidated entity with annual sales or revenues of $10 million or more. An "unconsolidated entity" is any entity directly or indirectly controlled by a parent but not consolidated with the parent for purposes of financial statements prepared in accordance with generally accepted accounting principles. An "unconsolidated entity" includes any entity

consolidated with that unconsolidated entity for purposes of financial statements prepared in accordance with generally accepted accounting principles. Whether the form CLC-2 must be submitted to the Cost of Living Council or retained as a record depends upon the price reporting or a price recordkeeping status of the "firm."

5. Certificate in lieu of form CLC-2. Any firm with annual sales or revenues of $50 million or more and which has not charged any price above base price levels since November 13, 1971, or which has not charged any price above base price levels after complying fully with the Price Commission's Special Regulation No. 1, in effect on January 10, 1973, may, in lieu of retaining in its files or submitting to the Cost of Living Council a form CLC-2, submit within 30 days of the end of the firm's fiscal quarter the following "Certificate in Lieu of Form CLC-2":

I certify that as of (last day in firm's fiscal quarter),

(Name of firm)

has not at any time since November 13, 1971, charged a price in excess of the base price established for a property or service of a covered activity under the regulations of the Price Commission in effect on January 10, 1973, or if such a price were charged, the firm has complied with all of the requirements of special regulation No. 1 of the Price Commission, and, since that time, has not charged a price in excess of such base price.

(Chief Executive Officer (or other authorized executive officer))

C. When To Submit or Prepare

1. A price reporting firm must submit and a price recordkeeping firm must retain all CLC-2 forms which are required to be prepared for each fiscal quarter beginning with the first fiscal quarter which includes January 11, 1973. Form CLC-2 must be submitted or retained not later than 45 days after the end of each fiscal quarter or 90 days after the end of the fiscal year.

D. What To Submit or Prepare

1. This form and instructions only require basic information. However, the Cost of Living Council may request additional data in particular cases. Firms required to prepare form CLC-2 must

attach all supporting schedules indicated in the instructions. Firms which submit forms CLC-2 which contain incomplete or incorrect information will be required to submit corrected forms CLC-2 and may be in violation of the reporting requirements if complete and correct forms are not submitted within the time periods prescribed.

2. Price adjustments and supporting cost justification must be recorded for each product line or service line categorized by four-digit Standard Industrial Classification (SIC) code if that is the entity's customary pricing unit (e.g., cost or profit center, for that product line or service line. If a customary pricing unit includes more than one four-digit SIC code, such pricing unit may be used provided that a listing of four-digit SIC codes included within the pricing unit is attached to the form. The listing of SIC codes must be in decreasing order of sales within the pricing unit. If a customary pricing unit is at a level of aggregation which is less than one four-digit SIC code, the entity may record price adjustments and supporting cost justification at that level.

3. For purposes of parts II and III of this form, price reporting firms which file forms 10-K and 10-Q with the Securities and Exchange Commission must attach to the form CLC-2 a copy of the form 10-Q for each fiscal quarter which ends on the date entered in item 4, Part I, form CLC-2. If the first submission of the form CLC-2 does not cover the first quarter of the firm's fiscal year, an additional form 10-Q must be submitted for the quarter immediately preceding the reported quarter. With the first submission, firms must file form 10-K for each of the 2 base years. Thereafter, the form 10-K must be filed at the end of each fiscal year as an attachment to the form CLC-2.

4. Firms which do not file forms 10-K and 10-Q with the Securities and Exchange Commission must prepare and attach to the form CLC-2, quarterly and annual financial statements (prepared in conformity with generally accepted accounting principles consistently applied) in conformity with definitions in the Securities and Exchange Commission Regulation S-X in lieu of forms 10-Q and 10-K as specified in paragraph D.3 above.

In addition, such firms which do not file form 10-K with the Securities and

Exchange Commission but which have annual financial statements audited by independent public accountants must attach a copy of such audited statements in conformance with the requirements for submitting form 10-K in paragraph 3 above. Such firms which do not have audited annual financial statements must attach a document explaining why such statements are not available.

E. Where To Submit

1. Price reporting firms must forward form CLC-2 and attachments to: Cost of Living Council, Form CLC-2 Submission, 2000 M Street NW., Washington, D.C. 20508.

2. Price recordkeeping firms must retain form CLC-2 at the address of the executive office of the parent.

F. Confidentiality of Information

1. Section 205 of the Economic Stabilization Act of 1970, as amended, provides as follows:

"(a) Except as provided in subsection (b), all information reported to or otherwise obtained by any person exercising authority under this title which contains or relates to a trade secret or other matter referred to in section 1905 of 18, United States Code, shall be considered confidential for the purposes of that section, except that such information may be disclosed to other persons empowered to carry out this title solely for the purpose of carrying out this title or when relevant in any proceeding under this title.

"(b) (1) Any business enterprise subject to the reporting requirements under § 130.21(b) of the regulations of the Cost of Living Council in effect on January 11, 1973, shall make public any report (except for matter excluded in accordance with paragraph (2)) so required which covers a period during which that business enterprise charges a price for a substantial product which exceeds by more than 1.5 percent the price lawfully in effect for such product on January 10, 1973, or on the date 12 months preceding the end of such period, whichever is later. As used in this subsection, the term 'substantial product' means any single product or service which accounted for 5 percent or more of the gross sales or revenues of a business enterprise in its most recent full fiscal year.

"(2) A business enterprise may exclude from any report made public pur

suant to paragraph (1) any information or data reported to the Cost of Living Council, proprietary in nature, which concerns or relates to the amount or sources of its income, profits, losses, costs, or expenditures but may not exclude from such report, data, or information, so reported, which concerns or relates to its prices for goods and services.

"(3) Immediately upon enactment of this subsection, the President or his delegate shall issue regulations defining for the purpose of this subsection what information or data are proprietary in nature and therefore excludable under paragraph (2), except that such regulations may not define as excludable any information or data which cannot currently be excluded from public annual reports to the Securities and Exchange Commission pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 by a business enterprise exclusively engaged in the manufacture or sale of a substantial product as defined in paragraph (1). Such regulations shall define as excludable any information or data which concerns or relates to the trade secrets, processes, operations, style of work, or apparatus of the business enterprise."

2. The Council will issue regulations providing for implementation of this provision.

G. Suggestions for Improvement

The Cost of Living Council welcomes suggestions for improving this and other forms. The Council seeks ways of obtaining the information it needs to exercise its responsibilities under the phase III economc stabilization program with the minimum amount of reporting burden. Suggestions should be submitted to: Cost of Living Council, Office of Price Monitoring, Special Projects Division, 2000 M Street NW., Washington, D.C. 20508.

H. Rounding

For purposes of this form, all percentages must be expressed to the nearest two decimal places (such as 5.92 percent). All dollar entries must be rounded to the nearest $1,000 and the 000 should be omitted (such as $1,750,803 entered as $1.751).

I. Sanctions

The submission of CLC-2 forms by price reporting firms as a report or pre

notification and the preparation and retention of CLC-2 forms by price recordkeeping firms are mandatory requirements under the phase III regulations. Failure to file, to keep records or otherwise to comply with these instructions may result in criminal fines, civil penalties, and other sanctions as provided by law including the Economic Stabilization Act of 1970, as amended, Executive Order 11695 and the economic stabilization regulations.

SPECIFIC INSTRUCTIONS

Organization to Which Form Applies

Check the one box which indicates the status of the organization to which this form applies. If either box (2) or (4) is checked, enter the legal name of the parent on the line provided.

Type of Submission

Check one box to indicate the reason for submission of the form to the Cost of Living Council.

Part I-Identification Data

ITEM 1. Name, address, and chief executive officer of parent or unconsolidated entity. Enter the legal name of the parent or unconsolidated entity to which the form applies. Enter the address of its executive office. Enter the name and title of the chief executive officer.

NOTE.-Hereafter the parent or unconsolidated entity to which the form applies will be referred to as the "entity."

ITEM 2. Is this a resubmission? Answer item 2 "yes" if you are supplying additional information or are resubmitting a report. In either case, the form must be completed in its entirety.

ITEM 3. Ending date of most recently completed fiscal year. Enter the date of the last day of the most recently completed fiscal year of the entity. If the fiscal year ending date has changed, enter the word "change" and attach a letter explaining the change.

ITEM 4. Reporting period ending date. Enter the date of the last day in the reporting period.

The reporting period must conform with the entity's most recently completed fiscal quarter. For purposes of the first preparation of this form, the reporting period is the fiscal quarter which includes January 11, 1973.

ITEM 5. Annual sales or revenues (to be completed by parent only)-Enter for the most recently completed fiscal year, the total of the annual sales or revenues (as defined in 6 CFR Part 130, Subpart L) of the parent and its consolidated and unconsolidated controlled firms. The amount entered in this item is computed as follows:

Total annual gross receipts of the firm from whatever source derived, less gross receipts of or from foreign entities, branches or divisions (in accordance with the definition of "annual sales or revenues" provided in Subpart L of the phase III regulations).

Special Instructions Applicable to the Food Industry

Subpart F of the phase III regulations provides that a firm which is subject to both the general standard for price adjustments (Subpart B) and the mandatory rules applicable to the food industry (Suppart F) is subject to two profit margin limitations: One for Subpart B purposes and one for Subpart F purposes. The Subpart B profit margin can be based, at the option of the firm, on total sales or on nonfood sales only, but if the former option is chosen the 1.5 percent price increase alternative of the general price standard is not available. The profit margin for Subpart F purposes is a food sales profit margin calculated according to the rules of Subpart F.

When these two profit margins are required to be calculated pursuant to Subpart F, parts II and III of the form CLC-2 are completed for the Subpart B profit margin and an additional form CLC-2 must be attached with parts II and III completed for the Subpart F profit margin. Type in "For Subpart F Purposes" following the headings for part II and part III of the attached form CLC-2 and also complete part I of the attached form CLC-2.

In the event that the entity to which form CLC-2 applies is itself engaged in food sales only or in nonfood sales only, the entity need not complete two parts II and III but it must designate whether the part II and III it does complete is for Subpart B or for Subpart F purposes. Entities which are engaged in both food and nonfood sales must complete two parts II and III of the form CLC-2, as indicated above, according to whether the firm (as defined in the general instructions) is subject to Subpart F of the