four-digit Standard Industrial Classification Code which is included within the industrial group for which modification of prenotification requirements is requested may not be more than 5 percent of the market covered by that four-digit classification.

(B) Until October 12, 1973, a firm which pursuant to the provisions of 6 CFR 300.51 (c) in effect on January 10, 1973, applied for and received from the Price Commission a modification of the prenotification requirements with respect to price increases relating to sales within a particular two-digit SIC code and which has reason to believe that it continues to qualify under this paragraph, shall be deemed to have received authority from the Cost of Living Council to put price increases into effect in accordance with the provisions of paragraph (b)(2) (iv)(A) of this section. Effective October 12, 1973, a firm may adjust a price pursuant to paragraph (b) (2) (iv) (A) of this section only if it has received authorization issued by the Council pursuant to the provisions of paragraph (b)(2)(iv)(A) of this section.

§ 150.152 Manner of prenotification.

The notice of the proposed price increase must be filed in the form and manner prescribed by the Cost of Living Council, and will be considered to be filed on the date when it is stamped and dated by the Council. The Council will notify the firm, in writing, of the date of filing. If the information submitted is incomplete or inadequate, the Council will not accept the filing, and will so notify the firm.

§ 150.153 Measure of the Prenotification Period.

The 30-day prenotification period will commence on the date of filing of the notice of the proposed price increase with the Council. In any case in which the 30-day period would otherwise end on a Saturday, Sunday or Federal holiday, it will end at the close of the next succeeding workday. § 150.154 Council Action.

During the 30-day prenotification period, the Council may issue an order disapproving, modify

ing, suspending or deferring a proposed price increase in whole or in part.

(a) The Council may issue an order disapproving or modifying a proposed price increase in whole or in part, if it finds that the proposed price increase does not conform to the rules of this part.

(b) The Council may issue an order temporarily suspending the running of the 30 day prenotification period of a proposed price increase if it finds additional information is necessary or that the form was improperly filed. The order will remain in effect until the Council notifies the firm in writing that the additional information has been received and accepted.

(c) The Council may issue an order deferring a price increase, in whole or in part, if it finds that the proposed price increase is of such magnitude and would have such an impact upon the economy as to be unreasonably inconsistent with the goals of the Economic Stabilization Program.

§ 150.155 Implementation of price increases. If the Council does not act upon the proposed price increase within the 30-day prenotification period, pursuant to § 150.154, the proposed price increase may be charged immediately upon expiration of the 30-day prenotification period. Failure of the Council to act upon the proposed price increase within the 30-day period does not constitute approval of the price increase and nothing in this part shall be construed to limit the authority of the Council to modify, suspend, disapprove, or defer any such price increase in whole or in part placed into effect after the expiration of the 30-day period if the Council finds that:

(a) the price increase does not conform to the rules of this part; or

(b) the price increase is of such magnitude and would have such an impact upon the economy as to be unreasonably inconsistent with the goals of the Economic Stabilization Program.

§ 150.156 Volatility.

(a) Subject to paragraphs (b) through (d) of this section, a firm that has customarily priced an item in a manner immediately responsive to frequent and customary market price fluctuations of the raw materials or partially processed products which it uses in that item may, when and to the extent authorized by the Cost of Living Council increase the price of that item to the extent of any

significant market price increase of those raw materials or partially processed products, without regard to the prenotification requirements of this subpart. However, in the case of a price increase based on an increase in the price of a partially processed product, only that part of the increased cost of the partially processed product that is due to an increase in the market price of the raw materials in that product may be used in computing any allowable increase under this paragraph. For the purposes of this paragraph and paragraph (c) of this section "raw materials" include raw agricultural products, raw seafood, and other raw materials used by the firm in preparing an item for which an authorization is sought under this section.

(b) Limitation. A firm which increases a price pursuant to an authorization granted under this section shall reduce that price to the extent of any later decrease in cost in accordance with the general rules of this part.

(c) Notice on invoice. A firm which increases a price on any partially processed product pursuant to authorization under this section shall indicate on each invoice to its manufacturing and processing customers that part of any cost increase that is due to an increase in the cost of the raw materials used in making the partially processed product.

(d) Until October 12, 1973, a firm which received a volatile pricing authorization from the Price Commission which was in effect on January 10, 1973, with respect to an item shall be deemed to have received authority from the Council to put price adjustments for that item into effect in accordance with the provisions of this section. Effective October 12, 1973, a firm may adjust the price of an item pursuant to this section only if it has received a volatile pricing authorization issued by the Council pursuant to paragraph (a) of this section.

§ 150.161 Quarterly Reports.

(a) General. Except as provided in paragraph (b), each price category I and II firm shall submit quarterly reports to the Cost of Living Council on prices, costs and profits in accordance with forms and instructions issued by the Council.

(b) Waiver of quarterly reports. Quarterly reports need not be submitted to the Council by the following firms:

(1) A firm which during its most recent fiscal year derived both (i) 90% or more of

its annual sales or revenues from the sale of exempt items or from exempt sales and (ii) less than $50 million of its annual sales or revenues from the sale or lease of non-exempt items.

(2) A firm which is a nonprofit organization with less than $50 million derived from transactions in property or services which are not exempt under Subpart D of this part, or otherwise excluded from coverage of this part.

(3) State and local governments.

(4) A firm which has not charged a price for any item above the base price or above the adjusted freeze price, whichever is higher, provided the firm files, for the fiscal quarter, a "Certificate of no price increase" in accordance with the forms and instructions issued by the Cost of Living Council.

(c) Manner of reporting. Each quarterly report required under paragraph (a) of this section shall be made in accordance with forms and instructions issued by the Cost of Living Council. § 150.162 Additional reports and information.

Whenever the Cost of Living Council considers it necessary for the effective administration of the Economic Stabilization Program, it may order any firm to file special or separate reports, setting forth information relating to the Economic Stabilization Program, in addition to any other reports required by this part.

§ 150.163 Effect of failure to file or maintain reports or other documents required by or under certain sections of this part.

(a) If a firm which is required to file a report or other document with the Cost of Living Council pursuant to the provisions of this part or an order issued by the Council does not, within the time limits prescribed, file the report or other document—

(1) The firm may not implement any further price increases including price increases which could otherwise be implemented pursuant to § 150.155 until it has complied with that reporting requirement and has obtained the special approval of the Council;

(2) Except to the extent specifically authorized otherwise by the Council in any case, based upon a written request of the firm concerned citing hardship or inequity, action is suspended on all requests

for exception filed by that firm until it has complied with the reporting requirement; and

(3) The Council may, whenever it considers it appropriate under the circumstances, order the firm to reduce any of its prices.

(b) Each day that a firm fails to comply with a reporting requirement pursuant to this part pertaining to reports, or with an order under this part, is considered to constitute a separate violation of this part or that order.

§ 150.164 Records.

(a) General. Each firm subject to this part shall maintain such records as are sufficient to demonstrate that the prices charged by the firm are in compliance with the rules in this part.

(b) Inspection. Records required to be maintained under paragraph (a) of this section shall be made available for inspection at any time upon the request of an officer or employee of the Internal Revenue Service or the Council.

(c) Justification. Upon the request of an officer or employee of the Internal Revenue Service or the Council any firm which has filed a notice of a proposed price increase or increases a price pursuant to this part, shall:

(1) Specify the records that comply with paragraph (a) of this section; and

(2) Justify that proposed price increase or increased price.

(d) Period for maintaining records. Each firm required to maintain a record under this section shall preserve that record for at least 4 years after the last day of the calendar year in which the transactions or other events recorded in that record occurred or the property was acquired by that firm whichever is later.

SUBPART I-ACCOUNTING AND FINANCIAL REPORTING REQUIREMENTS

§ 150.171 Comparability of financial data.

(a) General. When filing a report or other document under this part, financial data shall be restated in accordance with the provisions of this section in order that profit margins reflect comparable units.

(b) Acquisitions. An acquisition including the purchase of a separate accounting entity, such as a company or division, requires adjustments to financial data for purposes of this part if such an

acquisition would require restatement or disclosure in a filing with the SEC, or if the acquisition is of a similar type but such restatement or disclosure is not required because the firm does not file reports with the SEC.

(c) Divestments and discontinuations. A divestment of a separate accounting entity such as a company or division or a discontinued operation requires adjustment to financial data for purposes of this part if such a divestment or discontinued operation would require restatement or disclosure in a filing with the SEC, or if the divestment or discontinued operation is of a similar type but such restatement or disclosure is not required because the firm does not file reports with the SEC.

(d) Other changes. If the nature of operations of a firm has changed so that the business being conducted currently is of a significantly different nature than the business previously conducted for a reason other than those discussed above, the firm may request an exception to adjust profit margins appropriately for all pertinent periods.

SUBPART J-SPECIAL RULES

§ 150.201 Loss and low profit firms. (a) Applicability. This section applies to any firm which

(1) has estimated and has prepared supporting documentation in accordance with the provisions of paragraph (g) of this section that for its current fiscal year it will have a profit margin less than the minimum profit margin allowed as computed in accordance with paragraph (c); and

(2) for each control year (as determined pursuant to § 201.52 of this title) included in whole or in part in the current fiscal year has not increased the wages or salaries of any of its officers or employees who are owners or relatives of an owner in excess of the general wage and salary standard as computed in accordance with Economic Stabilization Regulations, unless the Council or its delegate has by order permitted greater increases to be paid with respect to the appropriate employee unit including such employees, in which case the firm may grant increases to the extent allowed by such order without losing its loss or low profit firm qualification.

(b) Definitions. For purposes of this paragraph

"Minimum profit margin allowed" means the profit margin calculated pursuant to the provisions of paragraph (c).

"Owner" means an officer or employee who owns (or is considered to own within the meaning of 26 U.S.C. 318 (a) (1)) on any day of the fiscal year concerned, more than 5 percent of the outstanding stock of the firm.

"Relatives of an owner" shall include only those members of the family specified in 26 U.S.C. § 318 (a) (1).

(c) Calculation of minimum profit margin allowed.

(1) Service activities. For any firm which during its most recently completed fiscal year, derived at least 90% of its annual sales or revenues from the furnishing of services, the minimum profit margin allowed is 1%.

(2) Other activities. For any other firm, the minimum profit margin allowed is that corresponding to the firm's capital turnover ratio and is set forth in Column B of Table I. The capital turnover ratio is computed by dividing the net sales for the most recently completed fiscal year or the alternative fiscal period by average total capital (long-term debt plus owner's equity, less investments, the income from which is included in nonoperating income) for that fiscal year or alternative fiscal period. Calculations made pursuant to this section must be consistent with instructions to the Form CLC-22 except that in computing the profit margin, the firm may not include interest expense on long term debt. The average total capital for a fiscal year or alternative fiscal period is computed by adding the outstanding total capital at the beginning of the fiscal year or alternative fiscal period to the outstanding total capital at the end of that fiscal year or alternative fiscal period, and dividing the sum by two:

5.3 or more, but less than 5.6 5.6 or more, but less than 5.9 5.9 or more, but less than 6.3 6.3 or more, but less than 6.7 6.7 or more, but less than 7.1 7.1 or more, but less than 7.7 7.7 or more, but less than 8.3 8.3 or more, but less than 9.1 9.1 or more, but less than 10.0 10.0 or more, but less than 11.1 11.1 or more, but less than 12.5 12.5 or more, but less than 14.3 14.3 or more, but less than 16.7 16.7 or more, but less than 20.0 20.0 or more, but less than 25.0 25.0 or more, but less than 33.3 33.3 or more, but less than 50.0 50.0 or more

1.9

1.8

1.7 1.6

1.5 1.4

1.3

1.2

1.1

1.0

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

(d) Alternative fiscal period. The alternative fiscal period is the best two of the firm's base period years. For purposes of computing the alternative fiscal period capital turnover ratio of paragraph (c) (2) of this section, the firm shall add the net sales and average total capital, for the firm's two best base period years and divide the sum by

two.

(e) Pricing. Notwithstanding Subparts A, E or K, or the prenotification requirements of Subpart H of this part, but subject to paragraphs (f) through (h) of this section, a loss or low profit firm may after August 12, 1973 increase any of its prices by an amount reasonably calculated to result by the end of its third fiscal quarter in a profit margin that does not exceed the minimum profit margin allowed under this section.

(f) Wage and salary limitations. If a firm which prices pursuant to this section increases during any control year included in whole or in part in the current fiscal year the wages and salaries of any of its officers or employees who are owners or relatives of an owner in excess of the general wage and salary standard as computed in accordance with Economic Stabilization Regulations or in excess of any greater increase permitted to be paid by order of the Council, authority to price pursuant to this section terminates.

(g) Reporting

(1) Each price category I or price category II firm, before utilizing this section for any fiscal year or part thereof, in addition to complying with the reporting requirements of Subpart H, and before charging any price under this section, shall furnish

to the Council sufficient financial data to support its loss or low profit position. The data submitted must include a Schedule R to Form CLC-22 completed in Parts I through V for the current fiscal year on a projected basis and for the alternative fiscal period and Form PB-3 or PB-3A if appropriate) for each appropriate employee unit which includes employees referred to in paragraph (f) of this section, for each control year covered in whole or in part by any fiscal year used to calculate the minimum profit margin allowed and for the current fiscal year in which prices are to be increased under this section. Such a firm may increase prices under this section after 30 days following the date of the receipt of that financial data by the Council unless, during that 30-day period, the Council suspends, modifies or disapproves that action. The Council may disapprove such action for a firm whose profit margin is at or above the average profit margin of other firms engaged in the same industry.

(2) Each price category III firm, before charging any price under this section in any fiscal year shall prepare and maintain at its principal place of business sufficient financial data to support its loss or low profit position for that fiscal year. The data prepared must include a Schedule R to Form CLC-22 completed for the current fiscal year on a projected basis and for the alternative fiscal period and Form PB-3 or PB-3A (if appropriate) for each appropriate employee unit which includes employees referred to in paragraph (f) of this section, for each control year covered in whole or in part by any fiscal year used to calculate the minimum profit margin allowed and for the current fiscal year in which prices are to be increased under this section.

(h) Termination of use of low profit rule. At the end of the current fiscal year, or within 45 days after the end of a fiscal quarter in the current fiscal year in which a loss or low profit firm which has increased prices pursuant to this section achieves its minimum profit margin allowed or approaches

it within .01 percent at an annual rate, authority to use this section terminates. Thereafter, the firm must conform to the price rules of this part which would be applicable to it if it had not been a loss or low profit firm. However, for purposes of this part, the base period profit margin of the firm is the profit margin allowed as calculated pursuant to the provisions of this section.

§ 150.202 Loss or low base low base period profit margins.

(a) General. Notwithstanding the provisions of subpart A and the definition of base period profit margin in subpart B, a firm may calculate and use as its base period profit margin the minimum profit margin allowed as calculated pursuant to this section.

(b) Calculation of profit margin allowed.

(1) Service activities. For any firm which in its most recently completed fiscal year, derived at least 90% of its annual sales or revenues from the furnishing of services, the minimum profit margin allowed is 1%.

(2) Other activities. For any other firm, the profit margin allowed is that corresponding to the firm's capital turnover ratio and is set forth in Column B of Table II. The capital turnover ratio is computed by dividing the sum of the net sales for the firms two best base period years by the average total capital (long-term debt plus owner's equity, less investments, the income of which is included in nonoperating income of those two years). Calculations made pursuant to this section must be consistent with instructions on Form CLC-22 except that in computing the profit margin, the firm may not include interest expense on long term debt. The average total capital for a fiscal year is computed by adding the outstanding total capital at the beginning of the fiscal year to the outstanding total capital at the end of that fiscal year, and dividing the sum by two: