(2) Midpoint in time of operations simultaneously loading and unloading

cargo.

Usually this will be considered to have happened at noon or midnight of the day on which the determining operation is completed.

(1) "Vessel Operating Expense"

means:

(1) For those carriers required to file FMC-64, the total of operating expenseterminated voyages, plus port, cargo, brokerage, and other voyage expense, less other voyage revenue and revenue from passengers net of passenger brokerage.

(2) For those carriers required to file FMC-63, basically the same data as outlined in subparagraph (1) of this paragraph, but in the format and detail set forth in Schedule VI (A).

(m) "Vessel Operating Expense Relationship" means the relationship between total vessel operating expense allocated to The Trade, on the one hand, and total vessel operating expense of all trades and services of the carrier on the other, both for the period.

(n) "Related Companies" means companies or persons that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the accounting carrier. The term "Control" (in reference to a relationship between any person or persons and another person or persons), shall be construed to include actual as well as legal control, whether maintained or exercised through or by reason of the method of or circumstances surrounding organization or operation, through or by common directors, officers, or stockholders, a voting trust or trusts, a holding or investment company or companies, or through or by any other direct or indirect means; and to include the power to exercise control.

may be obtained upon request from the Director, Bureau of Financial Analysis, Federal Maritime Commission, Washington, D.C., 20573. These pro forma statements are based on the Uniform System of Accounts for Maritime Carriers prescribed by the Maritime Administration and the Interstate Commerce Commission. For those carriers who are required to file FMC-63, a means has been provided whereby the accounts prescribed by the Interstate Commerce Commission for Carriers by Inland and Coastal Waterways may be reconciled with the requirements of these statements. For such carriers, alternative Schedules IV, VI, VII, and VIII have been provided, each identified by suffix (A).

(b) Rate Base (Exhibit A)—(1) Investment in Vessels (Schedule I). Each Cargo Vessel, excluding chartered vessels, employed in The Service for which a statement is filed shall be listed by name and type showing the original cost to the carrier, or to any Related Company, plus the cost of betterments, conversions, and alterations, less the cost of any deductions as at the beginning of the year. All additions and deductions made during the period shall be shown gross and on a pro rata basis reflecting the number of days they were actually in use during the period. The result of these computations shall be called Adjusted Cost. Where any of the above figures differ from those reported in Schedule 222 or 2020, respectively, of the annual financial statements FMC-63 or FMC-64, or from those reported for Federal income tax purposes, the differences shall be set forth and fully explained.

(i) The Cargo Vessels employed in The Service may be subdivided into two categories:

(a) Those Cargo Vessels employed exclusively in The Service for the entire period, inclusive of normal periodic layups, and which at no time during the period performed Voyages other than in The Service. For such vessels, the Adjusted Cost shall be included in the total. to be allocated to The Trade.

(b) Those Cargo Vessels employed in The Service for less than the entire period. For such vessels the Adjusted Oost shall be allocated between Voyages. in The Service and Voyages in Other Services on the basis of the relationshipthat the number of days in each bears to the total of both. The total number of days thereby derived will not normally

equal the number of days in the reporting period because lay-up days are not included. Lay-up days of vessels in this category will normally be assigned between the respective services on the same basis as that employed in allocating the Adjusted Costs of such vessels, i.e., active days. However, if one or more of the vessels normally employed in The Service have been diverted temporarily to Other Services in lieu of incurring lay-up expense, no assignment of lay-up time to Other Services is required. On the other hand, if a vessel or vessels are permanently withdrawn from The Service and laid-up pending disposition, the period of lay-up shall be assigned to Other Services. In summary, an inequitable amount of lay-up days shall not be assigned to The Service or to The Trade. That portion of the Adjusted Cost of the vessels not allocated to Other Services shall be included in the total to be allocated to The Trade.

(ii) The total of the Adjusted Cost of all vessels employed in The Service during the period which has not been allocated to Other Services, as required in subdivision (i) (b) of this subparagraph, shall be distributed between The Trade and Other Cargo in the Revenue Ton-Mile Relationship.

(iii) Where the service of the carrier is solely between ports in the continental United States and domestic offshore ports, and where there are no significant differences between the distances from the various continental ports and the several domestic offshore ports, and the ocean rates between said ports are identical, the Revenue Ton Relationship may be used in lieu of the Revenue TonMile Relationship.

(iv) Revenue derived from the carriage of passengers and other services which is treated herein as a reduction of costs paragraph (c) (2) (iii) of this section and the Revenue Tons from which such revenue is derived shall be excluded from the Revenue Ton-Mile calculations required herein.

(2) Reserve for Depreciation-Vessels (Schedule II). (i) Each Cargo Vessel, excluding chartered vessels, employed in The Service shall be listed separately showing for each its depreciable life and residual value used for depreciation purposes. The accumulated reserve for depreciation as at the beginning of the year shall be reported and shall be allocated to The Service and to The Trade in the same manner and in the same

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proportion as is the cost of the vessel in Schedule I. When any of the amounts required herein are different from those reported in Schedule 282 or 2021, respectively, of the annual financial statements FMC-63 or FMC-64, or from those reported for Federal income tax purposes, the differences shall be set forth and fully explained. If the depreciable life of any equipment installed on vessels differs from that of the vessel, the cost thereof and the depreciation basis shall be set forth separately.

(ii) For any vessels disposed of during the period, a deduction shall be made representing a daily proportion of the period following the date of disposal corresponding to the similar deduction as required by subparagraph (1) of this paragraph.

(3) Other Property and Equipment— Net (Schedule III). (i) Actual investment, representing original cost to the carrier, or to any Related Company, in other fixed assets employed in The Service and accumulated reserves for depreciation, both as at the beginning of the year, shall be set forth. Additions and deductions during the period shall also be reported, and the carrier may assume that all such changes took place at midyear except for those involving substantial sums which shall be prorated on a daily basis. Assets shall be grouped in major categories as required by the appropriate annual financial statements FMC-63 or FMC-64. The basis of allocation to the rate base of each item reported shall be set forth and shall be based upon the use thereof within The Trade. Any computations of percentages employed shall also be set forth. Assets employed in a general capacity, such as office furniture and fixtures, shall be allocated to The Trade in the Vessel Operating Expense Relationship.

(ii) With respect to any significant deductions, the reserve shall be proportionally reduced as required by subparagraph (2) (ii) of this paragraph.

(iii) When any of the amounts required herein are different from those reported in the annual financial statements FMC-63 or FMC-64 or from those reported for Federal income tax purposes, the differences shall be set forth and fully explained.

(4) Working Capital (Schedule IV). Working Capital shall be included on the Average Voyage Expense basis computed as follows:

(i) Average Voyage Expense shall be determined on the basis of the actual expenses of operating and maintaining the vessels employed in The Service (excluding lay-up expenses) for a period represented by the average length of time of all round voyages (excluding lay-up periods) terminated during the period on which any cargo was carried in The Trade. The expense of operating and maintaining the vessels employed in The Service shall include: (a) administrative and general expense (accounts 900955 less accounts 670 and 895), allocated to The Service in the relationship that vessel operating expense of The Service bears to Vessel Operating Expense of all services, and (b) total vessel operating expense-terminated voyages (accounts 701-799 inclusive). For this purpose if the average voyage, as determined above, is of less than 90 days' duration, the expense of hull and machinery and P & I insurance (accounts 755 and 757, respectively) shall be determined to be that for 90 days: Provided, That such allowance for insurance expense shall not, in the aggregate, exceed the total actual insurance expense for the period.

(ii) The determination shall be made in the following manner:

First, by dividing the sum of such expenses for the period involved applicable to the vessels in The Service by the aggregate number of days consumed in all voyages of such vessels in The Service terminating during such period;

Second, by multiplying the quotient thus obtained by the number of days (excluding lay-up days) in the average voyage in The Service; and

Third, by multiplying the resulting product by the quotient of the total number of days (excluding lay-up days) consumed in voyages of vessels in The Service terminating during the period divided by the number of calendar days within the period.

(iii) Where vessel operating expense is allocated as provided in paragraph (c) (2) of this section, working capital (Average Voyage Expense) shall be computed on the basis of vessel operating expense of The Service and then allocated to The Trade in the relationship that vessel operating expense of The Trade bears to vessel operating expense of The Service. This schedule is not required of those carriers who annually file FMC-63 with the Federal Maritime Commission.

(5) Working Capital (Schedule IV (A)). Working capital for carriers who annually file FMC-63 with the Federal

Maritime Commission shall be equal to one-twelfth of the expenses of the carrier during a 12-month period (one-sixth of the expenses of the carrier during a 6-month period), computed as follows: Add together the carrier's expenses during the period for vessel operating expense, administrative and general expense, other shipping operations, and inactive vessel expense, each as allocated to The Trade and shown respectively on Schedules VI(A), VII(A), VIII(A), and IX, and divide the total by 12, or 6, as may be appropriate.

(6) Other assets. Any other assets claimed by the carrier as components of its Rate Base shall be set forth separately in a schedule and related to amounts shown in the annual financial statements FMC-63 or FMC-64. The basis of allocation to The Trade shall be fully explained and supported by computations of percentages employed.

(7) Property and Equipment of Related Companies. Exhibit A provides for the reporting of property and equipment of Related Companies used in The Trade. Where such assets owned by Related Companies are used in The Trade, the profits of such Related Companies from such use shall be included in the Income Account, and an appropriate allocation of the depreciated cost of such assets as reflected on the books of such Related Companies may be included in the Rate Base. The basis of allocating such net depreciated cost to The Trade shall be set forth and fully explained in a schedule similar to Schedule III.

(i)

(c) Income Account (Exhibit B)—(1) Operating Revenue (Schedule V). Revenue allocated to The Trade shall include only revenue earned from the common carriage of cargo in the Domestic Offshore Trade on voyages terminated during the period. Revenue tons and revenue amounts shall be reported separately for each of the 15 commodities producing the highest revenues in The Trade.

(ii) When any of the amounts reported in the Income Account are based on amounts which are different from those reported in the annual financial statements, the differences shall be set forth and fully explained.

(2) Vessel Operating Expense (Schedule VI). A Vessel Operating Expense summary of Voyages terminated during the period, including all Voyages in which any cargo was carried in The Service, shall be submitted setting forth

allocations to The Trade on the following bases:

(1) Vessel Expense shall be allocated, where an allocation is necessary, to The Trade in the Revenue Ton-Mile Relationship. This procedure will be required for all Voyages in The Service. Should any of the elements of vessel expense be directly allocable to specific cargo, such direct allocations shall be made and explained.

(ii) Port, cargo, freight, brokerage, and other voyage expenses, separately by ports at which incurred, shall be allocated between The Trade and Other Cargo directly to the extent practicable, or otherwise on the basis of Revenue Tons loaded and discharged at such ports.

(iii) Passenger revenue less passenger brokerage and other voyage revenue earned in The Service shall be deducted from vessel operating expense and distributed between The Trade and Other Cargo in the Revenue Ton-Mile Relationship.

This schedule is not required of those carriers who annually file FMC-63 with the Federal Maritime Commission.

(3) Vessel Operating Expense (Schedule VI(A)). This schedule shall be submitted by carriers who annually file FMC-63 with the Federal Maritime Commission. It is designed to summarize operating results and to provide for allocations to The Trade where necessary because of the simultaneous carriage of Other Cargo. The principles of allocation are the same as those required by subparagraph (2) of this paragraph.

(4) Administrative and General Expense (Schedules VII and VII(A)). Administrative and general expense less agency fees, commissions, and brokerage earned shall be allocated to The Trade in the Vessel Operating Expense Relationship. Direct allocations may be made, where practicable, particularly with respect to advertising expense related to the operation of passenger and combination vessels. Any direct allocation shall be explained in detail and set forth in an appropriate schedule.

(5) Other Shipping Operations (Schedule VIII). Terminal, Cargo Handling, Tug and Lighter, and Other Shipping Operations shall be allocated to The Trade on a tonnage or volume basis as a measure of use and shall be made separately by ports at which incurred. The methods used shall be explained and fully supported. If inter

departmental credits for services and facilities are used by the carrier, such credits shall be allocated so as to offset the related contra charges included in the voyage accounts. Revenues earned from services performed for others, unrelated to The Trade, and the related costs and expenses shall not be allocated to The Trade. This schedule is not required of those carriers who annually file FMC-63 with the Federal Maritime Commission.

(6) Other Shipping Operations (Schedule VIII(A)). (i) This schedule shall be submitted by carriers who annually file FMC-63 with the Federal Maritime Commission. Items related to shipping, classified on Schedule VIII(A) as other shipping operations, shall be allocated to The Trade on a tonnage or volume basis as a measure of use and shall be made separately by ports at which incurred. The methods used shall be explained and fully supported.

(ii) Interdepartmental debits and credits shall be offset as explained in subparagraph (5).

(iii) Revenues earned from services performed for others, unrelated to The Trade, and related costs and expenses shall not be allocated to The Trade.

(7) Inactive Vessel Expense (Schedule IX). Inactive vessel expense shall, in general, be allocated by vessel on the same basis as the investment in such vessel is included in the Rate Base. However, when a vessel is definitely assigned to The Service, any inactive vessel expense for that vessel may be allocated to The Service. If such a vessel be temporarily chartered out to minimize lay-up expense, no lay-up expense incurred before or after such charter period need be allocated to the charter. Inactive vessel expense applicable to vessels not used in The Service or withdrawn from The Service shall be excluded, paragraph (b) (1) (i) (b) of this section.

the Merchant Marine Act, 1936, as amended, shall be taken into account. The construction-differential subsidy refund attributable to operations in The Service shall be allocated to The Trade in the relationship that the Revenue Ton-Miles of cargo carried in The Trade bear to the total Revenue Ton-Miles of that cargo the revenue from which was used to determine the amount of the refund. Whenever expenses applicable to The Trade are increased due to construction-differential subsidy refunds, details of calculations with respect thereto must be reported on Schedule XI.

(10) Other. (i) Any other elements of income or expense wholly or partially applicable to The Trade shall be fully explained and supported by a schedule showing details of allocation and reconciliation with amounts shown in the annual financial statements FMC-63 or FMC-64.

(ii) Operating-differential subsidy refunds under section 605(a) of the Merchant Marine Act, 1936, as amended, shall not be allocated to The Trade.

(11) Federal income tax. Federal income taxes allocated to The Trade shall be set forth together with the details of the computation thereof.

(12) Profits of related companies. Net income, after Federal income taxes earned by Related Companies of the carrier in performing services for the carrier in The Trade shall be included in an appropriate manner. The methods employed in determining such net income shall be fully explained and supported by a schedule.

domestic offshore trades of the United States and who are required to file periodic reports with the Commission pursuant to its General Orders 5 and 11. Such audits are necessary in order that the Commission may discharge its substantive regulatory responsibilities under the Intercoastal Shipping Act, 1933, and section 18(a) of the Shipping Act, 1916, by verifying the required reports. § 513.2 Access to records.

The Commission itself, or through duly accredited special agents or auditors, shall at all times have access to all documents, accounts, records, rates, charges, or correspondence used in the preparation of or pertaining to reports filed with the Commission and all underlying working papers (irrespective of by whom prepared) in support of all exhibits and schedules submitted to the Commission, and the Commission or its accredited special agents or auditors shall be permitted to make copies of such records to the extent they deem necessary. § 513.3 Notice of audit.

Notice that inspection of a carrier's books and records is desired for the purpose of audit shall be given by the Commission or its duly accredited special agents or auditors, and such inspection shall be at a place and time convenient to the carrier, but such inspection shall not be unduly delayed after reasonable notice is given to the carrier.

§ 513.4 Agents and auditors.

The terms "special agents" or "auditors" shall include any employee of the Commission's Bureau of Financial Analysis or any other employee of the Commission specifically designated by the Commission or the Director, Bureau of Financial Analysis.