SECURITIES AND EXCHANGE COMMISSION

          17 CFR Parts 210, 229, 240 and 249

          [Release Nos. 33-7620; 34-40884; FR54; File No. S7-17-98]

          RIN  3235-AH43

          Segment Reporting

          AGENCY:   Securities and Exchange Commission

          ACTION:   Final  Rules

          SUMMARY:    The Commission today is adopting technical amendments

          to conform our reporting requirements with the Financial

          Accounting Standards Board’s ("FASB") Statement of Financial

          Accounting Standards ("SFAS") No. 131, governing disclosures

          relating to a business enterprise’s operating segments.

          DATES:    Effective Date:  The rules will become effective on

          [insert date 30 days following publication in the Federal

          Register].   Compliance Date:  Issuers may voluntarily comply

          with the revised rules before the effective date.

          FOR FURTHER INFORMATION, CONTACT:    James R. Budge, Special

          Counsel, Division of Corporation Finance, at (202) 942-2950,

          Louise M. Dorsey, Assistant Chief Accountant, Division of

          Corporation Finance, at (202) 942-2960, or Robert F. Lavery,

          Assistant Chief Accountant, Office of the Chief Accountant, at

          (202) 942-4400, U.S. Securities and Exchange Commission, 450

          Fifth Street, N.W., Washington, D.C.  20549.



          SUPPLEMENTARY INFORMATION:    The Commission today adopts

          technical amendments to Rules 3-03[1]  and 12-16[2] of Regulation

          S-X,[3] Items 101[4] and 102[5] of Regulation S-K,[6] and

          Schedule 14A[7] in order to conform our reporting requirements

          with the FASB’s recently adopted SFAS No. 131.  We also are

          making consistent changes to Form 20-F[8] and to Section 501.06

          of the Codification of Financial Reporting Policies ("CFRP").

          I.   BACKGROUND

               In 1976, the FASB issued  SFAS  No. 14, "Financial Reporting

          for Segments of a Business Enterprise."  SFAS No. 14 required

          corporations to disclose certain financial information by

          "industry segment" as defined in the statement and by geographic

          area.  In December 1977, we adopted amendments to our rules to

          integrate the information to be furnished under SFAS No. 14 with

          the narrative and financial disclosures required in various

          disclosure forms.[9]

                After extensive deliberations, including solicitation of

          public comments, the FASB adopted a number of fundamental changes

          to its standards for segment reporting by publishing SFAS No. 131

          in June of 1997.  SFAS No. 131 superseded SFAS No. 14 and

          established standards for reporting information about "operating

          segments" of an enterprise rather than following the "industry

          segment" standards that were in place previously.

                On June 25, 1998, the Commission proposed for comment a

          number of technical changes to its reporting requirements to

          accommodate these modifications.[10]  Twelve commenters responded

          to the solicitation for public views on the proposed approach.

          Generally, the commenters were supportive of our efforts to

          conform our rules with the FASB standards.  We have determined to

          adopt the rules essentially as proposed.  We believe that this

          action is in keeping with our long-standing policy to look to the

          private sector for the promulgation of generally accepted

          accounting principles ("GAAP").[11]  It also furthers our goal of

          integrating existing accounting information into the narrative

          disclosure in documents mandated by the federal securities laws.

          This release explains the new reporting requirements.

          II.  RULE CHANGES

                A.  Operating Segment Disclosure

                SFAS No. 14 required, and the Commission’s rules and forms

          have required, disclosure along "industry segment" lines.  An

          "industry segment," as defined by SFAS No. 14, was "a component

          of an enterprise engaged in providing a product or service or a

          group of related products and services primarily to unaffiliated

          customers . . . for a profit."[12]  Recognizing that businesses

          often evaluate their operations using criteria not necessarily

          related to the products or services offered to the public, the

          FASB replaced the industry segment reporting standard with one

          that requires businesses to report financial information on the

          basis of  "operating segments."[13]  Under the new 

          accounting standard, an operating segment is

          a component of a business, for which separate financial

          information is available, that management regularly evaluates in

          deciding how to allocate resources and assess performance.[14]

          Specifically, SFAS No. 131 states that an operating segment is a

          component of a business:

          *    that engages in activities from which it may earn revenues
               and incur expenses (including revenues and expenses relating
               to transactions with other components of the same business);

          *    whose operating results are regularly reviewed by the
               enterprise’s "chief operating decision maker"[15] to make
               decisions about resources to be allocated to the segment and
               assess its performance; and

          *    for which discrete financial information is available.

               Under SFAS No. 131, a company generally must report

             separately information about an operating segment that meets

             any of the following thresholds:

          *    Its reported revenue, including both sales to external
               customers and intersegment sales and transfers, is 10
               percent or more of the combined revenue of all reported
               operating segments, whether generated inside or outside of
               the company;[16]
          *
          *    Its reported profit or loss is 10 percent or more of the
               greater of:  (1) the combined reported profit of all
               operating segments that did not report a loss or (2) the
               combined reported loss of all operating segments that did
               report a loss; or
          *
          *    Its assets are 10 percent or more of the combined assets of
               all operating segments.[17]

                SFAS No. 131 not only changed how a business should

          identify its segments, it also changed the types of information

          to be disclosed for each segment.  SFAS No. 14 required an issuer

          to report its revenues, operating profit (loss),[18] and

          identifiable assets[19] if a segment’s revenues, operating

          profit, or identifiable assets were 10% or more of all the

          industry segments’ revenues, operating profits, or assets,

          respectively.  Issuers were to reconcile these three items to the

          consolidated amounts in the financial statements.  In addition,

          SFAS No. 14 required issuers to report for each segment

          depreciation, depletion and amortization, capital expenditures,

          equity in net income of unconsolidated subsidiary or equity-

          method investee, and the effect of a change in accounting

          principle on operating profit (loss).

                By contrast, SFAS No. 131 requires that a company provide

          for each reportable segment  quantitative disclosure of two basic

          items - total assets and a measure of profit or loss.   The new

          standard defines neither segment profit (loss) nor assets.

          Instead, management must determine what they will report based on

          how they operate their business.  In addition, companies must

          disclose the following items for each segment, but only if

          management includes them in measuring segment profit or loss:

               *  revenues from external customers;
               *  revenues from other operating segments;
               *  interest income;[20]
               *  interest expense;[21]
               *  depreciation, depletion and amortization;
               *  unusual items;
               *  equity in net income of equity method investees;
               *  income taxes;
               *  extraordinary items; and
               *  significant non-cash items other than depreciation,
                  depletion, and amortization.

          A company also must disclose for each segment the amount of investment in

          equity-method investees and total expenditures for additions to

          long-lived assets if it includes the amount in its determination

          of segment assets.[22]

                The company must reconcile the totals of the reportable

          segments’ amounts for all of these listed items to consolidated

          amounts.  The FASB required more items to be disclosed per

          segment under the new standard because analysts have long wanted

          more information and most of the items required should be already

          available in management reports.

                Today we are amending our narrative and financial reporting

          rules to conform their segment reporting requirements to the

          FASB’s revised accounting standards.   We retain, however,

          certain requirements relating to disclosure of principal products

          or services and major customers that traditionally have differed

          from the FASB standards.[23]  We address below each of the rule

          changes.[24]

                    1.   Description of Business - Item 101

               In the past, Regulation S-K Item 101(b)[25] required issuers

          to disclose in the business description sections of documents

          that they filed with the Commission financial information based

          on GAAP’s old  "industry segment" standard.  Under revised Item

          101, registrants will report segment information in accordance

          with GAAP’s new operating segment standard.[26]  Other changes to

          Item 101 follow.

                a.   Principal products or services

               Item 101 historically has required a discussion, by segment,

          of the principal products produced and services rendered by the

          issuer, as well as the principal markets for and methods of

          distribution of each segment’s products and services.  On the

          other hand, GAAP required, and continues to require, disclosure

          of the types of products and services from which each segment

          derives its revenues, without reference to principal markets and

          methods of distribution. We continue to believe that information

          relating to principal markets and distribution methods is useful

          to investors; consequently we are retaining this provision.

                Item 101 further requires registrants to disclose the

          amounts of revenues from each class of similar products and

          services based on quantitative thresholds.   Specifically, the

          issuer must state the amount or percentage of total revenue

          contributed by any class of similar products or services that

          accounted for 10 percent or more of consolidated revenue in any

          of the last three fiscal years, or if total revenue did not

          exceed $50,000,000 during any of those three fiscal years, 15

          percent or more of consolidated revenue.[27]  SFAS No. 131

          requires disclosure of revenues from external customers for each

          product and service or each group of similar products and

          services unless it is impracticable to do so.

                Because SFAS No. 131 requires disclosure regardless of

          amount, unless impracticable, it appears that the new accounting

          standard may require more disclosure than Item 101.

          Consequently, we sought public comment as to whether we needed to

          maintain the quantitative thresholds of Item 101(c)(1)(i).

          Several commenters advocated eliminating the quantitative

          thresholds and simply relying on the GAAP standard, which they

          said implied a materiality standard for minimum disclosure.   We

          believe that SFAS No. 131 will result in disclosure of a range of

          amounts of products and services, depending upon how a company

          defines a class of related products or services.   In fact, SFAS

          No. 131 may require disclosure of amounts below the existing 10%

          threshold of Item 101.  We believe a clearly stated minimum

          threshold for disclosure is desirable to eliminate any possible

          ambiguity that may result from attempts to apply an unwritten

          materiality threshold to small amounts of reportable revenues and

          is in keeping with the 10% threshold used to report segments

          under SFAS No. 131.  We therefore have retained these Item 101

          thresholds.

                 b.  Retroactive restatement of information

               Item 101 has required issuers to restate retroactively

          previously reported financial information when there has been a

          material change in the way they group products or services into

          industry segments and that change affects the reported segment

          information.  By contrast, SFAS No. 131 provides that if an

          issuer changes the structure of its internal organization in a

          manner that causes the composition of its reportable segments to

          change, the issuer must restate the corresponding information for

          earlier periods unless it is impracticable to do so.[28]  In the

          final rule we conform the language of Item 101 with the language

          of SFAS No. 131 regarding when a company must restate

          information.

                 c.  Appendix A

               Item 101 has included an appendix illustrating how to

          present the required industry segment information in tabular

          form.  As proposed, we are eliminating this appendix and will

          rely instead on the SFAS No. 131 instructions governing how to

          present information relating to operating segments.

                     2.  Property - Item 102

               Regulation S-K Item 102 requires descriptions of an issuer’s

          principal plants, mines, and other "materially important"

          physical properties.  Companies must identify the industry

          segment(s) that use the described properties.[29]  We are

          updating the item to reflect the new financial statement

          reporting requirements, as proposed.

                     3.  Management’s Discussion & Analysis - Item 303

               Regulation S-K Item 303, which requires management to

          include a discussion and analysis of an issuer’s financial

          condition and results of operations, provides:

               Where in the registrant’s judgment a discussion of
               segment information or other subdivisions of the
               registrant’s business would be appropriate to an
               understanding of such business, the discussion shall
               focus on each relevant, reportable segment or other
               subdivision of the business and on the registrant as a
               whole.[30]

               The Commission historically has relied on the FASB’s

          definition for segment disclosure in Management’s Discussion and

          Analysis ("MD&A").  The Commission intends to continue to rely on

          the FASB’s standards, thereby allowing issuers to use the

          management approach under SFAS No. 131.  No rule change is

          necessary.  Under the language in Item 303, a multi-segment

          registrant preparing a full fiscal year MD&A should analyze

          revenues, profitability (or losses) and total assets of each

          significant segment in formulating a judgment as to whether a

          discussion of segment information is necessary to an

          understanding of the business.

                While we are not adopting changes to the language of Item

          303, we are amending CFRP 501.06.a, which provides informal

          guidance about MD&A.  The revisions conform the Codification’s

          language with that of SFAS No. 131, and adds a new footnote, that

          reads:

               Where consistent with the registrant’s internal management
               reports, SFAS No. 131 permits measures of segment
               profitability that differ from consolidated operating profit
               as defined by GAAP, or that exclude items included in the
               determination of the registrant’s net income.  Under SFAS
               No. 131, a registrant also must reconcile key segment
               amounts to the corresponding items reported in the
               consolidated financial statements in a note to the financial
               statements.  Similarly, the Commission expects that the
               discussion of a segment whose profitability is determined on
               a basis that differs from consolidated operating profit as
               defined by GAAP or that excludes the effects of items
               attributable to the segment also will address the applicable
               reconciling items in Management’s Discussion and Analysis.
               For example, if a material charge for restructuring or
               impairment relates to a specific segment, but is not
               included in management’s measure of the segment’s operating
               profit or loss, registrants would be expected to discuss in
               Management’s Discussion and Analysis the applicable portion
               of the charge, the segment to which it relates and the
               circumstances of its incurrence.  Likewise, the Commission
               expects that the effects of management’s use of non-GAAP
               measures, either on a consolidated or segment basis, will be
               explained in a balanced and informative manner, and the
               disclosure will include a discussion of how that segment’s
               performance has affected the registrant’s GAAP financial
               statements.

                Several commenters said that the footnote as proposed could

          be read to require registrants to reconcile the internal measure

          of segment profitability to pre-tax income from continuing

          operations by segment, which partial reconciliation by segment

          would go significantly beyond the requirements of SFAS No. 131.

          We have revised this language, as set out above, to clarify that

          we are not requiring any incremental reconciliation of segment

          profit beyond what SFAS No. 131 requires.  The note now makes it

          clear that we expect a narrative discussion in MD&A of items that

          affect the operating results of a segment but that are not

          included in segment operating profit defined by management.

                     4.   Form 20-F

                Form 20-F is the registration statement and annual report

          for foreign private issuers promulgated under the Securities

          Exchange Act of 1934 ("Exchange Act").[31]  Form 20-F has

          permitted a foreign registrant that presents financial statements

          according to United States GAAP to omit SFAS No. 14 disclosures

          if it provides the information required by Item 1 of the form.

          As proposed, we are replacing the reference to SFAS No. 14 with

          one to SFAS No. 131.[32]

               Item 1 of Form 20-F requires registrants to disclose sales

          and revenues by categories of activity and geographical areas, as

          well as to discuss each category of activities that provide a

          disproportionate contribution to total "operating profit" of the

          registrant.  We are not changing these requirements.

                B.  Other Reporting Requirements

               SFAS No. 14 also set standards for disclosure of certain

          enterprise-wide information where the issuer did not provide the

          information in the segment disclosure, and Regulation S-K

          reflected those standards.  As we proposed, we are updating our

          rules to conform with the revised requirements of SFAS No. 131,

          as we explain below.

                1.  Geographic areas

               Regulation S-K Item 101(d) has required an issuer to

          disclose for each of the issuer’s last three fiscal years the

          amounts of revenue, operating profit or loss, and identifiable

          assets attributable to each of its geographic areas.  It also

          required disclosure of the amount of export sales in the

          aggregate or by appropriate geographic area to which the issuer

          makes sales.

               Under SFAS No. 131, issuers must disclose revenues from

          external customers deriving from:

             * the issuer’s country of domicile;

             * all foreign countries in total from which the issuer derives

               revenues; and

             * an individual foreign country, if material.

          An issuer also must disclose the basis for attributing revenues from

          external customers to individual countries.

                The new accounting standard also requires an issuer to

          disclose long-lived assets other than financial instruments,

          long-term customer relationships of a financial institution,

          mortgage and other servicing rights, deferred policy acquisition

          costs, as well as deferred tax assets located in its country of

          domicile and in all foreign countries, in total, in which the

          enterprise holds assets.  If assets in an individual foreign

          country are material, an issuer must disclose those assets

          separately.[33]

               We are revising our disclosure requirements to conform

          entirely with the new accounting standard.  Consequently,

          issuers, even those whose segments are defined by geography, will

          continue to report designated information based on geographic

          areas, unless the information is already provided as part of the

          reportable operating segment information required by the

          accounting standards.[34]  Consistent with SFAS No. 131, the

          rules no longer will require companies to disclose geographic

          information relating to profitability, unless their segments are

          defined by geographic areas, or export sales.

                    2.   Major customers

               Since the adoption of SFAS No. 14, GAAP has required

          disclosure of revenues from major customers.[35]  SFAS No. 131

          now requires issuers to disclose the amount of revenues from each

          external customer that amounts to 10 percent or more of an

          enterprise’s revenue as well as the identity of the segment(s)

          reporting the revenues.  The accounting standards, however, have

          never required issuers to identify major customers.  On the other

          hand, Regulation S-K Item 101 historically has required naming a

          major customer if sales to that customer equal 10 percent or more

          of the issuer’s consolidated revenues and if the loss of the

          customer would have a material adverse effect on the issuer and

          its subsidiaries.[36]  We continue to believe that the identity

          of major customers is material information to investors.  This

          disclosure allows a reader to better assess risks associated with

          a particular customer, as well as material concentrations of

          revenues related to that customer.  Consequently, we retain this

          Regulation S-K requirement, as we proposed.

               C.   Segment Information Added to Interim Reports

               GAAP historically has not required segment reporting in

          interim financial statements.  In SFAS No. 131, the FASB changed

          its position.  Under the new accounting standards, issuers must

          include in condensed financial statements for interim periods the

          following information about each reportable segment:

               *  Revenues from external customers;

               *  Intersegment revenues;

               *  A measure of segment profit or loss;

               *  Total assets for which there has been a material change
                  from the amount disclosed in the last annual report;

               *  A description of differences from the last annual report
                  in the basis of segmentation or in the basis of
                  measurement of segment profit or loss; and

               *  A reconciliation of the total of the reportable segments’
                  measures of profit or loss to the enterprise’s
                  consolidated income before income taxes, extraordinary
                  items, discontinued operations, and the cumulative effect
                  of changes in accounting principles.[37]


               Thus, for the first time, issuers must disclose in their

          interim financial statements, including those filed with the

          Commission, condensed financial information about the segments

          they have chosen as reportable segments for purposes of their

          annual reports. [38]

                SFAS No. 131 is effective for fiscal years beginning after

          December 15, 1997.[39]  The FASB specified, however, that issuers

          need not apply the new provisions to interim financial statements

          in the initial year of application, but they must report

          comparative information for interim periods in that initial year

          in financial statements for interim periods in the second year of

          application.[40]  Consequently, through the Rules of General

          Application of Regulation S-X, which state that financial

          statements not prepared in accordance with GAAP will be presumed

          to be misleading or inaccurate,[41] we expect to begin to see

          comparative segment information reported in filings made by

          companies whose fiscal years ended after December 15, 1998 in

          their filings relating to their first quarter ending after March

          15, 1999.  A calendar year end company would provide comparative

          interim segment information beginning in its March 31, 1999

          interim financial statements.   No changes to our rules are

          necessary to implement the FASB’s changes in this regard.





          III. CERTAIN FINDINGS

               We requested comment on whether the proposed revisions, if

          adopted, would have an adverse effect on competition or would

          impose a burden on competition that is neither necessary nor

          appropriate in furthering the purposes of the Securities Act and

          the Exchange Act.  No commenter addressed this issue.  In

          complying with our responsibilities under Section 23(a)(2) of the

          Exchange Act, we have determined that there will be no adverse

          effect on competition and that the rule changes will not impose

          any unnecessary burden on competition that is not appropriate in

          furthering the purposes of the federal securities laws.[42]

               We also find that our action will promote efficiency,

          competition and capital formation by making our disclosure

          standards uniform with the accounting standards.  This is in

          keeping with our responsibilities under Section 2(b) of the

          Securities Act[43] and Section 3(f) of the Exchange Act.[44]



          IV.  COST-BENEFIT ANALYSIS

               We anticipate that these rule changes will not impose any

          new regulatory costs on registrants, since the changes simply

          conform our disclosure requirements with current accounting

          principles, to which registrants are already subject.   To the

          contrary, registrants will benefit from the obligation to follow

          uniform standards rather than potentially conflicting ones.



          V.             REGULATORY FLEXIBILITY ACT CERTIFICATION

               Pursuant to section 605(b) of the Regulatory Flexibility

          Act,[45] Arthur Levitt, Chairman of the Commission, certified

          that the amendments proposed in this release would not, if

          adopted, have significant impact on a substantial number of small

          entities.  The reason for this certification is that the

          amendments conform rules and forms to GAAP, as amended, to which

          registrants are already subject.  We included the certification

          in the proposing release as Attachment A.



          VI.  PAPERWORK REDUCTION ACT[46]

               We determined that information collection burden hours will

          not change as a result of the technical amendments adopted today.



          VII.           CODIFICATION UPDATE

               The "Codification of Financial Report Policies" announced in

          Financial Reporting Release No. 1 (April 15, 1982) [47 FR 21028]

          is updated to:

          1.   Modify Section 501 by revising Section 501.06.a. to read as

          follows:

          .a.  Segment Analysis

                In formulating a judgment as to whether a discussion of

          segment information is necessary to an understanding of the

          business, a multi-segment registrant preparing a full fiscal year

          MD&A should analyze revenues, profitability, and the cash needs

          of its significant segments.[47]  To the extent any segment

          contributes in a materially disproportionate way to those items,

          or where discussion on a consolidated basis would present an

          incomplete and misleading picture of the enterprise, segment

          discussion should be included.  This may occur, for example, when

          there are  legal or other restrictions upon the free flow of

          funds from one segment, subsidiary, or division of the registrant

          to others;  when known trends, demands, commitments, event, or

          uncertainties within a segment are reasonably likely to have a

          material effect on the business as a whole; when the ability to

          dispose of identified assets of a segment may be relevant to the

          financial flexibility of the registrant; and in other

          circumstances in which the registrant concludes that segment

          analysis is appropriate to an understanding of its business.

               The following example illustrates segment disclosure for a

          manufacturer with two segments.  The two segments contributed to

          segment profit amounts that were disproportionate to their

          respective revenues.   The registrant discusses sales and segment

          profit trends, factors explaining such trends, and where

          applicable, known events that will impact future results of

          operations of the segment.

                                      Net Sales by Segment

                                  Year 3              Year 2              Year 1
                                       Percent             Percent               Percent
          Segments     ($ million)    of Total ($ million) of Total ($ million)  of  Total

          Segment I             585       55      479         53       420         48

          Segment II            472       45      433         47       457         52

          Total Sales          1057      100      912        100       877        100



          Year 3 vs. Year 2

               Segment I sales increased 22% in Year 3 over the Year 2

          period.  The increase included the effect of the acquisition of

          Corporation T.  Excluding this acquisition, sales would have

          increased by 16% over Year 2.  Product Line A sales increased by

          18% due to a 24% increase in selling prices, partially offset by

          lower shipments.  Product Line B sales increased by 35% due to a

          17% increase in selling prices and a 15% increase in shipment

          volume.

               Segment II sales increased 9% due to a 12% increase in

          selling prices partly offset by a 3% reduction in shipment

          volume.

          Year 2 vs. Year 1

               Segment I sales increased 14% in Year 2.  Product Line A

          sales increased 22%, in spite of a slight reduction in shipments,

          because of a 23% increase in selling prices.

                Product Line B sales declined 5% due mainly to a 7%

          decrease in selling prices, partially offset by higher shipments.

               The 5% decline in Segment II sales reflected a 3% reduction

          in selling prices and a 2% decline in shipments.

                The substantial increases in selling prices of Product Line

          A during Year 3 and Year 2 occurred primarily because of

          heightened worldwide demand which exceeded the industry’s

          production capacity.  The Company expects these conditions to

          continue for the next several years.  The Company anticipates

          that shipment volumes of Product Line A will increase as its new

          production facility reaches commercial production levels in Year

          4.

               Segment II shipment volumes have declined during the past

          two years primarily because of the discontinuation of certain

          products that were marginally profitable and did not have

          significant growth potential.

                                  Profit by Segment

                         Year 3                          Year 2              Year 1
                                        Percent               Percent                 Percent
          Segments     ($ million)     of Total ($ million)   of Total  ($ million)   of  Total

          Segment I              126         75       108        68        67         55

          Segment II              42         25        51        32        54         45

          Segment
            Profit               168        100       159       100       121        100


          Year 3 vs. Year 2

               Segment I profit was $18 million (17%) higher in Year 3 than

          in Year 2.  This increase includes the effects of higher sales

          prices and slightly improved margins on Product Line A, higher

          shipments of Product Line B and the acquisition of Corporation T.

          Excluding this acquisition, Segment I profit would have been 11%

          higher than in Year 2.  Partially offsetting these increases are

          costs and expenses of $11 million related to new plant start-up,

          slightly reduced margins on Product Line B and a $9 million

          increase in research and development expenses.

                Segment II profit declined $9 million (18%) due mainly to

          substantially higher costs in Year 3 resulting from a 23%

          increase in average raw material costs which could not be fully

          recovered through sales prices increases.  The Company expects

          that Segment II margins will continue to decline, although at a

          lesser rate than in Year 3 as competitive factors limit the

          Company’s ability to recover cost increases.

          Year 2 vs. Year 1

                         Segment I profit was $41 million (61%) higher in Year 2 than

          in Year 1.  After excluding the effect of the $34 million non-

          recurring charge for the early retirement program in Year 1,

          Segment I profit in Year 2 was $18 million (27%) higher than in

          Year 1.  This increase reflected higher prices and a

          corresponding 21% increase in margins on Product Line A, and a

          17% increase in margins on Product Line B due primarily to costs

          reductions resulting from the early retirement program.

               Segment II profit declined about $3 million (6%) due mainly

          to lower selling prices and slightly reduced margins in Year 2.

          2.   Replace paragraphs .01, .02 and .03 of Section 503 with new

          paragraph .01, to include the text of Section I of this release

          captioned "Background" and with new paragraph .02 to include the

          text of Section II.B.2 of this release captioned "Major

          Customers."

               The Codification is a separate publication of the

          Commission.  It will not be published in the Code of Federal

          Regulations.



          VIII. STATUTORY BASIS

               The Commission proposes the rule changes explained in this

          release pursuant to Sections 6, 7, 8, 10 and 19(a) of the

          Securities Act and Sections 3, 12, 13, 14, 15(d) and 23(a) of the

          Exchange Act.

          List of Subjects in 17 CFR Parts 210, 229, 240 and 249

               Accounting, Registration requirements, Reporting and

          recordkeeping requirements, Securities.



          TEXT OF THE RULES

               Accordingly,  the Commission amends Title 17, Chapter II of

          the Code of Federal Regulations as follows:


          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, AND ENERGY POLICY AND
                  CONSERVATION ACT OF 1975.

               1.   The authority citation for Part 210 continues to read

          as follows:

                Authority:  15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2,

          77aa(25), 77aa(26), 78j-1, 78l, 78m, 78n, 78o(d), 78u-5, 78w(a),

          78ll(d), 79e(b), 79j(a), 79n, 79t(a), 80a-8, 80a-20, 80a-29, 80a-

          30, 80a-37(a), unless otherwise noted.

               2.   By  amending Section 210.3-03 by revising the first

          sentence of paragraph (e) to read as follows:

          §210.3-03 Instructions to income statement requirements.

                                 * * * * *

                (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. * * *

               3.   By amending §210.12-16 by revising footnote one to the
          table to read as follows:

          §210.12-16 Supplementary insurance information.

                                 * * * * *

          1  Segments shown should be the same as those presented in the

          footnote disclosures called for by generally accepted accounting

          principles.

                                 * * * * *

          PART 229- STANDARD INSTRUCTIONS FOR FILING FORMS UNDER SECURITIES
                  ACT OF 1933, SECURITIES EXCHANGE ACT OF 1934 AND ENERGY
                  POLICY AND CONSERVATION ACT OF 1975 - REGULATION S-K

               4.   The authority citation for Part 229 continues to read

          in part as follows:

                Authority:  15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s,

          77z-2, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii,

          77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78l,  78m, 78n, 78o, 78u-5,

          78w, 78ll(d), 79e, 79n, 79t, 80a-8, 80a-29, 80a-30, 80a-37, 80b-

          11, unless otherwise noted.

                                 * * * * *

                5.  By amending §229.101 (Item 101 of Regulation S-K) by

          revising the introductory text of paragraph (b), paragraph (b)(1)

          and paragraph (d); in paragraphs (c)(1) the introductory text,

          (c)(1)(i), (c)(1)(ii), (c)(1)(iv), and (c)(1)(v), by revising the

          term "industry segment" to read "segment";  in paragraph (c)(1)

          the introductory text and in Instruction 1 in the Instructions to

          Item 101, by revising the term "industry segments" to read

          "segments"; by revising Instruction 2 to Item 101, and by

          removing Appendix A - Industry Segments, and Appendix B - Foreign

          and Domestic Operations and Export Sales.

          § 229.101 (Item 101) Description of business.

                            * * * * *

               (b) Financial information about segments.  Report for each

          segment, as defined by generally accepted accounting principles,

          revenues from external customers, a measure of profit or loss and

          total assets.  A registrant must report this information for each

          of the last three fiscal years or for as long as it has been in

          business, whichever period is shorter.  If the information

          provided in response to this paragraph (b) conforms with

          generally accepted accounting principles, a registrant may

          include in its financial statements a cross reference to this

          data in lieu of presenting duplicative information in the

          financial statements; conversely, a registrant may cross

          reference to the financial statements.

                (1) If a registrant changes the structure of its internal

          organization in a manner that causes the composition of its

          reportable segments to change, the registrant must restate the

          corresponding information for earlier periods, including interim

          periods, unless it is impracticable to do so.  Following a change

          in the composition of its reportable segments, a registrant shall

          disclose whether it has restated the corresponding items of

          segment information for earlier periods.  If it has not restated

          the items from earlier periods, the registrant shall disclose in

          the year in which the change occurs segment information for the

          current period under both the old basis and the new basis of

          segmentation, unless it is impracticable to do so.

                                 * * * * *

                (d)  Financial information about geographic areas.   (1)

          State for each of the registrant’s last three fiscal years, or

          for each fiscal year the registrant has been engaged in business,

          whichever period is shorter:

               (i)  Revenues from external customers attributed to:

                     (A) The registrant’s country of domicile;

                    (B)  All foreign countries, in total, from which the

          registrant derives revenues; and

                     (C) Any individual foreign country, if material.

          Disclose the basis for attributing revenues from external

          customers to individual countries.

               (ii) Long-lived assets, other than financial instruments,

          long-term customer relationships of a financial institution,

          mortgage and other servicing rights, deferred policy acquisition

          costs, and deferred tax assets, located in:

                     (A) The registrant’s country of domicile;

                    (B)  All foreign countries, in total, in which the

          registrant holds assets; and

                     (C) Any individual foreign country, if material.

               (2)  A registrant shall report the amounts based on the

          financial information that it uses to produce the general-purpose

          financial statements.  If providing the geographic information is

          impracticable, the registrant shall disclose that fact.  A

          registrant may wish to provide, in addition to the information

          required by paragraph (d)(1) of this section, subtotals of

          geographic information about groups of countries.  To the extent

          that the disclosed information conforms with generally accepted

          accounting principles, the registrant may include in its

          financial statements a cross reference to this data in lieu of

          presenting duplicative data in its financial statements;

          conversely, a registrant may cross-reference to the financial

          statements.

                (3)  A registrant shall describe any risks attendant to the

          foreign operations and any dependence on one or more of the

          registrant’s segments upon such foreign operations, unless it

          would be more appropriate to discuss this information in

          connection with the description of one or more of the

          registrant’s segments under paragraph (c) of this item.

               (4)  If the registrant includes, or is required by Article 3

          of Regulation S-X (17 CFR 210), to include, interim financial

          statements, discuss any facts relating to the information

          furnished under this paragraph (d) that, in the opinion of

          management, indicate that the three year financial data for

          geographic areas may not be indicative of current or future

          operations. To the extent necessary to the discussion, include

          comparative information.

                Instructions to Item 101

                                 * * * * *

                2.  Base the determination of whether information about

          segments is required for a particular year upon an evaluation of

          interperiod comparability.  For instance, interperiod

          comparability would require a registrant to report segment

          information in the current period even if not material under the

          criteria for reportability of SFAS No. 131 if a segment has been

          significant in the immediately preceding period and the

          registrant expects it to be significant in the future.

                                 * * * * *

                6.  By amending Section 229.102 by revising the term

          "industry segment(s)" in the introductory paragraph to read

          "segment(s), as reported in the financial statements,".

          PART 240 - GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT
                   OF 1934

               7.   The authority citation for Part 240 continues to read

          in part as follows:

                Authority:  15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2,

          77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78f, 78i, 78j, 78j-

          1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78p, 78q, 78s, 78u-5, 78w,

          78x, 78ll(d), 78mm, 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-37,

          80b-3, 80b-4 and 80b-11, unless otherwise noted.

                                 * * * * *

                8.  By amending §240.14a-101(Schedule 14A) in Item

          14(b)(2)(ii)(A)(3)(i) by revising the phrase "industry segments"

          to read "segments".

          PART 249 - FORM, SECURITIES EXCHANGE ACT OF 1934

                9.  The authority citation for Part 249 continues to read

          in part as follows:

                Authority:  15 U.S.C. 78a, et seq., unless otherwise noted:

                             * * * * *

                10.  By amending Form 20-F (referenced in § 249.220f) by

          removing the term "SFAS 14" from Instruction 3 to Item 17 and

          inserting the term "SFAS No. 131" in its place.

          [Note:  The text of Form 20-F does not, and the amendment will

          not, appear in the Code of Federal Regulations]



          By the Commission.

          January 5, 1999                    Jonathan G. Katz
                                              Secretary

          **FOOTNOTES**

            [1]:   17 CFR 210.3-03.


          [2]:  17 CFR 210.12-16.


          [3]:  17 CFR Part 210.


          [4]:  17 CFR 229.101.


          [5]:  17 CFR 229.102.


          [6]:  17 CFR Part 229.


          [7]:  17 CFR 240.14a-101.


          [8]:  17 CFR 249.220f.


          [9]:  Release No. 33-5893 (December 23, 1977) [42 FR 65554].


          [10]:  Release No. 33-7549 (June 25, 1998) [63 FR 35886].


            [11]:  Section 101 of the Codification of Financial Reporting Policies.  The
            Commission initially issued its administrative policy concerning financial
            statements in 1938 and updated it in 1973 to recognize the establishment of
            the FASB.


          [12]:  SFAS No. 14, ¶ 10.a.


          [13]:  We use the proposed terms "segment" and "segments" as well as the phrase "segments
            as defined by generally accepted accounting principles" and similar terms or
            phrases in the rules rather than follow the accounting standard’s nomenclature
            of "operating segment."  Registrants should construe these terms to mean a
            component of a business for which GAAP requires separate reporting in
            financial statements.


            [14]:  We refer to this below as the "management approach."


          [15]:  The term "chief operating decision maker" identifies a function, not a person with
            that title.  This person’s function is to allocate resources to and assess the
            performance of the company’s segments.  A chief operating decision maker
            frequently might be a company’s chief executive officer or chief operating
            officer, but it also could be a group of decision makers, for example, the
            company’s president, executive vice presidents and others.


          [16]:  The FASB has proposed eliminating the word "reported" from the phrase "all reported
            operating segments."  See ¶ 7.t.(1)(a) of Proposed Statement of Financial
            Accounting Standards - Amendment to FASB Statement No. 66, Rescission of FASB
            Statement No. 75, and Technical Corrections, File Reference No. 190-A, dated
            October 13, 1998 ("Exposure Draft").


            [17]:  SFAS No. 131, ¶ 18.


          [18]:  SFAS No. 14 specifically defined segment operating profit to be revenues less all
            operating expenses, which included depreciation and amortization.  An issuer
            was to allocate operating expenses that were not directly traceable to a
            particular segment on a reasonable basis among the segments for whose benefit
            the expenses were incurred.   The standard required an explanation of the
            amount and nature of any unusual or nonrecurring items added or deducted in
            determining operating profit of a segment.  In addition, the standard defined
            any restructuring charges related to a specific segment as operating expenses
            of that segment and issuers were to deduct these charges in calculating that
            segment’s operating profit or loss.

              SFAS No. 14 excluded certain items in calculating segment profit.  They
          were: general corporate expenses; interest expense (except
          included for financial institutions, insurance and leasing
          operations); equity in income (loss) of unconsolidated
          subsidiaries or equity investees; discontinued operations;
          extraordinary items; and, the effects of changes in accounting.


          [19]: Segment assets included all tangible and intangible assets used by the segment,
            including goodwill, other intangibles, and deferred income and expenses.


          [20]: Certain enterprises may report segment interest revenue net of interest expense.
            See SFAS No. 131, ¶ 27.


          [21]:  Id.


          [22]:  In its Exposure Draft, the FASB has proposed to modify the provisions of ¶¶27 and
            28 of SFAS No. 131 to require companies to disclose the designated items for
            each segment, if included in the measure of profit or loss reviewed by or
            otherwise regularly provided to the chief operating decision maker.  See ¶¶
            7.t.(3) and (4) of the Exposure Draft.

          [23]:
            See Sections II.A.1.a. and II.B.2.


            [24]:  We are also adopting several technical amendments to update cross
            references to the new accounting standard.  These revisions are in Rules 3-
            03(e) and 12-16 of Regulation S-X and Item 14(b)(2)(ii)(A)(3)(i) of Schedule
            14A.


          [25]:  17 CFR 229.101(b).


          [26]:  We also retain the provisions allowing an issuer to refer to other sections of the
            registration statement that include the required information in order to avoid
            duplicative disclosure.


          [27]:  17 CFR 229.101(c)(1)(i).


            [28]:  See SFAS No. 131, ¶ 34.


          [29]:  17 CFR 229.102.


          [30]: 17 CFR 229.303(a).


          [31]:  15 U.S.C. 78a et seq.


          [32]:  See Instruction 3 to Item 17 of Form 20-F.  One commenter suggested also
            referencing International Accounting Standard 14 in this instruction.  In
            light of the technical nature of this rulemaking, we believe that we should
            reexamine this suggestion in connection with substantive rulemaking projects
            involving this form that may arise in the future rather than adopt a provision
            that was not introduced in the proposals.


          [33]:  See SFAS No. 131, ¶ 38.


          [34]:  See SFAS No. 121, ¶ 36.  We are eliminating Appendix B of Regulation S-K Item 101.
            We also revise Instruction 2 to Item 101, which provides guidance about
            materiality analyses based on "interperiod comparability," to reflect the
            elimination of the requirements to disclose the quantitative geographic
            information once required by SFAS No. 14.


          [35]:  SFAS No. 30 amended SFAS No. 14 and retained this provision to disclose revenues
            from major customers.


          [36]:  17 CFR 229.101(c)(1)(vii).


          [37]:  The FASB also amended Accounting Principles Board Opinion No. 28 ("APB No. 28"),
            governing interim financial reporting, to reflect this change.  The stated
            purpose of APB No. 28 is "to clarify the application of accounting principles
            and reporting practices to interim financial information, including interim
            financial statements and summarized interim financial data of publicly traded
            companies issued for external reporting purposes." APB No. 28 ¶ 1.

          [38]:
            SFAS No. 131, ¶ 33 currently states that segment information must be included in
            "condensed financial statements of interim periods issued to shareholders."
            Since this language has caused some confusion relating to when segment
            information is required, the FASB has proposed, as a technical amendment,
            eliminating the words "issued to shareholders" to make it clear that the
            information is to be provided in all interim financial statements, regardless
            of whether delivered to shareholders.  See Exposure Draft ¶7.t.(5).  We
            understood this to be the FASB’s interpretation of this requirement before we
            issued the proposals and we will expect to see segment information in all
            interim financial statements filed with the Commission.


            [39]: SFAS No. 131 ¶ 40.


          [40]: Id.


          [41]: See 17 CFR 210.4-01(a)(1).


          [42]: 15 U.S.C. 78w(a)(2).


          [43]: 15 U.S.C. 77b(b).


          [44]:  15 U.S.C. 78c(f).

          [45]:
            5 U.S.C. 605(b).


          [46]:  44 U.S.C. 3501 et seq.


            [47]:  Where consistent with the registrant’s internal management reports,
            SFAS No. 131 permits measures of segment profitability that differ from
            consolidated operating profit as defined by GAAP, or that exclude items
            included in the determination of the registrant’s net income.  Under SFAS No.
            131, a registrant also must reconcile key segment amounts to the corresponding
            items reported in the consolidated financial statements in a note to the
            financial statements.  Similarly, the Commission expects that the discussion
            of a segment whose profitability is determined on a basis that differs from
            consolidated operating profit as defined by GAAP or that excludes the effects
            of items attributable to the segment also will address the applicable
            reconciling items in Management’s Discussion and Analysis.  For example, if a
            material charge for restructuring or impairment relates to a specific segment,
            but is not included in management’s measure of the segment’s operating profit
            or loss, registrants would be expected to discuss in Management’s Discussion
            and Analysis the applicable portion of the charge, the segment to which it
            relates and the circumstances of its incurrence.  Likewise, the Commission
            expects that the effects of management’s use of non-GAAP measures, either on a
            consolidated or segment basis, will be explained in a balanced and informative
            manner, and the disclosure will include a discussion of how that segment’s
            performance has affected the registrant’s GAAP financial statements.