APPENDIX 5 EXCERPTS FROM SECTION 3 OF SECURITIES ACT OF 1933 Exempted Securities Sec. 3. (a) Except as hereinafter expressly provided the provisions of this title shall not apply to any of the following classes of securities: Securities of Governments and Banks (2) Any security issued or guaranteed by the United States or any territory thereof, or by the District of Columbia, or by any State of the United States, or by any political subdivision of a State or Territory, or by any public instrumentality of one or more States or Territories, or by any person controlled or supervised by and acting as an instrumentality of the Government of the United States pursuant to authority granted by the Congress of the United States 35 Pictured on the front cover of this report is our Center for Professional Development in St. Charles, Illinois, U.S.A. This training facility, acquired in 1970 and substantially expanded in 1972 and 1974, has been a major factor in achieving our training objectives. The Center's two buildings are located on 55 acres of property with meeting and living accommodations for more than 600 people. The educational-administration building has over 50 meeting rooms in sizes which can accommodate groups ranging from a few persons up to 75. The Leonard Spacek Auditorium, an addition completed in 1974, can seat more than 600 persons and can be divided into four rooms accommodating up to 150 each in classroom style. All meeting rooms are connected to a central audio and closed-circuit television network. The Center's video studio has an entire range of broadcast-quality color equipment to make live broadcasts to the meeting rooms and to produce videotape cassettes for training and communication purposes. All of our operating offices have standard video cassette playback units so that tapes produced at the Center can be used for local training programs and individual self-instruction and for firm-wide communications. The Arthur Andersen Worldwide Organization includes Arthur Andersen & Co. (an Illinois partnership), separate legal entities with the Arthur Andersen name and organizations with which Arthur Andersen & Co. has exclusive representation agreements, all of which are authorized under the laws of the countries in which such operations are located. The extensive interchange of personnel training and practice programs has provided a worldwide organization of individuals of many nationalities who adhere to the same objectives of professional leadership and client service, while complying with the laws, regulations, and professional ethics of the countries in which they practice. Copyright ARTHUR ANDERSEN & CO., 69 West Washington Street, Chicago, Illinois, U.S.A. 60602 All rights reserved-1975. Annual Report This, our third annual report, covers our activities for the seventeen months since March 31, 1974. In 1974, we changed our fiscal year-end from March 31 to August 31 so that the administrative work involved in closing our fiscal year and planning for the new year would be less disruptive to our peak period of client service. With many of our clients having year-end closings in the January to April period, we have noted ever greater demands on our most experienced partners and managers for participation in client affairs during those months. A fiscal year ending August 31 serves to maximize the time available for these client service requirements and better conforms to our "natural" business year. Growth in Personnel and Practice With the admission of 101 new partners on September 1, 1975, our worldwide organization has 945 partners, of whom 180 are nationals of countries other than the United States. Our personnel complement has grown to over 13,000 people, including approximately 4,000 nationals of countries other than the United States. Harvey Kapnick, Chairman Total hours of client service for the year were 14,706,000, about 4.5% above the previous year. Fees for professional services for the year were $386,341,000, exceeding those of the previous year by 16.1%. Since my last report to you, our service capabilities have been expanded with new office locations in five additional countries of the world (Abidjan, Beirut, Istanbul, Lisbon, and Tehran) and four other new offices (Birmingham, England, and Grand Rapids, Orlando, and Salt Lake City in the United States). The Economic Climate The extreme turbulence in the economic climate experienced in this reporting period has created many difficult business problems and severely impacted the financial position and operating results of business organizations around the world. Recession has been coupled with continued inflation, capital erosion, and capital shortages. The forces of recession and inflation have not been confined to national boundaries. |