Question
From: Redacted
Sent: Tuesday, August 24, 2010 10:51 AM
To: Verne, B. Michael
Subject: Response to item 5
I represent the seller in an asset sale.The seller manufactures certain of its products and has others made by thirdparties. It is not selling any manufacturing assets but is selling intellectualproperty, customer lists, contracts and inventory. The seller also will agreeto supply product to the Buyer, if desired, for a certain term.
The note on Item 5 on the web sitestates:
All revenues derived from sales by a U.S. entity U.S. manufacturer are not reported under a wholesale code unless the sale is made from adistribution facility which is separate from the manufacturing facility. Inthis case, revenues would be reported for both the manufacturing andwholesaling of the product. Thus if a manufacturer has wholesaling operationsat its manufacturing facility, it would report all of its revenues under themanufacturing NAIS code.
I have two questions. First, if a partymanufactures product and then ships it to a warehouse owned by a third partywho then sends out the product to customers on behalf of the manufacturer andaccompanied by an invoice from the manufacturer, would one treat that as onlymanufacturing revenue or as both manufacturing and wholesaling?
[MV - 1. Report only manufacturing]
Second, in my context, where the assetsbeing sold do not include the manufacturing facility, how would one report therevenues attributable to the brands being sold? If one tried to just list therevenue attributable to the brand the revenue would be zero. It seems to methat one should report the revenues attributable to the brands but footnote thefact that the manufacturing facilities are not being sold.
[MV - 2. Correct]